Inheritance Tax
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Topic: Inheritance Tax
Posted By: oldpbnoob
Subject: Inheritance Tax
Date Posted: 31 January 2011 at 12:08pm
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Happened upon a show on PBS called "Religion and Ethics Newsweek" and tuned in for a couple of minutes as one of the subjects was inheritance taxes. I was curious as they had a snippet of Prof. Michael Sandel from Harvard in regards to this subject. In doing some brief additional searching on the interwebs, essentially he is advocating extremely high inheritance taxes as he finds it unfair that people get a leg up because they are born into wealth. While I will admit, I did not watch the 55 minute video that I found online regarding the subject, I have to admit that I was a bit floored by this course of thinking. Not meaning to turn this into a conservative vs liberal finger pointing fest, but what are some general thoughts behind this? What is the rationale in thinking that the government should be allowed to step in and take the vast majority of someones estate when they die? Where does this type of thinking originate? I kept looking for a glimmer of a smirk when the guy was talking expecting him to start laughing and say "Bazinga!', but this dude is 100% serious. Really? ------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Replies:
Posted By: ParielIsBack
Date Posted: 31 January 2011 at 12:43pm
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As someone who would inherit millions in the case of my parent's death, I think it's fine. The reality is that multimillion or multibillion dollar estates are relatively rare, and the people who stand to inherit from them have the vast advantages that money was able to buy during the deceased's lifetime. I absolutely think that people earning over $250,000 a year (and my parents, who fall into this category, agree) should be taxed much more than they are right now. The reality is that the upper class has been growing steadily further from the lower and middle classes for decades. A capitalist system rewards those who already have money disproportionately, and I have no issue with trying to level the playing field (which this does.) Now, the US government's ability to do that effectively could rightly be called into question. I'm not sure I trust them to do anything like this properly, for that matter I'm pretty loath to task them with anything as they've shown they're not particularly capable. So in theory, I agree, in practice I'm leery. I would be much happier to simply apportion my inheritance through charities or similar organizations. ------------- BU Engineering 2012 |
Posted By: Reb Cpl
Date Posted: 31 January 2011 at 1:00pm
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I don't like it at all. Mainly because the money will end up being wasted. I bust my ass all my life to make some money that I can pass on for my kids to enjoy, invest, and grow- and now the government tells me that I can't do that? Eh.....No thanks. ------------- ? |
Posted By: agentwhale007
Date Posted: 31 January 2011 at 1:03pm
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I support an inheritance tax, although I don't think it should be a crippling level or anything extreme. If you're going to mark the received money as just that, you should owe taxes on it, just as if the person was alive. Of course, there are caveats to that as well, as the level of money we're talking about. What's the amount you can give as a gift and not be taxed on, anyway? I've not seen anyone support the inheritance tax taking a "vast majority," but then again I've not really looked into it much either. Mostly the argument I've heard is that it should be done away with all-together, which is something I disagree with. |
Posted By: merc
Date Posted: 31 January 2011 at 1:11pm
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it really grinds my gears when people think that if someone has money they can "afford" to pay higher taxes.
i think if someone earned their money (or their family earned it) they should be able to keep it. i think if there is going to be an income tax there should be a flat rate. X% regardless of if you make $10,000 or $10,000,000. one of the big problems in modern countries (us and a good part of europe) is being rewarded for sitting on your butt and being punished for getting out and making a living for yourself. i have a good friend of the family who is paying over 150K in income tax between himself and his wife, he has had to travel a great deal for work over the past 20 years or so and he is only home on the weekends. (this puts a great strain on his family and health but he does it to provide for them) they are putting 3 kids through college (no aid) and they also have a mortgage and car payments... meanwhile i have another friend who works at a homeless shelter and sees people driving BMWs and eating steak or lobster every night and they dont do crap... but hey... its only fair right? ------------- saving the world, one warship at a time. |
Posted By: merc
Date Posted: 31 January 2011 at 1:12pm
10k, 13.5k? if its family for school. ------------- saving the world, one warship at a time. |
agentwhale007 wrote:Posted By: Reb Cpl
Date Posted: 31 January 2011 at 1:13pm
There is that. Which I don't have a problem with of course. (aside from the fundamental gripe with taxation in the first place) But giant portions of inheritance doesn't need to be handed over to the govt. just because someone died. ------------- ? |
Posted By: merc
Date Posted: 31 January 2011 at 1:28pm
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^not to mention the money was already taxed as income at one point and will most likely be taxed again when spent... ------------- saving the world, one warship at a time. |
Posted By: agentwhale007
Date Posted: 31 January 2011 at 1:31pm
Concurred.
I've never understood this statement. Because if someone should be able to keep it - all of it - and that is their right, then why not support the banishment of taxes all-together? It's silly to say that everyone deserves to keep everything they earn and then support a taxation system of any kind.
It's a lovely thought on paper, but it simply does not work out. Flat tax simulations don't yield very good results for a number of reasons, namely a shifting of burden to the poor, which leads to a pretty chaotic string of events.
And if taxation is to blame for this imaginary problem of entitlements, how do you explain Scandinavia's success in pretty much every living standard measurement?
One, it sounds like this person needs to look into a better tax preparation service. Are they deducting travel expenses for work? Two, how much is the family bringing in? Three, why are his kids getting no aid? There are hundreds and hundreds of available private scholarships.
While I don't believe this hyperbolized anecdote in the least, it brings up a decent point: Yes, people will take advantage of assistance programs and charity. But what do we do about it? Is it better to scratch the programs completely and shut down the soup kitchen than it is to make sure the people needing assistance get it? |
Posted By: oldpbnoob
Date Posted: 31 January 2011 at 1:42pm
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As mentioned, I did not watch the video that was associated with this idea as it was an hour long, but from the snippet I saw, it seemed to indicate they they were talking about a very high rate. I guess I somewhat agree with it being taxed at the applicable income tax rate that such an inheritance would put them in because it is income like any other. The way it was worded or edited though, it really seemed like this guy was advocating taking everything and leaving a very small percentage that was able to be passed on. Perhaps I might be more apt to agree with a higher rate if it went towards somemthing like reinvesting into Social Securtiy or something. ------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: agentwhale007
Date Posted: 31 January 2011 at 1:54pm
It's not surprising. There are kooks on both sides. I don't see what good an extreme tax on inheritance would do. It's a relatively small pool of money to be any good, when you think about it, compared to general income tax from the larger society. |
Posted By: oldpbnoob
Date Posted: 31 January 2011 at 2:00pm
------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: evillepaintball
Date Posted: 31 January 2011 at 2:04pm
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If this guy played paintball, he would be the dude that gets on the Tippmann forum after a day at the field and cries about the little kids with nicer guns because "they didn't even pay for it, Mommy and Daddy did! QQ" ------------- 
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Posted By: agentwhale007
Date Posted: 31 January 2011 at 2:12pm
Ah. A Marxist with blinders, is a good name for those folks. Although they like being called "Academic Marxists." |
Posted By: oldpbnoob
Date Posted: 31 January 2011 at 2:24pm
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^^^ Ironically, he is a professor at Harvard.... So lets preach not being born lucky to those that were in fact born lucky? ------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: agentwhale007
Date Posted: 31 January 2011 at 2:32pm
Eh, being a professor at a good school isn't really indicative of one's starting point in life. |
Posted By: evillepaintball
Date Posted: 31 January 2011 at 2:40pm
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I think he was talking about the students. -------------
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Posted By: stratoaxe
Date Posted: 31 January 2011 at 2:46pm
This statement makes me sad.
Anyway, as to the topic, I don't see where the government has the right to say "Hey! You haven't earned that inheritance!" and strip a large portion away. I agree pretty much wholeheartedly with Reb here...you don't work and earn money your whole life to support your children just to have the government say "screw you" when you die and start them over from scratch.
I also love the idea of people who hate on the wealthy, yet want to transfer their wealth directly to the government.
"The rich keep getting richer..." Well good. They support a large portion of our economy, I don't see how that's negative.
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Posted By: little devil
Date Posted: 31 January 2011 at 2:46pm
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Here we have a probate tax. At a certain amount it kicks in. And certain amounts the percentage amounts go up.
It isnt too bad as far as i've heard.
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Posted By: oldpbnoob
Date Posted: 31 January 2011 at 2:57pm
------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: evillepaintball
Date Posted: 31 January 2011 at 3:01pm
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Classes exist for a reason. Know your role. -------------
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Posted By: stratoaxe
Date Posted: 31 January 2011 at 3:04pm
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Love me some Tosh. |
Posted By: agentwhale007
Date Posted: 31 January 2011 at 3:11pm
Still though, there are a bunch of underprivileged folks at Harvard as students. It's one of the advantages the Ivy's have, because of their massive endowment, they can pretty much give tuition cuts or waivers to everyone and anyone they like. And they do. I don't know anyone who has gone to an Ivy school and actually paid anywhere near full tuition. That doesn't mean that there are not a lot of blue bloods at Harvard, but there's a darn good number of people from different backgrounds too. I've applied for one of the Ivys for after this, and I'm from the modest background camp. *Note* I looked it up, and Harvard's endowment level for 2010 was $27.4 billion.  |
Posted By: ParielIsBack
Date Posted: 31 January 2011 at 4:52pm
I'd like to see this argument fleshed out. How exactly does it benefit all of us for the top few percent of Americans to have a vast portion of the money? ------------- BU Engineering 2012 |
Posted By: MeanMan
Date Posted: 31 January 2011 at 5:21pm
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I think it should be a progressive tax, but not that high of a tax. They earned, it. Regardless of how, they did. Trick to it....have your name on the bank accounts of your parents when they get older (I think it has to be at least 10 years before their death). Problem solved. ------------- 
hybrid-sniper~"To be honest, if I see a player still using an Impulse I'm going to question their motives." |
Posted By: oldpbnoob
Date Posted: 31 January 2011 at 5:23pm
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I am sure there are tons of trickes and TBH, I beleive the first 1-5 million is exempted anyways. ------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: ParielIsBack
Date Posted: 01 February 2011 at 12:17pm
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Yep, currently there's a $5 million exemption. After that, the maximum rate is 35%. Both those numbers vastly decrease the taxes coming from wealthy estates. ------------- BU Engineering 2012 |
Posted By: stratoaxe
Date Posted: 01 February 2011 at 12:22pm
Pariel, I keep trying to respond to your post and keep losing my text in the process 
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Posted By: brihard
Date Posted: 01 February 2011 at 12:49pm
It varies by province. In Ontario is't 0.5% for the first $50k, and 1.5% for everything passed that. It's not, strictly speaking, referred to as a 'tax'; instead it's a 'probate fee'. But yes, in actuality it's an estate tax. Inheritances are not taxes as income though, so that's good. ------------- "Abortion is not "choice" in America. It is forced and the democrats are behind it, with the goal of eugenics at its foundation." -FreeEnterprise, 21 April 2011. Yup, he actually said that. |
Posted By: stratoaxe
Date Posted: 01 February 2011 at 2:29pm
I had some great long replies written up, but my laptop is completely screwed up (see my next topic...
 ) and I'm rapidly losing motivation to rewrite  So here's a few questions I have, and we'll go from there-
1:) If you redistribute the wealth via taxation, how high should the tax scales go (i.e., how much should a person that makes over 250K a year be taxed?)?
2:) Where does the redistributed wealth go?
3:) Who's in charge of this?
4:) If you're taxing incredibly high levels on people who make 250+K a year, what is the motivation to climb the ladder to high incomes?
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Posted By: ParielIsBack
Date Posted: 01 February 2011 at 4:51pm
All arguments about how, not why.
You really think people will stop earning money because their children won't get it? Look no http://en.wikipedia.org/wiki/Warren_Buffett - further . Furthermore, I'm not advocating taking all their money, I'm advocating taking what they clearly do not need. There are legitimate issues that need to be addressed in this country, none of which involve Mercedes or caviar. ------------- BU Engineering 2012 |
Posted By: oldpbnoob
Date Posted: 01 February 2011 at 5:35pm
------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: stratoaxe
Date Posted: 01 February 2011 at 5:39pm
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I wasn't responding to the inheritance tax, I was responding directly to this statement-
Again, all of those questions I ask are in direct response to those lines.
I'm further mystified by your approach here. Our economy has never been about need, it's about wants hand down. I don't need an X-Box 360, I don't need this laptop, I don't need any more than some bread, some water, some proper nutrients, and something to shield my head from storms..
But what drives our economy is the lust for Mercedes', caviar, and all those things nobody needs but wants so terribly bad.
There are legitimate issues that need to be addressed in this country, and very specifically in the economy. But this is a country where you are free to earn what you will-I have a cousin who came from literally nothing, was a Papadeaux waiter his entire time through college, paid his way through college with whatevever he earned, hard work, and scholarships, and is now a very substantial lawyer making well beyond the figures you listed as being beyond the need / want scale. He's my personal inspiration to push to law school myself, though money is less a factor for me. I realize I probably won't imitate his success, but I want to push myself much deeper than the class I was born in to.
But I wouldn't do that if I knew that I'd spend 6-8 years of my life busting my ass in school to drop six figures, only to have my money taxed back to what someone thinks I "need" to have, and give it to someone who was completely happy to settle for whatever the government would give him.
That said, I'm perfectly in favor of taxes scaled by income, like Whale said it has to be that way. And I'm perfectly in favor of social programs to help the needy and give guys that started where I came from a leg up. But seeing the rich getting richer as a problem is missing the idea of capitalism and free market.
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Posted By: stratoaxe
Date Posted: 01 February 2011 at 5:44pm
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And to double post here, and to summarize my ideas in the last post, without incentive to exceed levels of need and get into levels of want, there wil be no innovations in economy. There would be no Apples or Microsofts to drive the economy, because who would risk their ass on business ventures when the government caps your payoff to keep you at the same level as the cop or nurse next door. This isn't a new idea, people have been arguing this point for years. I'm not sarcastically quoting you when I use the tired phrase "the rich get richer and the poor get poorer", it's one I've heard my whole life as arguments for redistribution. I just don't see it.
I could be wrong, I often am. But from my limited vantage point, I see no reason to punish the rich for their legitimately obtained wealth.
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Posted By: ParielIsBack
Date Posted: 01 February 2011 at 8:04pm
Are you asking me how this plays out in numerical terms? That seems needlessly specific and entirely outside the vein of the purely philosophical or economic argument.
Again, how does increasing the tax on the rich prevent that? I'm advocating taking from the enormously wealthy and divvying it up amongst the 75% of Americans who earn less than $50,000 a year, not equalizing the top 15% and the bottom 75%.
I'm confused about the last bit: do you mean government employees or people on welfare? Government employees have some of the best benefits, especially in relation to their work hours, of anyone in America.
More confusion. You're in favor of scaled income tax, but you don't want it to go higher?
OK, this was clearly a matter of my words sounding different to you than me. As I said above, I'm not in favor of some sort of semi-socialist, egalitarian society. I simply think that rich people can easily be taxed more while sustaining their life styles.
Capitalism punishes the poor for their legitimately obtained lack of wealth, too. Socially, politically, and economically giving a small portion of the populace a large amount of wealth does not benefit the nation. I don't look it as punishment, although I wouldn't be surprised if some would. It's a leash, just like we leash the government. Yes, capitalism gives great opportunities. But when those opportunities become so small due to wealth imbalance that social mobility is inhibited (and studies suggest that it's more difficult to change social classes now than since before WWII) we have a problem.
I absolutely agree that defining the way this actually plays out in real life, especially given my personal mistrust of the government, is difficult. As it stands right now, the rich should be taxed more. I don't know how much more that should be, but I agree that 70% is probably way, way too much (at least in terms of federal income tax.) A national sales tax would be a much more effective method of working this out. To some extent it would have to be combined with a tax on securities and other financial derivatives though. I think one of the biggest things that would help us (as a nation) figure out what tax levels were reasonable would be a vastly simplified tax code. Yeah, the code is there for a reason blah blah blah. It gets in the way, it should change (not that I think it will.) ------------- BU Engineering 2012 |
Posted By: oldpbnoob
Date Posted: 01 February 2011 at 8:22pm
I definitely don't beleive in giving those that don't work hard an easier free ride than they already have. Now if the money were used for general social programs like Social Securtiy, Medicare, education, infrastructure etc. I would have less of a problem with it. ------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: stratoaxe
Date Posted: 01 February 2011 at 8:42pm
Numerical terms are exactly what we're debating, sir
 I'm asking you to define what percentage the rich need. Are you in favor for over half of their income going to taxes?I think being specific is vital in ideologies that affect the government in the way this one does. There are many who endorse a Robin Hood approach to taxation, and our current system reflects that, IMO.
But the enormously wealthy already pay pretty large amounts in taxes. Also, you need to define the definition of "enormously wealthy". 250K isn't even really wealthy in our economy, and that brings me to my big issue here....
You're not just talking about a tax increase. You're talking about taking money from the rich with no reason other than the poor deserve some of their money as well. And we're talking about an amount much higher (based upon your posts in this discussion) than the amount we see now. So we're discussing a massive shift in economic means, and that's, without a doubt, going to impact some of the more prominent sectors of the economy I've discussed.
I was speaking of those who live the majority of their lives waiting for government assistance.
Moderation-? I don't understand why this is confusing. I support the second amendment, but I don't think everyone needs an M-60 in their closet.
But what you're describing is incredibly socialistic. It becomes so when the government has the authority to make decisions like...
Why should anyone be able to make that decision? Again, income that was earned by legal, legitimate means belongs to the person who earned it. And what you're talking about is simply redistribution disguised as taxation. Taxation = funneling money to the government to disperse as it sees fit. You're talking about taking directly from the people who earned and giving to the people who need it. Sounds familiar...
I'm not saying this ideology is wrong, I simply think that it's important to discuss it as is, not veiled under taxation.
Then your issue is with capitalism, and again, I empathize with you on this, but that's a different beast altogether. This nation is structured under capitalism (or really a mixed economy, but again, different discussion) where cash is king and the free market creates the standards and rules. You mess with the balance of that system by punishing initiative (and it's perfectly reasonable to look at it as such when we're talking 40-50% taxation rates), and that system collapses.
Well, that's good. That would be borderline evil.
Let's say you did a 45% tax for 250K above.
Jumping from 125K to 250K is no easy ordeal. It takes some serious hard work, dedication, and really luck. Yet, when you hit that 250K bracket, you just lost half your income, and you're back around 125K after taxes. Why work twice as hard for the same amount?
It's admirable reasoning, I just don't see it as practical in our world.
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Posted By: oldpbnoob
Date Posted: 01 February 2011 at 8:51pm
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What if instead of direct handouts, the money taxed was used to create opportunities for those so inclined? I.e. low interest small business loans, scholarships, management training programs? ------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: stratoaxe
Date Posted: 01 February 2011 at 8:55pm
If you trust the government that far...
I think the issue here is that if the percentage is pushed too much further, it's going to hurt initiative in the economy. I believe the 250K income is already at 30% or so, and the level above it at 33 or 35%.
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Posted By: oldpbnoob
Date Posted: 01 February 2011 at 8:59pm
------------- "When I grow up I want to marry a rich man and live in a condor next to the beach" -- My 7yr old daughter. |
Posted By: stratoaxe
Date Posted: 01 February 2011 at 9:05pm
Ah, then we're on the same page then 
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