What Defense Can Justify An Estate Tax?

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   GA Andersonposted 9 years ago

   You work hard to build a fortune that you can pass on to your kids, or otherwise distribute however you desire on your passing. It is your money. Shouldn't you be able to do whatever you want with it, within our legal boundaries of course?
   
   What business does the government have taxing your estate when you have already paid the required taxes when you earned it?
   
   How the hell can anyone justify an estate tax, and believe in the truthfulness of America as a land of opportunity, of individual success and accomplishment and freedom?
   
   What say you?
   
   GA

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      wildernessposted 9 years agoin reply to this

      Easy.  After all, the government wants money and knows better than you do what should be done with it (per Obama).  That makes it all right, just as tax rates of 90% are.

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         gmwilliamsposted 9 years agoin reply to this

         +1,000,000,000,000,000,000,000!!!!!

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      promisemposted 9 years agoin reply to this

      I struggle with that one quite a bit.
      
      If a core principle of Republican philosophy is merit, then why should children inherit anything that they didn't earn?
      
      But if a core principle is freedom of choice, a person should have a right to do with their money what they want.
      
      I just don't see an easy answer.

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         GA Andersonposted 9 years agoin reply to this

         I can understand why it might be a struggle for you. If it helps, I was looking at it as a concept, not a Repub or Dem issue.
         
         Your principle of freedom thought is more in line with my reason for posing the question. The American concept of work hard to improve your life and offer a better life to your children. I don't see that as a Left or Right issue.
         
         Quill offered a reasonable point about untaxed capital gains value in estates, but I still see an estate tax as a governmental money grab. (I think I will go back and edit my response to him and wonder why not a threshold to recoup those untaxed gains in the lifetime of the estate owner)
         
         It would be interesting to hear you say more to the question without a Left or Right condition.
         
         GA

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   3. 68

      Quilligrapherposted 9 years agoin reply to this

      
      Good evening, Gus. What a patriotic question to ask. I can almost hear John Philip Sousa’s band playing in the background.
      
      Are you simply asking for my opinion or are you going to put me down again because I back up my remarks with facts?
      
      I can think of many reasons that justify an estate tax but some, like the rapidly growing wealth gap in the country, are highly subjective and too dependent on ideological perspectives. Therefore, allow me to offer one valid justification that is both objective and factually sound.
      
      Unrealized capital gains account for a significant proportion of the assets held by large estates. According to data gathered by the Federal Reserve Board, an average of 55 percent of the value of estates worth more than $100 million is unrealized capital gains that have never been taxed. For estates valued between $5 million and $10 million, the average amount of unrealized capital gains is about 32 percent.
      
      Without the estate tax,  a huge amount of capital gains, ranging from a third to a half of all qualifying estates, would face no tax of any kind: no income tax, no capital gains tax, nada! Keep in mind that an estate’s assets pass to the next generation at current market value and not at the cost basis. Therefore, with no estate tax, heirs would never be taxed on those capital gains either. Over generations, wealthy families would escape from ever paying taxes on massive amounts of wealth. {1}
      
      
      {1} http://www.cbpp.org/research/policy-bas … estate-tax

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         ahorsebackposted 9 years agoin reply to this

         Perhaps you can justify an estate tax simply for justifying all taxes !
         
         Your justification of estate dollars "never "being  taxed is wrong .  If a man has saved or earned a net wealth he has been taxed over and over and over again .  Just how many times Should a dollar be taxed ?
         
         How wrong you are to assume an inherited dollar isn't taxed . It sure is if it's declared income .    savings or dividends .  Or spent on anything down the road from inheritance !
         
         I believe you are for all taxation , or you might  admit this .

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            Quilligrapherposted 9 years agoin reply to this

            Usually, an estate’s “unrealized capital gains” have not been previously taxed.   
            

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            GA Andersonposted 9 years agoin reply to this

            Hey there guy,
            
            I won't answer for Quil, but I will steal some of his ammo. You are both right. The increased estate value is taxed prior to becoming an estate, through increased property taxes. That is where you are right. But, the increased value of the estate has not been taxed as capital gains, which is what increased capital evaluation is, so Quil is also right.
            
            I will let him take it from there.
            
            GA

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               wildernessposted 9 years agoin reply to this

               I read his post as to stock holdings, not real estate paying yearly real property taxes.  As such there has been no taxes on any gains not taken as of the death.

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                  GA Andersonposted 9 years agoin reply to this

                  I read it to include more, but either way, both are still right. Taxes have been paid in the case of increased estate value, but not as capital gains.
                  
                  GA

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                     wildernessposted 9 years agoin reply to this

                     Outside of property taxes (either real or personal) what else might have been paid?  Am I missing something?

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                        GA Andersonposted 9 years agoin reply to this

                        Yep, you are missing the question of what justifies an estate tax.
                        
                        GA

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                           wildernessposted 9 years agoin reply to this

                           ?? Then I'm confused; I though Quill did a pretty good job of justifying at least some of it.  Income to the deceased that had never been taxed and thus should be.  Capital gains on investments that had never been taken and thus never taxed.  Real, actual gains that survivors got the benefit of.

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                              GA Andersonposted 9 years agoin reply to this

                              Once again, Yep. You are confused. The question is the "rightness" of taxing the assets of the dead. If the untaxed status of the capital gains in an estate is the rational, then why not just tax it while the estate owner is alive? That addresses the "taxable money" question. Just say, "Hey, your money has increased x%, so gimmee. But since that is politically unpalatable, we (the government), will just wait until you die and then take it.
                              
                              Otherwise you are saying that I can work my butt off to help give my kids a better start in life, as long as I am willing to put my government before my kids. Yep, that is the American way.
                              
                              GA

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                                 wildernessposted 9 years agoin reply to this

                                 I don't see it that way.  It hasn't been taxed because he (the corpse) never laid hands on it.  It was only paper notations until he withdrew it, whereupon it would be taxed.  But he didn't withdraw it, so no taxes.
                                 
                                 Leaving the heirs with a large capital gains tax that never gets paid.  Seems like that should be taxable.  Sure, we could require a calculation of net worth each year and tax the difference from last year (I know, that's simplistic, but you get the idea), but we choose not to.  We wait until it is "cashed in", or withdrawn in real $$, whereupon we tax it - whether the corpse pays or the heirs seems irrelevant.

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                           2. 82

                              GA Andersonposted 9 years agoin reply to this

                              Quil did do a good job. Good enough to cause me to reconsider my opinion. Too good in fact. Since I am sure he will see this, I will repeat my accusation that his link was a time thief!
                              
                              6+ hours so far reading on just that one topic. From the Plecnik research paper, to a follow-up link to an earlier Plecnik article describing Thomas Jefferson's agreement with the social and economic dangers of inheritance dynasties,  to another essay about Paine's agreement with Jefferson's thinking, to another link pointing to Adam Smith's writings influencing Jefferson's philosophies. All that was bad enough, but then a Smith link lead to a couple more hours reading parts of Smith's The Wealth of Nations, (still not done with that), and down and down...
                              
                              See what I mean about the dangerous black hole of link chasing.
                              
                              ps. I was serious about my wife questioning what I was spending my time reading. I had to explain why I was reading Smith, but she just gave me a look I am all too familiar with and walked away. *sigh
                              
                              GA

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                                 wildernessposted 9 years agoin reply to this

                                 I haven't even read his links, but had never thought about inherited dynasties.  It is indeed a sobering thing to consider, and we DO have just such dynasties in the country.  "Old" money everywhere, and highly venerated.

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                                    GA Andersonposted 9 years agoin reply to this

                                    The point that surprised me most was the agreement of some of the founding fathers. It served to increase my respect for their ambitions for the constitution they were creating.
                                    
                                    The thought of seeing something nationally negative in the fruits of successful personal achievement, and the conservative ideology of deserving to own and enjoy those fruits is causing me to give some deeper thought to some concepts I have usually accepted as naturally fair and just.
                                    
                                    It hasn't upset my apple cart. I am not starting to glow blue, but it is giving me another measuring stick to use.
                                    
                                    GA

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                                       Quilligrapherposted 9 years agoin reply to this

                                       Hi Gus.
                                       
                                       Is it possible that your time was not really stolen but wisely invested and your new measuring stick is, in fact, your first dividend?
                                       

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                                          GA Andersonposted 9 years agoin reply to this

                                          Hey Quil, I could say simply; "Of course you are right," but that would steal, (from me), an opportunity to display the greatness of my wisdom, the depth of my wit, and the expanse of my humility (smile)
                                          
                                          Or I could be mischievously vague with a reference to one of Hamlet's most famous lines as an answer to your question.
                                          
                                          Or I could just admit that my grumbling is meant to camouflage the pleasure it gives me to take advantage of opportunities to correct my own opinions and increase my knowledge. I mean, don't most folks hate to admit they are wrong, and insist that they be drawn over the coals to force them to change their mind? How would it look if folks knew I welcomed the chance to ensure I don't make the same mistake twice?
                                          
                                          I get great enjoyment from these forums. And I have benefited personally from some of my interactions here. But keep that under your hat, the other posters might start demanding compensation for their help.
                                          
                                          GA

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                                          1. 68

                                             Quilligrapherposted 9 years agoin reply to this

                                             

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      2. 88

         wildernessposted 9 years agoin reply to this

         Good point!  Certainly a valid reason (IMO) for taxing at least a portion of estates.

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      3. 82

         GA Andersonposted 9 years agoin reply to this

         Hello Quill,
         
         I do recall taking issue with your facts once. I remember it being over what I considered a silly Politifacts source concerning broken Obama promises. In a discussion about promised governmental actions, your supporting list included such items as promising his girls a dog. (or something like that).
         
         If that is you reference then, yes, it was "my bad." Otherwise I don't recall any conversations where I put down your facts. Debated maybe, but I don't think of that as putting you down. I will try a little introspection because it concerns me that something I said left you with that impression.
         
         But yes, it was opinion that I was soliciting. Link wars are useless. So to the point of your link.
         
         Your unrealized capital gains justification was not an angle I thought of. So, bear with me as I shoot from the hip, (and possibly stumble along the way), and offer a first thought.
         
         ..... OK, went out and had a puff...
         
         I was thinking about the concept, not its specific application, ie. there is a floor that triggers its implementation, so your point applies to it as a tax targeted at the wealthy - not everyone.
         
         My dad bought his home for around $29k, it is valued today, (64 years later), at around $180k - that is $151k of untaxed capital gains. That is a lot of money, but his estate did not meet the threshold for the Estate Tax.
         
         Following the unrealized capital gains angle, why should his estate be exempt just because he wasn't quite rich enough? It seems it could be said that the Estate tax is just a tax on the rich. I have a perception that proponents of this tax are of the group that wants "fairness" in life. Targeting someone just because they are rich doesn't seem quite right to me.
         
         It would be silly of me to mention the "family farms" that are lost to heirs because they could not afford the estate taxes and had to sell the farm, because you could then rightly point to Soros and Koch family type counter examples. Hmm...
         
         I will continue to think about your justification, but even though you have a valid point about the untaxed value, for now it still sounds like a money grab. The government couldn't legally get at it while the owner was alive, so they will just wait and get it when they die. Nope, doesn't sound right to me.
         
         You mentioned other justifications, let's consider another while I look for flaws in my thinking on this one.
         
         ps. Sousa can stir the heart can't he. Maybe those that proclaim paying taxes is a patriotic duty were listening to a Sousa playlist when contemplating an Estate Tax. Hmm...
         
         GA

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            Quilligrapherposted 9 years agoin reply to this

            I have to agree with you, Gus. It not only would be silly, but it would also be untrue.
            
            Not one American farming family has ever lost the family farm because of the estate tax. Just for emphasis, please allow me to repeat that: Not one American farming family has ever lost the family farm because of the estate tax.
            
            In 2001, David Cay Johnston, then a writer for the News York Times, won a Pulitzer Prize for his work exposing this phony legend. Yet, this myth is repeated even today. {1}
            
            {1} http://america.aljazeera.com/opinions/2 … farms.html

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               GA Andersonposted 9 years agoin reply to this

               Well damn Quil, I know I said I wouldn't "put you down" for your facts, and I did refrain from actually using those lost farms as an example, but...
               
               Whew! I stayed true to my word on the former and dodged a bullet on the latter. My only saving grace, (I know there is a straw here somewhere), is that I did say I was "shooting from the hip."
               
               Your David Johnston link sent me down one of those link chasing black holes that 5 or 6 links later led me to another Johnston article relating some of the Founding Fathers thoughts on inheritance dynasties.
               
               Don'cha just hate it when facts get in the way of a good sounding opinion.
               
               Now, if I can just get past the gut instinct that it just ain't right to tax someone after they die...
               
               Sometimes the only honest choice is to admit you are wrong and move on.
               
               Mea Culpa.
               
               GA

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               1. 68

                  Quilligrapherposted 9 years agoin reply to this

                  Hey there, Gus. I think you should give your gut instinct a break. The inheritance tax is a wealth tax that has a legitimate place in our taxing structure. The good news is that it is a tax imposed only once in a lifetime and affects only 2 percent of all estates. I can live with that!
                  
                  Trying to judge taxes for “rightness” is an impossible task. The objective in the aggregate is to strike a balance across society so that the powerful do not shift the  burden of funding the government onto those least able to bear it.
                  
                  Taxes must also strike a balance between what is practical and what is fair. In the end, this is more of an art than a science. For example, many would argue for an individual head-tax as the fairest tax of all because it places the tax burden on each and every citizen equally.  However, despite its fairness, it is utterly impractical since in practice it is impossible to raise enough revenue to fund our government from a head-tax alone.
                  
                  John T. Plecnik, Assistant Professor, Cleveland-Marshall College of Law, published an article proposing a wealth tax that would comply with US Constitutional requirements. As an added bonus, he includes an in-depth look at the various goals and methods of taxation in the US that I found as a layman to be an eye opener. I recommend it. I also suggest that you read footnote 65 found on pages 494-495. It relates how wealth taxes were administered and challenged in ancient Athens. It is an interesting read. {1}
                  
                  Thank you, my friend, for launching this thread although I don’t think it will ever prove your gut instinct is “right” or “wrong.”
                  
                  Stay well and enjoy your evening.
                  
                  {1} http://jay.law.ou.edu/faculty/jforman/A … kPaper.pdf

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                     GA Andersonposted 9 years agoin reply to this

                     Quil, your link to the Plecnik article is a time thief. I don't know whether to thank you or damn you.
                     
                     But it was an interesting, and on first read, persuasive perspective. I found many points that I will need to explore further to decide whether I can agree with his certainty of his "modest" proposal. As for now I am off to search for his Infra Notes. There were several mentioned that I want to learn more about.
                     
                     I can say that following his reasoning, it appears to me that the current Estate Tax is a wealth tax, but structured as it is to pass constitutional muster.
                     
                     While I am on that journey I will take a few minutes to forward, to you, a list of the home improvement tasks that your link has interrupted. Several in mid-process. I will also give my wife your address so you can explain to her what the hell I am doing spending so much time staring at the monitor reading research papers on wealth tax proposals. She doesn't believe my explanation.
                     
                     ps. you were right about the Athenian example appealing to my interests. What a classic example of a "put up or shut up" challenge. I like it.
                     GA

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      Old Poolmanposted 9 years agoin reply to this

      The current estate tax is the final insult our government can enforce on we citizens.  It is a form of punishment they can levy on all those who refused to become dependent on the government for their basic needs.
      
      But this (Death Tax) will gradually die a natural death as more and more of our citizens climb on the entitlement train.  When the train stops for them, they will have no estate to tax other than a few nickles in their pocket and five or six big screen TV's.
      
      Only in America is a citizen punished after death for living a productive life and acquiring a few assets along the way.  If we really think about how many times every dollar is taxed, this last possible tax is even more of an insult.

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         gmwilliamsposted 9 years agoin reply to this

         +1,000,000,000,000,000,000,000,000,000,000,000!!!!!

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         GA Andersonposted 9 years agoin reply to this

         It really is good to see you pop in Old Poolman, I miss our discussions.
         
         Even though I mostly agree with your response, it is a very cynical one. I too believe our "entitlement" sector will continue to expand as our government becomes more and more the go to provider of economic security, but I do not see the extinction of individual success stories that you do.
         
         There was recently a Neil Cavuto segment with a college girl that included her statement that there will always be 1%ers and even though the entirety of her proposition was naive BS, on that point I think she was right.
         
         Your last paragraph;
         "Only in America is a citizen punished after death for living a productive life and acquiring a few assets along the way.  If we really think about how many times every dollar is taxed, this last possible tax is even more of an insult."
         OK, I admit that is an emotional exasperation, but I think many people feel the same way. Including me. Especially the "insult" part.
         
         GA

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   5. 84

      gmwilliamsposted 9 years agoin reply to this

      Slippery slope, I say.  The EXTREME Liberal, Left, and  Far Left want "equality of income".  This is the communist premise that there should be no rich while there are poor.  This is an update of the communist manifesto.   The premise of the EXTREME Liberal, Left, and FAR Left is that money belongs to all, not just some   The current government including Obama is flooded with the abovementioned people who loudly proclaim, even espouse the communist philosophy.  Totally insane if you ask me.  This is the 1960s magnified-hippies, revolutionaries, and radicals have taken over our government pure and simple!
      

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         Old Poolmanposted 9 years agoin reply to this

         There are countries where they could move that already have the system they think they want.  I wish they would just move to one of these countries and leave ours alone.  Perhaps we could even get government funding to pay for their trip.

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            gmwilliamsposted 9 years agoin reply to this

            Exactly, that's an ....EXCELLENT IDEA.  They HATE America so much.  Let's see how they will fare in other countries,hmmmmm......

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   ahorsebackposted 9 years ago

   Americans have morphed into tax paying sheep  !   One look at local , county , state tax bases  is enough for the average person to say .        Yup, hat's just about enough .     The problem has been culturally  evident in that  if you ever  attend   local tax  meetings , town hall meetings etc........You would see a resounding  flock mentality in okaying taxes .
   
   I believe it began with responsible  needs of a society  ,  in other words .  The older generations would have thought . "well if they ask for more money , then they must need it ". Pure honesty in 'paying their fair share .      today though , it's all different , now it's about   the inevitable creeping up  factor  ,  if it's ten percent this year , next year it will have to be   eleven or twelve percent .
   
   Often I contemplate just how many times a dollar that I earn in a paycheck is  actually taxed ?   If I pay a eighteen percent income , FICA , state ,federal ,local tax , shouldn't that be enough ?    But then the remaining income pays again and again , gasoline  taxes  , property ,  fuel oil , natural gas , highway tolls  ,   real estate  taxes ...........Where does it end , not until we hear a resounding "Enough ".

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