# Estate Taxes



## mrhnau (Jul 29, 2006)

In this thread there is discussion regarding Minimum Wage and a mention of Estate Tax. I was curious to see people's opinion on the Estate Tax. Do you think there should be an Estate Tax, or as some people call it, a Death Tax? If so, why? If not, then why not?


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## michaeledward (Jul 29, 2006)

One relavant fact.
Why Pays an Estate Tax?

In 2006, the wealthiest 0.27% of Americans are the only ones who pay estate taxes. ​For more than 99 out of 100 citizens, this discussion occurs only in the theortical arena. If you are one of those .3% of Americans who will be effected by this program, please let us know.

For the rest of us, please be congizant of the fact that government programs are not being eliminated to balance the cuts from the Estate Tax repeals. The 20 billion dollars annually being cut by repealing the estate tax are being added to our tax burden. 

Source ... http://www.faireconomy.org/estatetax/ETFAQ.html


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## evenflow1121 (Jul 29, 2006)

mrhnau said:
			
		

> In this thread there is discussion regarding Minimum Wage and a mention of Estate Tax. I was curious to see people's opinion on the Estate Tax. Do you think there should be an Estate Tax, or as some people call it, a Death Tax? If so, why? If not, then why not?


 
States, usually do not carry Estate Taxes what they usually have is a carry over from the federal estate tax, but they can carry them.  Estate Taxes can get very nasty after your first $2 Million in cash and assets.  I think it should be done away with, it is part of old english law to tax you on your way out anyways seems ridiculous.  It is a stupid law, imo but it hardly affects any of us.  If you do have assets within the vicinity of $2M or hell $1M even if in properties not necessarily cash, you may want to consider a an estate trust rather than a will.


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## mrhnau (Jul 29, 2006)

michaeledward said:
			
		

> One relavant fact.Why Pays an Estate Tax?
> 
> In 2006, the wealthiest 0.27% of Americans are the only ones who pay estate taxes.​






> In its current form, the estate tax only affects the wealthiest 2% of all Americans.



This is directly from the IRS

More when I have time.

​


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## elder999 (Jul 29, 2006)

This tax, like many  others, is easily avoided or minimized, even by those in the lowest 0.1% of that 3%.


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## Phoenix44 (Jul 29, 2006)

I wish I earned enough to pay the estate tax.


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## michaeledward (Jul 29, 2006)

Phoenix44 said:
			
		

> I wish I earned enough to pay the estate tax.


 
The Estate tax is not based on earnings, but rather assets. Most who are subject to this tax, need not work at all. Their wealth is inherited. Somewhere in their lineage, someone earned and acquired that wealth, but it does not need to be those who are subject to this tax.


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## crushing (Jul 29, 2006)

Phoenix44 said:
			
		

> I wish I earned enough to pay the estate tax.



I doubt you want to be in the situtation that would require you to pay the estate tax (aka the death tax).


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## FearlessFreep (Jul 29, 2006)

I'm against the Estate Tax on  principal without worrying about who it applies to, simply because a) what's being taxed has, at leats in theory, already been taxed and I really hate the way the government tries to double dip and get in on the action on any transaction and b) I'm against most taxes


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## FearlessFreep (Jul 29, 2006)

_ The 20 billion dollars annually being cut by repealing the estate tax are being added to our tax burden._

No, because my taxes are not going up to offset the lost money from Estate Taxes.  Either the government doesn't have the money to pay for their obligations and they cut that spending,  or they borrow more to cover it (which is eventually going to come due, but that's a different issue)  

It's not like the total tax revenue is established to be $X dollars so if one tax is cut for someone, it raises the rest of the tax for someone else.


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## michaeledward (Jul 30, 2006)

FearlessFreep said:
			
		

> No, because my taxes are not going up to offset the lost money from Estate Taxes. Either the government doesn't have the money to pay for their obligations and they cut that spending, or they borrow more to cover it (which is eventually going to come due, but that's a different issue)
> 
> It's not like the total tax revenue is established to be $X dollars so if one tax is cut for someone, it raises the rest of the tax for someone else.


 
I would encourage you to spend some time on this as a thought experiment.

You have tried to brush off the entire discussion by telling us 'Deficit Spending is a different issue' ... which it is not. 

You are correct that the 'total tax revenue is not established to be 'X'. However, the total of government outlays is established yearly to b 'Y'. No matter how one devises it, X must equal Y.

If Government Spending is $100.00 annually. 
Then Government Revenue must be $100.00 annually.
If the Government revenue equals only $90.00 this year, then a $10.00 Debt is carried forward (interest begins to accrue).
If the Government cuts the Estate Tax by $5.00 forever, the amount Government spends does not change. 
Either Spending needs to drop to match that eliminated revenue or,
That $5.00 is distributed over the population not paying the Estate Tax.

If the Government rolls that Estate Tax deficit forward, as debt, the burden now falls on future tax payers.



One argument Conservatives have made in the past, is they are for 'smaller government', theoretically because this creates small tax burden. Under the current Congress, taxes have been cut, and the size of government (and related expenditures) has increased. 

See John Dean .... Conservatives without Conscience.


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## elder999 (Jul 30, 2006)

michaeledward said:
			
		

> The Estate tax is not based on earnings, but rather assets. Most who are subject to this tax, need not work at all. Their wealth is inherited. Somewhere in their lineage, someone earned and acquired that wealth, but it does not need to be those who are subject to this tax.


 
The first sentence is somewhat true, but the rest of what you've said here is somewhat prejudicial. One of the ways of avoiding some of the burden of estate tax is setting up an AB trust, and making one's heirs the beneficiaries of that trust.  One of the specifications of that trust can be that one has to work or go to school to access the trust-this has been the case for me, my wife and a few other people I know who have been or will be beneficiaries of a trust.  There are also several legitimate exceptions built into the estate tax for farms and businesses-traditionally inherited property, and often property where the heir is already working in the business, and needs to continue to do so: a business worth a little more than $1 million (the current maximum exempt from the estate tax) might not be worth very much in terms of income. Many restaraunts, for example, can be worth closer to $2 million in assets/value, but only supply their owners with an income of close to $100,000/year-not bad, but hardly wealthy, especially considering that a restaurant owner can easily put in 80 hr. weeks regularly.That income is effectively cut upon inheritance by the estate tax: if the business is worth $2 million, then the heir has to pay 37% of $1 million, or $370,000-this can, obviously, be crippling and unjust.


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## michaeledward (Jul 30, 2006)

Elder999, those arguments are true, on paper. 

But, the reality of the Estate Tax, is that for years people have been looking for small businessmen and farmers that were hurt by the Estate tax, and they are not to be found. The Estate Tax affects the very wealthy, not the run-of-the-mill mom and pop shop. 

We are familiar with the Oracle of Omaha's recent donation to the Bill and Melinda Gates Foundation. For decades, Mr. Buffet has refused to even speak with any charities. A few weeks back, he gave 37 Billion dollars to a charitable organization. This, of course, takes those billions out of the 'Estate Tax' category, doesn't it? 

What would happen, if that tax incentive to donate to charitable organizations was removed? Might some charitable giving be reduced? 

Instead, that wealth would pass unhindered to the progeny of those who created the wealth (Paris Hilton). That way lies 'Oligarchy'.


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## elder999 (Jul 30, 2006)

michaeledward said:
			
		

> Elder999, those arguments are true, on paper.
> .


 
Those arguments could be true for my children, Michael-and, the fact is, I mostly agree with you, and said so: the estate tax won't effect Bill Gates' heirs in the least, not only because they could afford to pay it  in its entirety and still have more money than God, but because he has likely structured things so that this tax is minimized-although he may be planning on pulling a Buffet himself.  

I guess it was the "most who are subject to this tax need not work at all" that tweaked me-you'd be surprised at how many people who inherit wealth are obligated to work-and how many of us view work as a necessity rather than a burden, trust structure notwithstanding.


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## michaeledward (Jul 30, 2006)

elder999 said:
			
		

> Those arguments could be true for my children, Michael-and, the fact is, I mostly agree with you, and said so: the estate tax won't effect Bill Gates' heirs in the least, not only because they could afford to pay it in its entirety and still have more money than God, but because he has likely structured things so that this tax is minimized-although he may be planning on pulling a Buffet himself.
> 
> I guess it was the "most who are subject to this tax need not work at all" that tweaked me-you'd be surprised at how many people who inherit wealth are obligated to work-and how many of us view work as a necessity rather than a burden, trust structure notwithstanding.


 
Certainly, my words, although chosen carefully, can tweak any of us who have to work each week to pay the rent or mortgage. I think I saw a headline on Slate earlier today that said 'Nepotism really does run American Companies'. 

But, really, Steve Forbes does not need to run a magazine, or for President, or do anything. His grandfather, or great grandfather made a mint, and Mr. Forbes can live off of it. 

Paris Hilton ... has she done *anything* for society, other than that night vison film? 

If the estate tax is affecting resturants, then modify the law to exempt those small businesses. But be careful not to create loopholes for Mr. Trump or Ms. Hilton.

Recently, I have begun to gain a different understanding of the phrase "Let them eat cake" ... from the French Revolution. I never quite understood that phrase to represent the 'out-of-touchness' of the monarchy. 

It seems to me, we working slobs who argue against the Estate Tax (or throw around the phrase Death Tax), are those who bought into the 'Let them eat cake' worldview - believing in our wealthy society there are none that go without because that is the only way they can go.


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## elder999 (Jul 30, 2006)

michaeledward said:
			
		

> It seems to me, we working slobs who argue against the Estate Tax (or throw around the phrase Death Tax), are those who bought into the 'Let them eat cake' worldview - believing in our wealthy society there are none that go without because that is the only way they can go.


 
Well, I'm *not* a "working slob," and, while far from the Steve Forbes, David Watson, Bill Ford, or Paris Hilton category, I probably am someone of whom you'd say "...doesn't need to work at the lab, or teach school or anything," if you were aware of simply the value of my over several generations old inheritance. Much as the likes of Paris Hilton are simply offensive-the "idle rich"- there are others who are quite productive-both  on their own merits and as a product of that inheritance. Again, I largely agree with you, though-their is no real need to cut the Estate Tax, as it is, largely affordable and avoidable, with a few minor exceptions.


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## crushing (Jul 30, 2006)

michaeledward said:
			
		

> It seems to me, we working slobs who argue against the Estate Tax (or throw around the phrase Death Tax), are those who bought into the 'Let them eat cake' worldview - believing in our wealthy society there are none that go without because that is the only way they can go.




Perhaps those 'slobs' with whom you disagree don't understand why there is a different set of rules.  Yes, this is a case where there is actually a different set of rules.

Also, just because one doesn't benefit from the estate tax, doesn't mean they don't see a problem with having two sets of rules, even if the one set of rules is to the detriment of the very wealthy.

I used the phrase 'Death Tax' in my previous post to help jokingly impress upon Phoenix44 the situation required to pay the Estate Tax (are there situations where a death isn't part of the Estate Tax?).

Best Regards,
a slob


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## Don Roley (Jul 30, 2006)

michaeledward said:
			
		

> Paris Hilton ... has she done *anything* for society, other than that night vison film?



And who are you to determine what her parents can and can't give to her?

I see this in a lot of arguments about this matter. People take some rich slob that has inherited their wealth and let loose with barely concealed envy of their wealth and greed to get their hands on it.

But the fact is that as a parent I want to make my kids lives as wonderful as I can. Every cent I earn I want to pass along to them. I am a man of simple means and wants. Anything I do to make myself more than just average would be to pass along to my kids in some way.

But then somebody comes along and takes one or two examples out of the millions of people that inherit something from their parents and determines that their judgement on their charecter is more important than the fact that I earned the freaking money and will do with it as I damn well please!!!

That is the sort of laws I want. I want laws that will allow me to use the money I earn with the sweat of my labor and skill as I please. If I want to give it to my kids, what kind of elitism does it take to say that I can't because my choices are wrong? Heck, if I don't have kids and want to spend it on stupid things, what is it anyone else's place to say that I can't?

I pay taxes on what I earn. After I pay that, I should be able to spend it or give it without any more expense. If I use it all in a liquor store I will only sales tax, if any. But if I want to leave it to my kids without some complicated scheme, I will get taxed again. That is wrong in principle on so many levels. That is why I oppose any law that punishes me from giving money to my kids.

And if anyone does not like the idea that I give it to my kids, or even to Paris Hilton if I so choose, then I would remind them that it is not any concern of theirs what the hell I do with the money I earn.


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## michaeledward (Jul 30, 2006)

Don Roley said:
			
		

> Every cent I earn I want to pass along to them.


 
While I haven't checked, I believe there are places in the world where you can do just that. Generally, there is an accompanying title with this ability ... things like 'Lord', 'Duke', and 'Prince'. 

My country was established in a manner in which each generation is able to undertake efforts for itself, and to step away from the inherited positions within society. While this ideal is never going to be reached, we have put in place, mechanisms to prevent the creation of a stratified, oligarchy.

In my country, if you are a man of modest needs and wants, you can pass every cent you earn to your progeny. Enjoy.


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## FearlessFreep (Jul 30, 2006)

_
You have tried to brush off the entire discussion by telling us 'Deficit Spending is a different issue' ... which it is not._

Not intending to 'brush it off', because it is a complicated issue but not really material to the Estate Tax and so should be looked at seperately.

You're 'thought experiment' is extremele simplistic and leaves a lot of possibilities out.


_
If Government Spending is $100.00 annually. 
Then Government Revenue must be $100.00 annually._

Nope, doesn't happen for the govt, doesn't happen for the citizens.  The difference between income and spending is either 'savings' or 'debt', depending on what direction it goes, and eventually that debt has to be paid off.  Only difference is that the gogt doesn't (yet) have creditors knocking of the door demanding payment.  However,the govt doesn't really follow a pattern that how much they spend matches how much is collected in taxes

_If the Government revenue equals only $90.00 this year, then a $10.00 Debt is carried forward (interest begins to accrue)._

True.  Like using your credit card to buy more this month  then you earned, it carries forward until next month.

_
If the Government cuts the Estate Tax by $5.00 forever, the amount Government spends does not change. 
Either Spending needs to drop to match that eliminated revenue or,
That $5.00 is distributed over the population not paying the Estate Tax.
_

And this is the part that is simplistic and wrong.

Neither revenue nor spending are constant from year to year.  Spending changes from year to year by quite a lot, and in theory there is nothing stopping the govt from cutting there spending to $90 (hey, it has happened, stranger things have...)  But the big variable is revenue.  Tax Revenue varies from year to year based on population, health of t he economy, changes in tax law, etc... (and at least one school of thought that if each person's tax contribution as a percentage of ther income goes down, then that allows more money to be put into the economy directly by the people, which has the effect of increasing the total tax revenue)

You want  X + Y = C where C s a constant so that if X changes, then Y must change in the opposite direction to match.  The problem is that C is not a constant, and Y varies as well, independently from both X and C.   

_

In my country, if you are a man of modest needs and wants, you can pass every cent you earn to your progeny. Enjoy._

Don't descriminate.  Why should it matter if you are 'of modest' means?  The last thing I want is for the govt to try to determine if I am 'of modest means' or not.  (For the record, I am the single income earner in my family of eight, and I currently make $75K a year; well above poor, far from rich)  I'm not going to look at you differently simply  because you are poor; neither will I hold it against you if you are rich  As an aside, why do we have sympathy for people born in poverty but disdain for people born to wealth?...far as I know neither had much choice in the matter.  I'm not going to sit back and tell someone "hey, I think you can afford to pay more so I htink you 'deserve'to pay more"  Who am I to say?  And what happens when someone looks at me with the same mentality?   There seems to be a mentality that "It' ok to treat one group of people different, [because they can deal with it anyway so who cares]"  Why?  I guess it's easy to not consider if something is 'right' or not if the people who we are being unfair to can 'afford' it.  As an abstraction, if I give you a buck, why should the govt. insist on a piece of the action? 

I guess it seems to me like the govt looks around for more inventive places to grab some money from, people who have money are an easy target.  Just 'cause you have money doesn't mean I'm okay with the government deciding they can take it from you. 

The Estate Tax is pretty silly because it's a tax on money that's already been taxed.  (I earned $1M, I pay income tax...I invest it and make $1.5M, I pay capital gains tax, I give you $1.5M, you have to pay Estate Tax...how many times is the govt. going to grab a piece of the action?  Especially if you take whatever is left of that $1.5M and buy a house...and pay sales tax...and continue to pay property tax every year)


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## michaeledward (Jul 30, 2006)

Well, first, I have no idea where your variable 'C', came from, nor any idea what it represents. 

You also say that the government does not need to follow the rules of income and outflow over periods of time, but I don't see where you explain how and why the state is exempted from this rule. 

Yes, revenues and expenditures change year over year, but if there is a running deficit, revenues will be required to pay interest, and the economic theory is the debt will negatively impact the economy via intrest rates. Now that the worlds currency has been disconnected to any tangible asset (we were once on the gold standard, yes?), certainly the government can just print money ... except that is deflationary, which introduces another problem. 


What is the purpose of the Estate Tax? 

I posit, the Estate Tax is in place to prevent the accumulation of wealth in the hands of a few families. With wealth comes power, to influence politics, communities, and business. Working to restrict that concentration of power, is a valuable, and I believe uniquely American, endeavor.  

So, how about this, rather than the Estate Tax going to the Federal Government of the United States, - cuz that seems to be what is bugging you - let us mandate that the 20 billion dollars collected each year instead go to ... oh, ...Unicef. We'll still need to cut federal spending to match the lost revenue, but now we are preventing, or slowing the creation of an oligarchy.

Lastly, the comment about 'a man of modest means', was directed to Don Roley, because he described himself as such. I meant not to describe anyone in a manner deemed by them or others as derogatory.


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## Rich Parsons (Jul 30, 2006)

michaeledward said:
			
		

> One relavant fact.Why Pays an Estate Tax?
> 
> In 2006, the wealthiest 0.27% of Americans are the only ones who pay estate taxes. ​For more than 99 out of 100 citizens, this discussion occurs only in the theortical arena. If you are one of those .3% of Americans who will be effected by this program, please let us know.
> 
> ...




While I will accept these numbers as the most recently I think people are still remembering afwe years to a decade ago when the values were much lower and many more people would pay.

But, I think this is still an issue for the future, for those who 401K and other retirement plans that have sufficient amounts of money that maybe transfered in the future. Mind you this will not effect me as my parent does not have this type of money.  But if it only 0.27 percent of the people and I happen to know at least three retired (* non-related *) couples with that much saved who worked for a living and did very well for themselves. So that would mean that all the rest I know and the next ones I meet to 997 would all have less. So, I agree that the numbers might be fine today, but a review from time to time might be in order. 

Then again a straight flat tax might get rid of people thinking that only the rich get a benefit or have to pay. (* Of course there would be a lower end for the flat tax that would not be applied. *)


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## FearlessFreep (Jul 30, 2006)

​ _Well, first, I have no idea where your variable 'C', came from, nor any idea what it represents._

It's just an asbstract idea to repersent a principle, but loosely, 'C' is 'spending', 'X' is 'taxes from one source' and 'Y' is taxes from another source' 

_
You also say that the government does not need to follow the rules of income and outflow over periods of time, but I don't see where you explain how and why the state is exempted from this rule._

I didn't say they were, but t he at like they are, at least over short terms.  

The problem with your assesment is that you assume outflow is constant and that income *will* equal outflow.  Outflow is not constant, and income is made of *many* sources that are constantly changing, so that a change in one source of income is not, or does not have to be, directly and explicitely offset by a similar change in in another source of income.

Or to put it bluntly, to say that 'they' are getting a tax break (in Estate Tax) meaning  that 'you' will pay more is basically an appeal to envy

_
I posit, the Estate Tax is in place to prevent the accumulation of wealth in the hands of a few families. With wealth comes power, to influence politics, communities, and business._

Which is absurd on the face of it because if  that was truly the goal than the Estate Tax would be 100% and there would be no inheritance and every generation would start over.  It's also absurd because if I leave you $1B and you have to pay, say, 10%, then that accomplishes nothing to stop you from exercising your money for power.  The Estate Tax is useless to accomplihs what you claim it's purpose is (as is evidence by the fact that we still have a lot of families with a lot of money that continue to wield influence).

The purpose of the Estate Tax is just like the tax on winning the lottery or game show prizes.  Money is changing hands and the state wants a piece of the action.  That it is going from 'rich' to rich' simply makes it more palatable for everyone else to accept, and much more easy to exploit.

More importantly you are now talking about using Taxes in a punitive way to accomplish social engineering, and frankly it scares the hell out of me that the governement would cross that line.  If you tax me to give a portion of my money to someone else who has less..well that's a different discussion, but if you are taxing me *just* because I *have* money and you don't want me to have too much...or do with it what  I want..that's frightening.

_So, how about this, rather than the Estate Tax going to the Federal Government of the United States, - cuz that seems to be what is bugging you
_

Not at all.  What bugs me about it is that it's eing assessed at all.  I'm not bugged that the State is getting it, I'm bugged that the state is taking it.  That the state decides "well you can afford to pay than what you are already are so we'll find more ways to get some from you".  That the people this affects may have more money than me is immaterial to me.  That the State is making decisions like this over the citezenry really bugs me


_Lastly, the comment about 'a man of modest means', was directed to Don Roley, because he described himself as such_

Because it was Don's point that the freedom to use your money as you fit should be universal and not restricted to those whom the state sees as worthy; it's not the State's responsibility or priveledge to limit the rights of the citizens based on their wealth (one way or the other); it's not the State's job to limit freedom to those of 'modest means' and thne decide what constitues 'modest'


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## Don Roley (Jul 30, 2006)

michaeledward said:
			
		

> While I haven't checked, I believe there are places in the world where you can do just that. Generally, there is an accompanying title with this ability ... things like 'Lord', 'Duke', and 'Prince'.
> 
> My country was established in a manner in which each generation is able to undertake efforts for itself, and to step away from the inherited positions within society. While this ideal is never going to be reached, we have put in place, mechanisms to prevent the creation of a stratified, oligarchy.



Strange. I thought that in the country I was born it the ideal was _freedom_ to do what you wanted as long as it did not harm others. That includes using every cent you earn as you wish- like giving it to your kids. The problems my founding fathers had with royalty was in that the laws treated them differently than ordinary people- not that they were rich.

But the country *you* live in caters to the greed and envy of the many who want to take from the rich and put it under the control of the many- i.e. them. 

Fearless freep put it best when he said,



> More importantly you are now talking about using Taxes in a punitive way to accomplish social engineering, and frankly it scares the hell out of me that the government would cross that line. If you tax me to give a portion of my money to someone else who has less..well that's a different discussion, but if you are taxing me *just* because I *have* money and you don't want me to have too much...or do with it what I want..that's frightening.



In the country I want my kids to grow up it, the laws treat the rich and poor alike and the people tell the goverment what to do instead of the small elite trying to social engineer society.


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## michaeledward (Jul 30, 2006)

FearlessFreep said:
			
		

> _Well, first, I have no idea where your variable 'C', came from, nor any idea what it represents._
> It's just an asbstract idea to repersent a principle, but loosely, 'C' is 'spending', 'X' is 'taxes from one source' and 'Y' is taxes from another source'


 
Well, those were not my variables for X and Y.  Kinda makes everything else moot, doesn't it.


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## Rich Parsons (Jul 30, 2006)

michaeledward said:
			
		

> Well, those were not my variables for X and Y.  Kinda makes everything else moot, doesn't it.



ME,

I used to quote the dictionary to show what the definition of words I was trying to use in making a point while others were using a the same word in a manner not in the dictionary and expecting others to understand their point of view and get upset when people did not understand or agree.

So, please understand I am not trying to be a jerk, here when I ask, what were the definitions of your variables?


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## michaeledward (Jul 30, 2006)

Rich Parsons said:
			
		

> So, please understand I am not trying to be a jerk, here when I ask, what were the definitions of your variables?


 
Rich Parsons, from earlier in this thread ... post # 11.



			
				michaeledward said:
			
		

> You are correct that the 'total tax revenue is not established to be 'X'. However, the total of government outlays is established yearly to b*e* 'Y'. No matter how one devises it, X must equal Y.


 
The bold font letter 'e' in the post was omitted in the original ... a typo. I apologize.


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## FearlessFreep (Jul 30, 2006)

_Well, those were not my variables for X and Y.  Kinda makes everything else moot, doesn't it._

nope, because you're position was that if estate tax went down, tax burden for others went up because spending would be constant and therefore revenue had to be constant to match.   The phrase "x + y = c" was just a shorthand way of expressing , and therefore illustrating that fallacy of, what you had already proposed.

In your equation, or thought experiment, "C" was "$100" as the constant spending and therefore constant that revenue had to match.  Never mind that spending is *highly* variable and that correlation between spending and revenue with the US govt is pretty non-causal anyway

"X" was the estate tax that would  be cut  by 5$, requiring a corresponding increase in the other side of the equation

In your words (with my inserts)

_If the Government cuts the Estate Tax ( X) by $5.00 forever, the amount Government spends (C) does not change.

That $5.00 is distributed over the population not paying the Estate Tax.(Y)_

All I did was reduce the thrust of your thought experiment to an equation, to illustrate the fallacy of the argument


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## Rich Parsons (Jul 30, 2006)

michaeledward said:
			
		

> Rich Parsons, from earlier in this thread ... post # 11.
> 
> 
> 
> The bold font letter 'e' in the post was omitted in the original ... a typo. I apologize.



Thank you. 




			
				michaeledward said:
			
		

> I would encourage you to spend some time on this as a thought experiment.
> 
> You have tried to brush off the entire discussion by telling us 'Deficit Spending is a different issue' ... which it is not.
> 
> ...



Now correct me if I am wrong. If "X" is the dollars raised by what ever means and "Y" is the amount the Governement spends.

If "Y" is greater than "X" would not that value be the deficit for the year?

And as there is one then they do not always equal. I agree they should equal.


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## michaeledward (Jul 31, 2006)

Rich Parsons said:
			
		

> Now correct me if I am wrong. If "X" is the dollars raised by what ever means and "Y" is the amount the Governement spends.
> 
> If "Y" is greater than "X" would not that value be the deficit for the year?
> 
> And as there is one then they do not always equal. I agree they should equal.


 
If Y is greater than X, the Federal Budget would be in 'Surplus'. This happened under President Clinton (in no small part because of the Gingrich Revolution). When revenues exceeds expenditures, the State can pay off the debt it created in earlier years (Reagan's budgets for instance). As that debt is reduced, Federal interst payments are reduced, and monetary policy can be strengthened, lowering borrowing rates for all consumers. 

For individuals, there are times when carrying a 'debt' is a good thing; a college education, a mortgage. These expenditures are often best paid for by borrowing over a long term, because the value of the acquisition will carry over that long term. For this reason, 30 year mortgages are not a horrible idea. 

The Federal government does not have the ability to put any item on the books for the 'Long Term'. Each year, all expenditures must be considered. This is why the budget battles in Congress get so troublesome. Our Representatives have to revisit every discussion, every year. 



			
				FearlessFreep said:
			
		

> nope, because you're position was that if estate tax went down, tax burden for others went up because spending would be constant and therefore revenue had to be constant to match. The phrase "x + y = c" was just a shorthand way of expressing , and therefore illustrating that fallacy of, what you had already proposed.


 
If that is the way you diagram the problem? 

Try this .....

X is government revenue from all sources. 
Y is government expenditures.
D is government revenue from the Estate Tax (in charity, I will allow the variable for this factor to be D 
X = Y
X - D = Y​Both of these statements *cannot* be true (unless D = Zero; and currently, D is not equal to zero) 


Perhaps, I should not have used the term 'annually' in my thought experiment. Perhaps because of this term, you assumed a 'constant'. I certainly did not mean to imply there is a constant. And I don't think my text indicates a constant. What I think I implied, and actually said, was that Revenue and Expenditures must be in balance.

Certainly, there are times when the balance is carried forward. But to ignore an out of balance is not good monetary policy.


----------



## FearlessFreep (Jul 31, 2006)

_If that is the way you diagram the problem? _

*shrug*  That's the way you described the problem.

_
Perhaps, I should not have used the term 'annually' in my thought experiment. Perhaps because of this term, you assumed a 'constant'. I certainly did not mean to imply there is a constant. And I don't think my text indicates a constant. What I think I implied, and actually said, was that Revenue and Expenditures must be in balance._

You said... 

_the amount Government spends does not change._

That's your constant, 'does not change' and the rest of our argument rests on your assertion of that constancy

_

Try this .....

X is government revenue from all sources. 
Y is government expenditures.
D is government revenue from the Estate Tax (in charity, I will allow the variable for this factor to be D X = Y
X - D = Y​Both of these statements *cannot* be true (unless D = Zero; and currently, D is not equal to zero)_

If that's the way you want to express it, that's fine, because now it's your expression.

And the problem with your expression is that you used it to posit the idea that if D goes to zero than the tax burden of the 'rest of us' goes up, which is not true.   

First off, X is not Y on a year to year basis.  Be nice if it was, but it isn't.  Hopefully over a series of years it'll square out.  But  apresumption that X will be Y is false because, sadly, it just doesn't happen.  But before proposing that since X and Y are equal that therefore any change in X will be offset by another chnage in X to equal out to Y, you have to fix the problem that X is not usually Y to begin with.

Second, Y is not constant, it changes year to year.  So D could go to zero and if Y went down by the same amount, it would square.  Since tha amount we are talking about is $20-30B a year and you keep complaining  that the war in Iraq is going at $20B a week, I'm sure you could suggest some ways to drop Y by at least $20B a year ; )

Third is that X is made up of many components and they are all variable.  So taking D out of the components of X does not mean that one other compnent of X (my income tax, or yours, or the 'rest of us') has to go up.   My income tax is currently much higher than t was a decade ago simply because I make more money then I did then soin a sense, my 'tax burden' has gone up, but that's really not what you meant to imply when saying that the tax burden for the 'rest of us' would go up.


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## elder999 (Jul 31, 2006)

michaeledward said:
			
		

> What is the purpose of the Estate Tax?
> 
> I posit, the Estate Tax is in place to prevent the accumulation of wealth in the hands of a few families. With wealth comes power, to influence politics, communities, and business. Working to restrict that concentration of power, is a valuable, and I believe uniquely American, endeavor.
> 
> ...





Whenever I look at these things, I tend to ask myself what the Founding Fathers wanted. While your position on the Estate Tax most definitely echoes their intention that  there be no &#8220;American Aristocracy,&#8221; and while, by their days and even today&#8217;s standards, the richest men among them  would mostly have been considered &#8220;landed squires,&#8221; or upper-middle class, I find it doubtful that they&#8217;d have endorsed the idea of the Estate Tax any more than they&#8217;d have endorsed Income Tax. 

Furthermore, as I pointed out in my earlier posts on this matter, the Estate Tax has hardly done _anything_ to prevent the development of an American Aristocracy, vis a vis the Fords, Rockefellers, Kennedys, Trumps, Firestones, Watsons,  and, erm, Bushes&#8230;..and, if it is not repealed, it will continue not to do so.Granted, those people inherited wealth that was largely initially generated prior to the establishment of the estate tax in 1916, but the fact really is that the only people that it really _taxes_ are the ones that I mentioned earlier- people with inheritable assets in excess of $1 million who are not necessarily wealthy, but simply upper-middle class, the same sort of people as the Founding Fathers. If Bill Gates did not intend to follow the example of Warren Buffet (and I have every reason to believe that he will) and chose to do so, there are enough ways to minimize this tax so that his children would still inherit vast wealth-indeed, if he chose to do nothing whatsoever to minimize the estate  tax burden for them , his children would still inherit vast wealth-I don&#8217;t think anyone could inherit 55 sum odd percent of his fortune, and quibble about losing %45  or so to the government&#8230;.strike that, they probably *would*, but they&#8217;d still be  the sort of vastly wealthy person you seem to be speaking of-indeed, in the matter of such fortunes, and even smaller ones, it is a corollary that money begets more money, thusly those with fortunes have more fortune, unless they are fools.



> The trick to money is having some.-_Stuart Wilde_




So Michael, while I really agree with you that it would be foolish-given the current fiscal disaster that is our government-to repeal the Estate Tax, I don&#8217;t agree with you at all about what it is meant to do, or that it even accomplishes that, or even could. Money *is* power, and those that have enough of it and are not foolish with it will continue to have more of it and pass it on to their heirs-and their heirs will have more, even after paying the full tax in some cases, almost without any effort.

Lastly, I certainly did not take exception to the use of  &#8216;modest means&#8221;; there are those who refer to my wife and me the same way, some of them friends-and we certainly live modestly-quite a bit below our means, as a consequence of our upbringing and aesthetics. I&#8217;m not a &#8220;working&#8221; slob, or any other kind of slob, though I do work. I do think that your attitude in this matter seems to border on an almost socialistic prejudice towards people who  have money, and I find that somewhat offensive, both personally, and in terms of what I think these United States are supposed to represent.


----------



## Flatlander (Jul 31, 2006)

Beyond all of that, it seems to me that the ability to use the trust structure, as mentioned upthread, makes the entire issue of Estate Taxes moot anyway.   Though a trust can be pricey to establish, the subsequent tax savings will more than offset that cost.  So, perhaps we can assume that the only estates paying this tax are the estates that both had a sufficient amount of assets, and as well either failed to plan appropriately, or were otherwise ignorant of the trust strategy.  I'm curious, at this juncture, just what quantity of revenue, on average, that the IRS generates in estate taxes on any given year.

Having said that, I also disagree with any tax regime that will double tax.  If they could just do away with estate taxes, there'd be fewer people paying lawyers so that they could establish trusts to work around it.

Regarding the argument that government revenue must necessarily (sooner or later) equal spending, let's not forget that the "spending" portion of that equation is variable.  Given that, it doesn't necessarily follow that revenues must be made up elsewhere.  Spending could be reduced to offset the decrease in income.  However, again, I'd be interested to know how much lost revenue we're really talking about here.


----------



## elder999 (Jul 31, 2006)

Flatlander said:
			
		

> . However, again, I'd be interested to know how much lost revenue we're really talking about here.


 
In 2003, the estate tax is estimated to have raised $20 billion. Several cabinet departments  including Labor, Commerce, Agriculture, and Interior  each have discretionary budgets equal to or smaller than $20 billion.


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## michaeledward (Jul 31, 2006)

FearlessFreep said:
			
		

> _If that is the way you diagram the problem? _
> 
> *shrug* That's the way you described the problem.


 
FearlessFreep. 

You seem to be jumping between the 'Real World' and a 'Thought Experiment'. 

And, it seems you can't diagram a word problem. The way I described the problem, Government expenditures were a 'given', but it was not a constant, and it belonged on the other side of an equal sign in the equation. 

In the real world, you are correct, revenue and expenditures never match. Both can vary greatly, by design, or not. But unless a specific offset is listed, you can not make the assumption that the money cut is not going to be spent. 

Elder999 ... I agree the actual results of an Estate Tax don't line up very well with the intent. But, I do believe it moves in the correct direction. 

I agree, the Founding Fathers would be against the specific tax as designed, but I think they would be in favor of the idea. But even more so, I think the Founding Fathers would be* disgusted *with the current tax structure supporting a military apparatus such as established in these United States. So, appealing to that higher authority, is probably not a great idea. 

If you view me as socialist, that's OK. Certainly, I think socialism as an idea is a valid one. Like other systems, when put into practice, it fails a bit. And while I will never be subject to the Estate Tax (save for a lottery winning), my wife and I are in a position to take advantage of some of the policies the Bush adminstration have put into place. Many of these policies, I think are a bad idea, and dangerous for the American Experiment, and hurtful to the least among us. But, that doesn't stop me from taking advantage of them. But I think it sucks that those more needy than I, are unable to benefit from the policies and programs. 

The Department of the Interior has a budget *less than* what the estate tax generates. And isn't the Bush administration selling off public lands? Think about it.


----------



## Rich Parsons (Jul 31, 2006)

First appearance in Post #11: (* Quote completely to show the part I am taking and not trying to take things out of context. *)



			
				michaeledward said:
			
		

> I would encourage you to spend some time on this as a thought experiment.
> 
> You have tried to brush off the entire discussion by telling us 'Deficit Spending is a different issue' ... which it is not.
> 
> ...



Now you state here that "X" is the 'Total Tax Revenue'



			
				michaeledward said:
			
		

> You are correct that the 'total tax revenue is not established to be 'X'. However, the total of government outlays is established yearly to b 'Y'. No matter how one devises it, X must equal Y.



(* Quote completely to show the part I am taking and not trying to take things out of context. *)



			
				michaeledward said:
			
		

> If Y is greater than X, the Federal Budget would be in 'Surplus'. This happened under President Clinton (in no small part because of the Gingrich Revolution). When revenues exceeds expenditures, the State can pay off the debt it created in earlier years (Reagan's budgets for instance). As that debt is reduced, Federal interst payments are reduced, and monetary policy can be strengthened, lowering borrowing rates for all consumers.
> 
> For individuals, there are times when carrying a 'debt' is a good thing; a college education, a mortgage. These expenditures are often best paid for by borrowing over a long term, because the value of the acquisition will carry over that long term. For this reason, 30 year mortgages are not a horrible idea.
> 
> ...



Yet you corrected me with this: 


			
				michaeledward said:
			
		

> If Y is greater than X, the Federal Budget would be in 'Surplus'.



And then went on to say:



			
				michaeledward said:
			
		

> X is government revenue from all sources.
> Y is government expenditures.



If if Expenditures are greater than the income how can it be in surplus to pay of debt when it would acrue debt.


----------



## michaeledward (Jul 31, 2006)

Rich Parsons said:
			
		

> If if Expenditures are greater than the income how can it be in surplus to pay of debt when it would acrue debt.


 
Cuz I'm standing on my head ... and thinking out my ***. 

Of course, you are correct. Although, I was 100% certain when I typed that crap I was saying what I meant, not what I said. 

Actually, I think it may be the sequence of variables there ... although irrelevant to the equation, ... I listed X first, you listed Y first.

Thanks .. Good catch.


----------



## elder999 (Jul 31, 2006)

michaeledward said:
			
		

> Elder999 ... I agree the actual results of an Estate Tax don't line up very well with the intent. But, I do believe it moves in the correct direction.
> 
> I agree, the Founding Fathers would be against the specific tax as designed, but I think they would be in favor of the idea. But even more so, I think the Founding Fathers would be* disgusted *with the current tax structure supporting a military apparatus such as established in these United States. So, appealing to that higher authority, is probably not a great idea.


 
_Looking_ to that higher authority is almost *always* a good idea, or it is in the very least a good means of investigation. I agree with you about their likely thoughts about the military industrial complex, though.



			
				michaledward said:
			
		

> If you view me as socialist, that's OK. Certainly, I think socialism as an idea is a valid one. Like other systems, when put into practice, it fails a bit. And while I will never be subject to the Estate Tax (save for a lottery winning), my wife and I are in a position to take advantage of some of the policies the Bush adminstration have put into place. Many of these policies, I think are a bad idea, and dangerous for the American Experiment, and hurtful to the least among us. But, that doesn't stop me from taking advantage of them. But I think it sucks that those more needy than I, are unable to benefit from the policies and programs.
> 
> The Department of the Interior has a budget *less than* what the estate tax generates. And isn't the Bush administration selling off public lands? Think about it.


 
Funnily enough, it doesn't matter to me if you're a socialist, or not-it was your prejudice against the wealthy that I dislike.It might interest you to know that my father's parents seriously flirted with Communism back in the 30's, as did many "people of color" at the time. Grandpa apparently put an end to that when he realized that it would mean giving up his wealth.

 And, funnily enough, my wife and I are also in a postion to take what I presume to be an  even greater advantage of the policies the Bush administration have put in place, but Mrs. Conscience has made certain that any advantages gained in that quarter have been accounted for and donated to valuable social programs-to make certain that those more needy  are able to benefit from those policies and programs, at least-somewhat.

Yes, the Bush administration is selling off public lands-the intention is to open them to energy development/exploitation. In other words, it's to benefit his oil industry cronies, not to generate revenue for the government-we'll see about that, though......


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## michaeledward (Jul 31, 2006)

I don't know if I have a prejudice against wealth, or the wealthy. 

What I have a prejudice FOR, is that we should have equality of opportunity. Again, while that ideal will never manifest, there are certain things that stack the deck; such as being born 'William Gates III' (or VII).

That William Gates Jr. dropped out of college, out maneuvered some competitors, and snookered IBM into buying a product he didn't have, was clever and created. He has executed upon his vision of 'A computer on every desktop', and it has made him exceedingly wealthy. 

What happens if that wealth stays in his family - currently, two children, if I am not mistaken? What legacy does that create?

I think that everyone should start the game in the same place. It's an ideal, and will never come about. But can there be policies that move toward that objective (such as public education for all K-12).


Some argue that - geesh - Bill Gates earned all that money, all by his lonesome, and now the big bad government wants to take its cut. (intentional hyperbole). Something we must keep in mind, is that the government has established the rules of commerce, and has an enforcement agency to police those rules. If it weren't for those rules, it is quite possible Mr. Gates' better ideas would have been stolen and pirated; which could have crippled Microsoft before it became Microsoft. 

An excellent text on the issue is 'The Myth of Ownership'.

I know this response has wandered a bit ... it's been a long day. But we need to remember, so few people are affected by the Estate Tax. Many of the arguments are about the 'small businessman' ... well, let's change the rules so the small businessman is unaffected. Move the cutoff up to 20 million dollar estates; 50 million dollar estates. Those who argue against it because it would hurt the small businessman begin to show their true colors .... there is no point where it is acceptable. Which then begs the question ... what is the function of government? 

I think some view government as their own personal income source (e.g. HHS Leavitt comes to mind). 

One last thought ... for Mrs. Conscience ... Hey, I voted against this guy and his policies. But, the majority (well, once at least) of Americans wanted to put his policies in place. Who am I to argue against 50.4% of the public?


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## elder999 (Jul 31, 2006)

michaeledward said:
			
		

> I don't know if I have a prejudice against wealth, or the wealthy.
> 
> What I have a prejudice FOR, is that we should have equality of opportunity. Again, while that ideal will never manifest, there are certain things that stack the deck; such as being born 'William Gates III' (or VII).
> 
> ...


 
Well, you might be surprised to learn that he and his father pretty much agree with you on this issue.

As for the level playing field, it is level-"all men are created equal," but only within the eyes of the law-I don't have the jumping ability of a Michael Jordan, some don't have the brain power that I'm said to have, few have the combination of things that led to Mr. Gates entrepenuerial success-especially at such a young age.

Some, it seems, are also just lucky.

If the wealth stays in his family (and I do believe that whatever his intentions for the bulk of his wealth, he will see to it that the kids are taken care of-they'll just have to come up with their own means to their own  47,000 sq. ft. house) it will be a legacy no different than that of the Fords-and, much as personally dislike him, I have to admit that Bill Ford has done a sincere, if not always successful job of guiding his family's company-what's wrong with that?

As far as your cutoffs-there are graded percentages for the amount inherited in the Estate tax-for fortunes over $50 million it's around 70%.

As for Mrs. Conscience-hey, I thought it was a good idea, too-a tax cut for us, especially during these times, is laughable. I couldn't, in good conscience, accept that money while so many important (to me) programs are being cut, and families that have less suffer, and I certainly couldn't trust the money going to the government at this point, so we did a little extra tithing-it's not like I even missed it. This may just be the issue I have with the wealthy-rather than the fact that they exist at all, which is what your issue seems to be to me-but that one should  only be able to fill one's life up with so much stuff before one comes to the realization that they have more than enough, and turns that money to other things like helping people-I can only enjoy so many cars, motorcycles, houses, etc.-much better to help  the hungry, the infirm, the homeless and needy, where one can, if one has the means to-at least , that's the way it seems to me, and the way I was raised.

Yet it seems to me, at times, that the wealthy (and even the merely rich) are the hungriest people of all.....


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## michaeledward (Aug 1, 2006)

I do not believe I have a prejudice against wealth, either the possession of, or acquisition of. 

You, of course, are entitled to your opinion.


----------



## mrhnau (Aug 1, 2006)

I've not had alot of time to carefully read every arguement (been mega-busy), but I'll throw out some things.

There seems to be a revolt against these mega-millionaires. The Rockerfellas, Fords, Bill Gates, Waltons, Warren Buffet. We don't seem to like they make billions. However, these are the people who can easily afford to hide or manuever their cash into positions where they government won't be taking everything. These are also the people that donate billions to charities and such, employing thousands of people. These "evil billionaires" are the ones that have encouraged progress, came up with innovative ideas that made their fortures and left a legacy of growth and really lived out the American dream!

Now, there are a different class of people that fall into the estate tax group, especially with the number at 2 million. There are alot of small business owners and family farmers. These people tend not to have piles of cash laying around, owning yachts and such. They can hardly afford paying payrolls, much less hiring a lawyer to "hide" their assests like the mega-wealthy. They are not cash rich, but asset rich. Once you die, you have 9 months to pay off the debt owed to the IRS, or you are in legal trouble. As anyone who tries to sell alot of lands or businesses know, you can't get rid of things quickly, especially if you ask "full prices", which the IRS claims to know. Regardless of what you sell it for, they want money equal to their estimated value.

How can this happen? This is personal, but other examples out there exist. My dad bought a 130 acre plot of land around 20 years ago. About $800 an acre. Since that time, the price of the land has skyrocketed, going up to $5000 an acre. By local standards, this is a very small plot of land. I'm familiar with people who own and farm areas over 1000 acres. Same current land price. So, lets analyze this farmer and his family.

He employs his children and other family members. He owns 1000 acres at $5000 each, but has been in the family for generations, bought over 100 years ago for well under $1000 an acre. He owns farming equipment to perform his trade. Worth well over 1 million. So, though this farmer has trouble paying his bills, dependent on price of crops, drought, etc, he has a net value of over 6 million dollars, not counting his house or other possible assets (retirement, cars, ect). This guy dies. Taxable 4 million dollars. At last check, its taxes at 50% (please correct if this is wrong). Thats 2 million dollars in 9 months. How do you get it? Sell the equipment? The children can't take over the business. Sell the land? Then you can't apply your trade. Sell part of the land? Then who locally has 2 million in cash laying around to pay full market price, other than mega-coorperations? You either sell it to a huge corperation or slash the price to sell quickly, which means you sell more than half your land. The farmer had problems making ends meet with 1000 acres, how will the kids do with less than 500? When they die, the price of land will be going up again, and they face the same problem (assuming they die a good bit later).

Effectively, you are destroying the family farming business all across america. Same applies for any small business over a certain threshold. No wonder people are moving into the cities. They can't afford to stay in the country any more. With every passing generation, the farms get smaller. Taking away 1 billion in taxes from Bill Gates may be laughable, but taking 2 million from a struggling farmer is not funny. While my father does not fall in that category, I know many near where he lives that do.

Another thing that irks me, if things are not fixed. Things phase out in 2010, then go back to "normal" in 2011, right? [sarcasm] So, gee, I hope there are alot of farmer deaths in 2010. Better time your death right, or your family gets screwed! [/sarcasm]


Just on principle, I don't like the idea. A man works very hard his whole life to live out the American dream. If he succeeds too well, he gets overly punished. These millionaires don't have buckets of cash laying around, but its in assets. Houses, vacation homes, 401K's, stocks, bonds, CD's, just whatever they want. Upon death, much of it has to be liquidated. I guess most people think thats fine, as long as its not your personal stuff. What if YOUR dad did well? Or if YOU did well? Do you want the stuff you wanted your children to have to be sold to pay taxes? Want your Mom's engagement ring to be pawned to pay Uncle Sam? The house you lived in to be sold and you forced to move because of taxes? I think its kind of silly...

The only ones that really win here are the lawyers that make a living off of "hiding" wealth. They make a killing.

So, there are a few categories of people this affects. Small business owners. Farmers. Mega-rich - large/medium business owners. Those inhereting the money. Those wise in dealings (bought land early in growing places, invested wisely). [sarcasm] So, lets screw them all! I don't have that much money, neither should they! Yay communism! I hate Bill Gates and Warren Buffet lets destroy small businesses and the farmers while we are at it! Yay! [/sarcasm]

Fixes: Eliminate the Estate Taxes. Period. No more. You get taxed enough while you are alive, Uncle Sam should not try to pick your pocket while you are in the grave. Either that or set the limit VERY high. Even so, the filthy rich might have the cash to get around it still. Lawyers still do well, just not as many of them.



> I do not believe I have a prejudice against wealth, either the possession of, or acquisition of.



I'll call BS. Read what I wrote and tell me this is a just tax. You want to single out the filthy rich, the Paris Hiltons and Gates. You can't do this without raping the rest of America that has done moderately well. In todays society, 2 million ain't that hard to come by. Buy a house in Miami 30 years ago. Invest in Starbucks at the right time. Buy a house in California 30 years ago. Buy some farm land in a growing area. Buy Intel at the onset. Geez... Go pick up a magazine selling expensive houses. They ain't hard to find.


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## michaeledward (Aug 1, 2006)

So, the discussion as become an attack on Me personally, and how I hate rich people, rather than a discussion of Estate taxes. 

Wonderful.

The Government reported today how wealthy people in this country are hiding money in a 'Black Box' of offshore accounts to the tune of 60 Billion dollars. Nice. 

I submit this article... to rebut some claims made in earlier posts. 

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=860671


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## mrhnau (Aug 1, 2006)

michaeledward said:
			
		

> So, the discussion as become an attack on Me personally, and how I hate rich people, rather than a discussion of Estate taxes.
> 
> Wonderful.



When you make a claim about yourself personally, such as 


> *I* do not believe *I* have a prejudice against wealth, either the possession of, or acquisition of.


how would you like me to respond? I added the bolds.

You sure do take things personally  Make a -personal- statement, expect a -personal- answer.



> The Government reported today how wealthy people in this country are hiding money in a 'Black Box' of offshore accounts to the tune of 60 Billion dollars. Nice.



I don't blame them. HOWEVER, farmers don't have tons of cash laying around. They can't hide their farms offshore, their tractors, or their houses.


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## elder999 (Aug 1, 2006)

michaeledward said:
			
		

> So, the discussion as become an attack on Me personally, and how I hate rich people, rather than a discussion of Estate taxes.
> 
> Wonderful.


 
Pretty certain that you probably don't hate _anyone._ You seem like a reasonable enough fellow, and I agree with you on the repeal of the Estate Tax-just not the fact of it. Our government can't afford to cut any revenue right now. 

Interestingly, both Roosevelts, Teddy and FDR, agree with you about this in principle as well-in fact, a surprising number of wealthy people have supported the same position throughout U.S. histrory, and there has been an Estate tax in one guise or another since the 19th century.

At any rate, it's not you so much as your statements about the wealthy that are prejudicial and inflammatory, as though they and their property need to be subjected to a different set of rules, because they have so much, and their heirs have done nothing to earn it other than being born.

For example:



			
				michaeledward said:
			
		

> Paris Hilton ... has she done *anything* for society, other than that night vison film?




Now, I'm no fan of hers, and if you look to her mother you'll see that she didn't fall too far from the tree, but it seems to me that she's making money as a model, a TV star and a singer-all of which are certainly indictments of our society, if you wish, but not her-if someone could make a profit in this country selling doggie doo-doo in a paper cup, well, they would. In any case, she's making her own money, and her contrubution to society is immaterial: while I was raised to feel obligated about such a thing, and others are or come to the feeling as well, there is nothing _in this country we both were born in_ that says that such a thing is necessary-she can say "let them eat cake" all she wants to, and so can her parents. THe alternative being, of course, that she be reduced to something befitting her talents-giving up her inheritance and becoming a crack whore, perhaps, and thus an equally loathsome blight on society than the one she is now....





			
				michaeledward said:
			
		

> While I haven't checked, I believe there are places in the world where you can do just that. Generally, there is an accompanying title with this ability ... things like 'Lord', 'Duke', and 'Prince'.




They actually do call me a title like that in Ghana, and a few others in a few other places, but that's neither here nor there-the fact is that this equivocation of  inherited wealth with royalty and all it connotes is prejudicial, or perhaps, hyperbolous-I'm no more "royal" in this sense than Oprah Winfrey; I'm an American citizen, quite simply, just as she is, and I have far less money......



			
				michaeledward said:
			
		

> My country was established in a manner in which each generation is able to undertake efforts for itself, and to step away from the inherited positions within society. While this ideal is never going to be reached, we have put in place, mechanisms to prevent the creation of a stratified, oligarchy.




So  is what you're saying here that _real_ Americans earn their keep, and inherited wealth, and all that you imply it entails (not really sure I have any inherited "position" in this country that wields the sort of influence you fear; in fact, I'm sure that I don't), runs counter to some sort of ideal-that those who inherit wealth are a subversion of the American dream, rather than beneficiaries of it?

 


			
				michaeleward said:
			
		

> In my country, if you are a man of modest needs and wants, you can pass every cent you earn to your progeny. Enjoy.




Yet, in your country, if you are the heir of someone of more than modest means (never mind your "needs and wants," as I posted earlier, I live much more modestly than my means-my needs and wants are generally satisfied) then you are somehow obligated to surrender a large portion of those means, for the benefit of-what? The government? Or to "even the playing field?" Sociological handicapping?




			
				michaeledward said:
			
		

> I posit, the Estate Tax is in place to prevent the accumulation of wealth in the hands of a few families. With wealth comes power, to influence politics, communities, and business. Working to restrict that concentration of power, is a valuable, and I believe uniquely American, endeavor.




Well, no-the Estate tax is in place to generate revenue. It hasn't prevented the accumulation of wealth, and it never will, as I've demonstrated more than once. As for "power to influence politics, communities and businesses," I think those are also the bailiwick of 
*any* citizen that has a mind to, and the will to garner support, at least they are _in my country._ My parents marched on Washington and Selma back in the Sixties, and it wasn't their money  or anyone else's that changed things.





			
				michaeledward said:
			
		

> One relavant fact.
> Why Pays an Estate Tax?
> 
> In 2006, the wealthiest 0.27% of Americans are the only ones who pay estate taxes.
> For more than 99 out of 100 citizens, this discussion occurs only in the theortical arena. If you are one of those .3% of Americans who will be effected by this program, please let us know.




Well, I have been, and, should I be alive when my mother passes away, I will be again. Somehow, though, your mind is made up in spite of what those whom it has affected have to say.

By the way, your number is absolutely incorrect by a factor of 100:



			
				IRS webpage said:
			
		

> In its current form, the estate tax only affects the wealthiest * 2% *of all Americans.




Seen  here.

In any case, it affects anyone who inherits a gross-based on various IRS calculations and exemptions, of $1million or greater-some of the allowances are for surviving spouses, small businesses and farms, and others are based on  a reduction of value from the IRS's "true market value" calculation to something that takes into account things like depreciation or liabilities and mortgages. In any case, once the estate has been determined to have a net value of $1 million or greater, it's subject to this tax-and, in a country where a bungalow in Downey, Ca is "valued" at  $750,000, it isn't such a significant number for even the merely middle-class anymore; it is eminently achievable. In this case a of small businesses and farms, BTW, the current exemption is $820,000-enough to often offset the inheritance burden, but not always.





			
				michaeledward said:
			
		

> Most who are subject to this tax, need not work at all. Their wealth is inherited. Somewhere in their lineage, someone earned and acquired that wealth, but it does not need to be those who are subject to this tax.




I would posit that most who are subject to this tax *do* work, whether they appear to you to need to or not. Somehow, though, it seems to me that you think that they should be what some might  see as effectivelhy penalized for inheriting the fruits of their forebears labors?



			
				michaeledward said:
			
		

> Instead, that wealth would pass unhindered to the progeny of those who created the wealth (Paris Hilton). That way lies 'Oligarchy'.




Do you really think the likes of the  Paris Hiltons of this country (and, believe may, there are much worse than she running amok without TV cameras as we speak-Paris loves her cameras) are going to run the country because they've inherited wealth? That congressmen and senators are going to be influenced by an underfed, undereducated, sexually trivial bimbo because she owns a few hotels?

If it were oil wells, well, maybe-but it's really corporate influence that you need to fear on that front, and not at all the wealth of individuals-the barn door on that one, BTW, was shut behind the fleeing horses in the form of corporate citizenship-since corporations became entities entitled to the same rights as people, their influence has grown into just the sort of thing that you're speaking against, and something that Founders would have detested far more than inherited wealth itself.



			
				michaeledward said:
			
		

> But, really, Steve Forbes does not need to run a magazine, or for President, or do anything. His grandfather, or great grandfather made a mint, and Mr. Forbes can live off of it.




Yet, he, as do many others, does do those things-as is his right as a citizen-just as doing nothing and living off his wealth might be. Somehow, though, what you say here seems to be an indictment of Mr. Forbes, as in, "how dare he be in a position to do whatever he wants because his forebears made it that way."

No, Michael, I don't believe for a minute that you're prejudiced against the wealthy, or wealth, but I don't think for a minute that you have a great understanding of them-and your statements not only demonstrate this, but are, by their nature, prejudicial.


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## Rich Parsons (Aug 1, 2006)

michaeledward said:
			
		

> Cuz I'm standing on my head ... and thinking out my ***.
> 
> Of course, you are correct. Although, I was 100% certain when I typed that crap I was saying what I meant, not what I said.
> 
> ...



MichaelEdward,

I apologize for the dyslexia and the confusion. I now understand where you began. 

Let me think about some of the other equations floating around in here and then reply.

:asian:


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## FearlessFreep (Aug 1, 2006)

_
The Government reported today how wealthy people in this country are hiding money in a 'Black Box' of offshore accounts to the tune of 60 Billion dollars. Nice._

This is one of the reasons I'm against many of the various taxes on varioues spurious things (like Estate Taxes, Capital Gains, God Knows What Else)

The Government sees some action and wants a piece of the aciton ,so they tax it.  People don't like to be taxed, so they try to find ways, legal, semi-legal, and less than legal, to hide the money or otherwise keep it from being taxed.  So the IRS has lawyers to further refine the tax code to try to get ahold of the money and investigators ti find the money and the people trying to keep the money hire accountants and lawyers to figure out how to ide the money in increasingly clever ways, hopefully without going to jail.

So a whole mess of people do *nothing* with their lives but play the shell game of 'hide the money/ find he money/ tax the money/keep the money'.  A game that has no connection to producing anything, growing anything, creating anything, contributing anything but is merely an artifact of the tax system.  

For every Paris Hilton one could complain that they don't contribute anything to society, how many people don't contribute anything to society but shuffle papers of abstractsions of other peices of paper(money) trying to hide it or find it in a vicious circle of our own creation.  At least Paris Hilton keeps us entertained and spends a lot of money.  The tax code just generates waste in a game of hide and seek

The reason I don't like the estae tax s that it's such a waste of energy and resources


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## michaeledward (Aug 2, 2006)

submitted for your consideration ... 

http://mediamatters.org/items/200608010004



> On the July 28 edition of Fox News' _Special Report with Brit Hume_, _Washington Post_ columnist Charles Krauthammer falsely claimed that the estate tax "penalizes a lot of small businesses" and could leave the "heirs" of a "small-business owner" with "nothing." In fact, the estate tax affects very few small-business owners, and the highest marginal estate-tax rate is 46 percent.



And this is an interesting quote from the same article. Please note the number of businesses vs number of businesses affected.



> Congressional Budget Office report found that based on an analysis of 1999 and 2000 estate-tax returns, only 135 family-owned businesses would have owed any estate tax at the current exemption level of $2 million. By contrast, about 4.5 million active businesses with assets under $5 million filed income-tax returns in 2002, according to the IRS.


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## mrhnau (Aug 2, 2006)

Estate Tax on Wiki

Great article, gives pros and cons for both arguements. Also interesting are the tables with max tax rate and actual tax rates. Very interesting read. Does not seem to have any motive (unlike alot of other articles offered here).

One great quote:



> A study of the 18,800 taxable estates taxed in 2004 found 7,090 which had any farm or business income. Of those, there were 440 estates in which half or more of its assets were the value of farms and/or businesses. The effective tax rate on the 440 estates studied in detail never averaged more than 23%



Note, 18k taxable estates, and 7k were farm/business related. 440 were similar to the arguement I made earlier in this thread. Thats not a trivial number, especially when you are one of the 440 (or 18k).


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## elder999 (Aug 2, 2006)

michaeledward said:
			
		

> submitted for your consideration ...
> 
> http://mediamatters.org/items/200608010004
> 
> ...


 
Yeah, but you forgot to factor in one thing-the number of businesses affected is proportional to the number of business owners that *died.*-in other words, while some-odd million (4.5) business owners filed tax returns for the years noted, most if not all of them were likely alive in the year afterward-the comparison is specious, obviously.


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## michaeledward (Aug 2, 2006)

elder999 said:
			
		

> Yeah, but you forgot to factor in one thing-the number of businesses affected is proportional to the number of business owners that *died.*-in other words, while some-odd million (4.5) business owners filed tax returns for the years noted, most if not all of them were likely alive in the year afterward-the comparison is specious, obviously.


 
You are correct, except that I did not forget to factor anything, I submitted that article for review. Blame the authors for mis-matching data.

4.5 million business owners. 

Estimated average lifespan of business owner - 75

4,500,000 / 75 = 60,000 estimated deaths.

60,000 estimated deaths ... vs ... 440 small businesses subject to Estate Tax of an average of 23%. 


The point is .... damn near NOBODY has to pay Estate Tax.


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## mrhnau (Aug 2, 2006)

michaeledward said:
			
		

> You are correct, except that I did not forget to factor anything, I submitted that article for review. Blame the authors for mis-matching data.
> 
> 4.5 million business owners.
> 
> ...


faulty logic, bad math. This assumes there is an even distribution of deaths from age 0 to 75. Also assumes that a 1 year old can own a business.

Lets also get your idea of a business owner. I can go and get a business liscence for around $200 total. I officially own a business. Would I get counted in your estimates? I know several people (family and friends) that own a business. Few of them are rich. Some of them are though, if you count assets.



> The point is .... damn near NOBODY has to pay Estate Tax.



Then why are you so desperate to keep it? If it generates SO much money, and we simply will fall apart if it disappears, the money comes from SOMEONE. You telling me the Paris Hiltons and Bill Gates of the world are the only ones dying w/ money?


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## mrhnau (Aug 2, 2006)

Lets knock this one around....

Fix the limit that Estate taxes kick in. Lets pull out an arbitrary number, lets say 10 million. Adjust this number based on inflation every year. Since the government likes to employ people, hire some people to consider the situation of each case, since there are so few per year (numbers from previous post seem to indicate such). Ask some questions, like "would this destroy a family farm", "force a business to be sold for less than real value", or "force a family to move from their homes to pay the bill". If this is the case, then either repeal or reduce the tax. This fixes a couple of things... Those just sickly full of money still need to pay (close loopholes if you want). Those eeking out a living but full of assets (farmers, small business owners barely making it) get a break. Just because your house/land goes up in value, it may keep per with inflation and not bite you later.

hows that for a solution? Still get some tax revenue w/out the risk of destroying small businesses and farmers. Almost everyone is happy (except for the mega-rich perhaps)

Also, what number would be reasonable? Is 10 million too high? 50? 1? Should it be regional? For instance, a ranch in Texas ain't worth nearly as much as in California. Should the limit be based on local cost of living?


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## elder999 (Aug 2, 2006)

michaeledward said:
			
		

> You are correct, except that I did not forget to factor anything, I submitted that article for review. Blame the authors for mis-matching data.
> 
> 4.5 million business owners.
> 
> ...


 
60,000 estimated deaths, what, per year? the data from your post contradicts that. Whatever it means, all of those people are going to die, someday, and somebody is going to inherit their stuff, depending upon how they structured it.

Point is, the IRS says that 2% of the population is liable for this tax  and the US population is *300,000,000*. 2% of 300,000,000
is *6,000,000*-the population of a large city,of course, they also don't die in that number every year, but they're hardly "damn near NOBODY," unless,of course, you think of "the rich" as "nobody.":idunno:


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## psi_radar (Aug 13, 2006)

I didn't read the replies to this since I have a definitely biased point of view. My dad worked really hard his whole life to pass down a legacy to his kids. We might fall into that small bracket. To me, that inheritance means I don't have to worry about my autistic son ever worrying about his next meal after we're gone. I probably will not be able to do as well financially as my father. My father lives simply, I do too. All we want is what he saved for us, and ultimately, for my child, whose care will cost quite a bit over his lifetime after we're gone. Is it to much to ask to pass down the money you've saved over the years to your kids, regardless of the amount?


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## michaeledward (Aug 13, 2006)

psi_radar said:
			
		

> I didn't read the replies to this since I have a definitely biased point of view. My dad worked really hard his whole life to pass down a legacy to his kids. We might fall into that small bracket. To me, that inheritance means I don't have to worry about my autistic son ever worrying about his next meal after we're gone. I probably will not be able to do as well financially as my father. My father lives simply, I do too. All we want is what he saved for us, and ultimately, for my child, whose care will cost quite a bit over his lifetime after we're gone. Is it to much to ask to pass down the money you've saved over the years to your kids, regardless of the amount?


 
Why are you waiting for your father to die?

I hope that both you and your father are aware that he can gift a portion of money to you each and every year he is alive, right? If you have siblings, he can similiarly gift them a portion of his legacy. I'm pretty certain that he can gift money to your child as well. Also, if your father is still married to your mother, she can gift a not insignificant amount of money to you, your siblings, and (maybe) your children each year - even if it was money your father earned. (a benefit to marriage)

As, I think, elder666, would point out, have your father visit an experienced attorney. There are steps that can be taken to minimize the effect of the Estate tax. Most likely, a short conversation will allow your father to avoid the Estate Tax all together.

I say 'most likely', because most people with assets commonly talked about when discussing the Estate Tax pay ZERO Estate tax to begin with.




P.S. - I hope that I never refer to money as a 'legacy'. I hope that my children receive a legacy from me that consists of love, action, hope, peace, patience, discipline, integrity, kindness, brotherhood and optimism. These traits, I think, are far more valuable than any assets we pass on to our progeny.


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## psi_radar (Aug 20, 2006)

michaeledward said:
			
		

> Why are you waiting for your father to die?
> 
> P.S. - I hope that I never refer to money as a 'legacy'. I hope that my children receive a legacy from me that consists of love, action, hope, peace, patience, discipline, integrity, kindness, brotherhood and optimism. These traits, I think, are far more valuable than any assets we pass on to our progeny.



Hey M.E,

There are indeed gifts you can give your children ($11,000) tax free per year, and there is also a way to provide special needs trusts, but the fact is, no matter how rich you might think you are, a debilitating disease can incur a nearly unfathomable amount of cost. My father has parkinson's, so I don't blame him for keeping whatever ready assets he has for his own treatment, without investing a lot of his liquidity in my son. 

I don't know what world you're living in, but a lot of mine depends on finances. It's moot that kindness, brotherhood, love, etc. is a necesstity. So is food and lodging. My son will likely outlive me by 40+ years. I'm doing my best to take care of him, and it'd be great if my inheritance is intact to pass to him and his caregivers.


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## michaeledward (Aug 20, 2006)

psi_radar said:
			
		

> Hey M.E,
> 
> There are indeed gifts you can give your children ($11,000) tax free per year, and there is also a way to provide special needs trusts, but the fact is, no matter how rich you might think you are, a debilitating disease can incur a nearly unfathomable amount of cost. My father has parkinson's, so I don't blame him for keeping whatever ready assets he has for his own treatment, without investing a lot of his liquidity in my son.
> 
> I don't know what world you're living in, but a lot of mine depends on finances. It's moot that kindness, brotherhood, love, etc. is a necesstity. So is food and lodging. My son will likely outlive me by 40+ years. I'm doing my best to take care of him, and it'd be great if my inheritance is intact to pass to him and his caregivers.


 
In almost every likelyhood, your inhreitance will pass to him intact. 

One of the legacy attributes that I hope will pass from me, to the generation that follows me, is hard work. 

Dean Warmer said it best, "Fat, Drunk and Stupid is no way to go through life, son".


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