8 ms·

To reply to the people below as to why @themartorana might be against estate taxes: if the tax system does its job properly, death shouldn't be a taxable event.

• dragonwriter 10y ago
  Estate taxes are a problem, but only because inheritances aren't treated as normal income for the recipients. Death shouldn't be a taxable event...but receiving income (even as a result of someone else's death) should be. If there is a desire to allow some level of ubtaxed inheritance, then instead of exempting estates below a certain size, we ought to exempt a certain amount of inheritance income per recipient.
• andrepd 10y ago
  No, it just means that after your death your descendants don't benefit unfairly. Instead, the money that would be used to set a trust fund baby for life is redistributed among all people.
  • clarkmoody 10y ago
    In a free society, you can give your property to whomever you like. How do "all people" have any right to the fruits of your labor, especially a superior right than your own children?
    • andrepd 10y ago
      You and you alone have the right to the fruits of your labour. Once you are dead you are not gonna benefit from it anymore, so your children do not have any more claim to it than anyone in the country. Therefore it should be redistributed back to all people. Do you think your children should have more rights than other people?
    • astazangasta 10y ago
      That's your definition of a "free society", as is "fruits of your labor". You know, I might say that societies with our concept of property, where a state monopoly on violence guarantees rights, and where wealth is largely the product of appropriation of people's productivity based on those state-sanctioned property concepts, is very far from a free society.
      • clarkmoody 10y ago
        > very far from a free society Agree with you there. > wealth is largely the product of appropriation of people's productivity ??? In a market economy, wealth accrues to those who solve people's problems the best. It is only through business-government collusion that you skew the market toward cronies and incumbents. > state monopoly on violence guarantees rights In theory. But it doesn't really work that way. Hence, the estate tax.
        • andrepd 10y ago
          >In a market economy, wealth accrues to those who solve people's problems the best. That is simply it true, and it baffles the mind how some people obtusely insist on that bunch of wishful baloney, pardon my bluntness. So a capital holder/landowner simply buys stock/rents out a flat, and by essentially doing nothing but owning stuff he gets to earn a large amount of money while people actually doing stuff are rewarded as lowly as the market can squeeze them. How does this fit with your worldview of "money goes to those who work harder"?
        • astazangasta 10y ago
          No, wealth does not accrue to "those who solve people's problems the best". For example, let's consider what I do, cancer research. In my field, lots of scientists and doctors work very hard to develop new therapies for treating cancer. At the end of the day, this results in a product that is covered by a patent, a form of property. This property is owned by some very rich people who have never lifted a finger to do any cancer research or solve any problems; all they have done is own things. In this case, because of the specific form of property, they are able to make hundreds of billions in profits without having done any work other than the contribution of some capital. That is, literally, property ownership is the only contribution these people make to drug development, yet they accrue essentially all of the resulting wealth. The extent of this accrual is a product of the specific forms of property that exist and how much they allow this sort of appropriation. Every form of property is the product of government - property as we know it cannot exist without government help. For a practical example, until 2013 it was possible to own genes via patents, and about 20% of the human genome was under patent. There were companies that were entirely built on the fact that they owned certain human genes, e.g. Myriad Genetics, which made hundreds of millions of dollars off this. Then the Supreme Court decided this was NOT a form of property, and suddenly this possibility of accrual vanished. This applies to everything we might think of as property - patents, trademarks, land titles, etc., they exist because of legal force guaranteed by the government. Some of these property forms are extremely arbitrary measures that seem almost designed to produce wealth transfer (for example, granting mineral rights) to certain individuals.
    • daveguy 10y ago
      In the US, you can give your property to whomever you like... and they have to pay taxes on it as income. I'm not sure why your children should be exempt from paying taxes on the gift of an estate. Call it "death tax" if you want, but really the lack of an estate tax is tax break privilege for the wealthy. The estate tax is simply a decision of what the income tax will be on income in the form of an gifted estate.
      • themartorana 10y ago
        Except the estate tax is often a much, much larger percentage than normal income tax.
        • daveguy 10y ago
          That is typically not true in the US (2015). In the US there is an exemption on estate tax up to $5.43 Million and the transferred wealth above that amount is 40%. Compared to the highest regular income tax bracket is 39.6% and that is on the income above $464,850. So, it is essentially an income tax on the transfer -- except typically much much less. For example, an estate of $5.44 Million would be $4,000 (on the excess $10,000). Or an effective tax rate of 0.074% not 74% or 7.4% but 0.074%. Edit: So, yes, if you are transferring 500 Million or 50 Million then you will get close to the 40% tax (slightly higher than the regular 39.6% tax), but if you are transferring 5 Million or below there will be no tax.
      • maxerickson 10y ago
        The giver is generally on the hook for gift taxes and it is calculated similarly to the estate tax. That the giver pays is not really a super important distinction, the money is coming from the same place either way, but procedurally it's the giver that has to do the paperwork.
    • nsajko 10y ago
      You can, but the transaction gets taxed .) Anyways, you're appropriating the word free for describing your personal political agenda.
      • clarkmoody 10y ago
        > you're appropriating the word free for describing your personal political agenda This is a political topic. Also why I would advocate elimination of income tax ;-)
  • largote 10y ago
    There's nothing unfair about your descendants (or other heirs) acquiring your belongings once you pass away (assuming proper tax was already paid on said belongings).
  • exclusiv 10y ago
    Death tax is a form of double taxation and many people are forced to sell their inherited family home. That sounds unfair to me. If we had a consumption tax (FairTax) then you couldn't skirt paying your share when you spend it. Sales tax is incredibly efficient.
    • ssmoot 10y ago
      It's also regressive.
      • elsewhen 10y ago
        the fairtax organization has proposed a "prebate" to mitigate regressiveness. https://fairtax.org/about/how-fairtax-works-slideshow https://fairtax.org/about/how-fairtax-works-slideshow
        • ssmoot 10y ago
          That seems like a reasonable effort. Thanks.
        • 0xcde4c3db 10y ago
          They've proposed that, but as far as I can tell it's less of a serious proposal and more an instance of an "overcoming objections" sales tactic. I don't see how a flat sales tax can achieve revenue-neutrality (itself a major selling point of FairTax) while also offering a large enough "prebate" to avoid being enormously regressive in practice. Considering the misleading nature of a bunch of other FairTax claims [1], I pretty much consider distrust to be the only tenable default position with respect to anything else they say. [1] http://www.factcheck.org/2007/05/unspinning-the-fairtax/ http://www.factcheck.org/2007/05/unspinning-the-fairtax/
• bufordsharkley 10y ago
  Even if people pay full capital gains, that doesn't prevent the existence of a multi-generation estate. And those kind of estates are the whole point of the estate tax. If a tax directly taxed holdings on an ongoing basis (a wealth tax, or much better, a land value tax), I could see an argument for doing away with an estate tax, but only then. (And I'd say not even then)
  • largote 10y ago
    Land value taxes are called property taxes.
    • larsiusprime 10y ago
      Not quite. property tax includes the value of the buildings. Land value tax is different: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
  • KZeillmann 10y ago
    What's inherently wrong with a multi-generation estate? What's wrong with me wanting to pass on wealth to my kids and grandkids without this already-taxed money to be double-dipped by the government? If I want to work so hard that I can leave significant money for my descendants, why should the government get to tax that money twice? That seems incredibly unfair to me.
    • kllrnohj 10y ago
      Look at it as a regular income event. You were taxed when you got that money from whoever gave it to you and now your kids are being taxed when they get the money. Your kids aren't you. Money isn't a taxed-once thing, it's taxed every time it changes hands. Death is an event at which money changes hands (from you to your kids), and is taxed appropriately. Anyway multi-generation estates are very well tested as being bad for society over time. Just look up monarchies.
      • 10y ago
• cmrdporcupine 10y ago
  For comparison. There is no death / estate tax here in Canada.
  • parasubvert 10y ago
    That's not entirely accurate: the CRA requires "deemed disposition" on all your assets at the time of death. Basically your estate has to pay up all pending taxes / capital gains as if it sold all its property at the time of death.
    • cmrdporcupine 10y ago
      But held cash assets belonging to the estate and passed onto children/spouse are not taxed.
      • hinkley 10y ago
        You have a fundamental misunderstanding of the super rich if you think that hard currency represents any significant fraction of their assets, late in life. It's only a concern for the middle class, and there are other rules that cover them.
    • refurb 10y ago
      Right, the estate just pays the taxes it would have paid if the person had been alive. That seems more fair.
• eevilspock 10y ago
  What is a "fair share"? Ok, I expended sweat and tears and made $X, and obviously I should be able to benefit from my labors in my life. Too much tax denies me that, but too little is unfair as I used the resources of "the commons". But receivers of inheritance did not earn any of it. It's not obvious that 100% estate tax is unfair.
• kllrnohj 10y ago
  No, the point of estate tax is to prevent generational inheritance, not to re-coupe failed cap gains. The purpose is to prevent a class of non-working super rich that live for generations off of the estate. So you can be rich and have lots of fancy toys and swim in pools of money while you're alive, but once you die that's it. Your children benefit by starting with a (very large) head start relative to their peers, but they shouldn't necessarily be set-for-life. It's economically bad to have a vast pile of money sitting in one place for a long time, you want to get that back into circulation. And success should be earned, not granted at birth. The only alternative would be something like actively taxing net worths that exceed some amount, which is less palpable.
  • caf 10y ago
    And of course practically speaking, death is a great thing to tax, because one of the problems with taxation is that it can be distortionary - when you tax something, people tend to do less of it. That's obviously not a problem with estate taxes.
    • robfig 10y ago
      Plenty other discussion about the lengths people go to avoid the estate tax, so I think it is distortionary
  • hinkley 10y ago
    That head start can extend into adulthood of you let them live rent free in a house you own, use your vacation house, etc. Hell, if your forty year old son hasn't been able to mooch at least a couple million off of you tax free, you're just not doing it right.
  • refurb 10y ago
    No, the point of estate tax is to prevent generational inheritance, not to re-coupe failed cap gains. Yet a lot of countries with low inequity don't have them. Canada, Sweden, etc.
    • 10y ago
• Gustomaximus 10y ago
  > Taxing at death would be double dipping. This is one of the more common anti-estate tax arguement but I dont see it. At the end of the day the government will raise a pool of tax dollars. They can tax you more while you're alive, or tax you less while alive + estate tax when you die. If you look at it like this, estate taxes actually allow you to pay less tax over your lifetime. So to not have estate tax, one could argue people are paying too much tax during their lifetime.
  • refurb 10y ago
    If you look at it like this, estate taxes actually allow you to pay less tax over your lifetime. Sorry, I chuckled a little bit. If you think the gov't putting a new tax in place reduces taxes in other places, I'd point you to the size of gov't over the past 100 years.
• ubernostrum 10y ago
  You want to read Alexis de Tocqueville's comments on early American inheritance law; it's always been structured to try to prevent the accumulated heritable wealth and power that built the European aristocracies, and the estate tax is simply one tool in that toolbox.
• themartorana 10y ago
  @hype7 is correct. To others in the thread, I don't mind Canada's system - basically, tax the income from (the potential) full liquidation of assets. In many cases, everything needs to be liquidated before an estate is divided anyway. Income gained would be taxed anyway. That said, I don't live in Canada so I don't know the finer points. To those speaking of multi-generational wealth, I'll bypass the "it's bad" argument and point greatly towards the "1/10 of 1 percent" that have gained something like 90% of all newly created wealth in the past couple decades (and the innumerable ways they can keep that wealth from the estate tax) as evidence of it being a failed policy, again only hurting those somewhere in the middle.
• kelnos 10y ago
  Taxing at death would be double dipping. Not really the point. In general, money is taxed when it changes hands. Payroll taxes, income taxes, sales taxes, etc. Taxing on death is just taxing money that is transferred from the decedent to their heirs. It's not a matter of how many times you "dip": the same money has likely been taxed quite a few times for different reasons before it ended up in that person's estate anyway.