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As of January 1st, 2011, the estate tax kicks in at $1,000,000. (The law on the books actually kicks in at $10,000, but there's a temporary credit in place.)

As of January 1st, 2011, the estate tax kicks in at $1,000,000. (The law on the books actually kicks in at $10,000, but there's a temporary credit in place.) The actual rate and exemption has varied widely from year to year. This year there's no estate tax, but in 2009 there was a $3.5MM exemption. Much of the money you have on hand when you die has already been taxed in one form or another. (If it hasn't, your death should trigger the much lower capital gains tax - that's how it works in Canada, for example.) If you've been working hard to ensure your wife and children don't want for anything in life, why in hell should the government take half of what you've earned and already paid taxes on? I don't understand your bit about compound interest. The people in this community who are affected by the estate tax don't get there through compound interest, they get there through entrepreneurship and job creation. If you want to propose that the estate tax only affects passive income, I'd certainly be in favor.

jbooth 16y ago
Ok, so basically I'm right about the few million part. Attempts to say it could be otherwise, but isn't, notwithstanding. And if your wife and children inherit 3.5 million tax free and half of everything else, they will be fine. I'm more sympathetic to the wife argument, if she was spending time with the kids instead of developing a career - the children have presumably had a good education, they should be able to make their own money if 3.5 million isn't enough. RE: compound interest, if you don't understand that, then you really do not understand inherited wealth.
igrekel 16y ago
You know some die hard capitalists would argue that all of your wealth should be taken away at death. That way, the wealth of an individual can only come from what you build and create during your life. Not that I think it is the correct or fair way of thinking, its seems just so wrong when death was unforeseeable.
gnosis 16y ago
"If you've been working hard to ensure your wife and children don't want for anything in life, why in hell should the government take half of what you've earned and already paid taxes on?" To avoid the creation of an aristocratic class. The founding fathers had this specific aim in mind. Details here: http://budiansky.blogspot.com/2010/10/adam-smith-thomas-jefferson-and-other.html http://budiansky.blogspot.com/2010/10/adam-smith-thomas-jeff... A relevant quote from the article: [Thomas] Jefferson cited Adam Smith, the hero of free market capitalists everywhere, as the source of his conviction that (as Smith wrote, and Jefferson closely echoed in his own words), "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death." The states left no doubt that in taking this step they were giving expression to a basic and widely shared philosophical belief that equality of citizenship was impossible in a nation where inequality of wealth remained the rule. North Carolina's 1784 statute explained that by keeping large estates together for succeeding generations, the old system had served "only to raise the wealth and importance of particular families and individuals, giving them an unequal and undue influence in a republic" and promoting "contention and injustice." Abolishing aristocratic forms of inheritance would by contrast "tend to promote that equality of property which is of the spirit and principle of a genuine republic."
- jacques_chester 16y ago
  In capitalist societies this is less of a problem. Wealthy families generally dissipate their wealth in a few generations, not through taxes or charity, but through consumption, error and incompetence. Trust babies destroy family fortunes more efficiently than estate taxes.

jbooth 16y ago

Ok, so basically I'm right about the few million part. Attempts to say it could be otherwise, but isn't, notwithstanding. And if your wife and children inherit 3.5 million tax free and half of everything else, they will be fine. I'm more sympathetic to the wife argument, if she was spending time with the kids instead of developing a career - the children have presumably had a good education, they should be able to make their own money if 3.5 million isn't enough. RE: compound interest, if you don't understand that, then you really do not understand inherited wealth.

igrekel 16y ago

You know some die hard capitalists would argue that all of your wealth should be taken away at death. That way, the wealth of an individual can only come from what you build and create during your life. Not that I think it is the correct or fair way of thinking, its seems just so wrong when death was unforeseeable.

gnosis 16y ago

"If you've been working hard to ensure your wife and children don't want for anything in life, why in hell should the government take half of what you've earned and already paid taxes on?" To avoid the creation of an aristocratic class. The founding fathers had this specific aim in mind. Details here: http://budiansky.blogspot.com/2010/10/adam-smith-thomas-jefferson-and-other.html http://budiansky.blogspot.com/2010/10/adam-smith-thomas-jeff... A relevant quote from the article: [Thomas] Jefferson cited Adam Smith, the hero of free market capitalists everywhere, as the source of his conviction that (as Smith wrote, and Jefferson closely echoed in his own words), "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death." The states left no doubt that in taking this step they were giving expression to a basic and widely shared philosophical belief that equality of citizenship was impossible in a nation where inequality of wealth remained the rule. North Carolina's 1784 statute explained that by keeping large estates together for succeeding generations, the old system had served "only to raise the wealth and importance of particular families and individuals, giving them an unequal and undue influence in a republic" and promoting "contention and injustice." Abolishing aristocratic forms of inheritance would by contrast "tend to promote that equality of property which is of the spirit and principle of a genuine republic."

jacques_chester 16y ago
In capitalist societies this is less of a problem. Wealthy families generally dissipate their wealth in a few generations, not through taxes or charity, but through consumption, error and incompetence. Trust babies destroy family fortunes more efficiently than estate taxes.