5 ms·

How Did the Deaths of Four People Cost the U.S. Government $6.5 Billion?

26 points by cwan 16y ago

forgotAgain 16y ago
Really poor title for the NY Times. The deaths didn't cause the government to lose money. It's not the government's money to begin with, it's the property of the people who died. It's distressing to see the country's premier newspaper resort to linkbait.
- brown9-2 16y ago
  Is it really link bait? The amounts in question are tax revenue that the government would have collected in other years which were not collected this year due to the one-year-only-exemption. How is missed revenue opportunity not lost money? The question comes down to semantics of how you interpret a missed chance at revenue, we can probably leave the question of the fairness of the inheritance tax out of it (for now).
  - forgotAgain 16y ago
    The tax code is what it is. The deaths of the four people did not cause the government to lose the money. The structure of the tax code did.
    - brown9-2 16y ago
      Dubner's point here is that the timing of the deaths did in fact cause the government to miss out on some tax revenue. I agree he's being a bit cute about the wording, but it is just a blog post - not a NYTimes cover news story. He's trying to make a point about the quirks and odd facets (some might call them ridiculous) of our tax code.
      - spinlock 16y ago
        Or, maybe not. You see, this year, you not only get to avoid the death tax but you also miss out on the step-up in tax basis. So, you can pass assets down to your heirs tax free but they then have a much larger tax bill if they ever realize the gains on those assets.
    - jonhendry 16y ago
      " The structure of the tax code did." Then the decision of the Republicans to structure the tax code so that the kids of billionaires get tax-free windfall income has cost other taxpayers billions.
      - donspaulding 16y ago
        FTFY: ...so that the kids of billionaires get tax-free windfall income just like the kids of non-billionaires...
        jonhendry 16y ago
        The billionaire kids won't have been saddled with the cost of supporting their ailing parents. The two situations are not just like each other. Also, there's a benefit to society in avoiding a hereditary concentration of wealth in a quasi-aristocracy of Paris Hilton-class morons.
  - spinlock 16y ago
    I'm a bit unclear what "link bait" would be but I do think that the title is a tad misleading and sensationalistic but in a good way. It's like pitching a VC your problem statement. You'd be a fool to be pedantic about it. You want to catch their interest so that they'll listen to the rest of your pitch. The title does the same thing. No one would read the blog post if it was titled "How 4 Deaths Delayed an Indeterminant Amount of Government Revenue for an Indeterminant Amount of Time."
    - forgotAgain 16y ago
      Agreed that titles are meant to attract but this specific case I believe goes beyond that. It left me with a negative impression of the NYT. A feeling that I had been misled.
- andreyf 16y ago
  Really poor title for the NY Times. I'm pretty sure Dubner posts these without review, so it's really his wording, not anything attributable to the NYT. It's not the government's money to begin with, it's the property of the people who died. This is one (perfectly valid) model of property. Another would include the fact that the institutions that make the ownership of a baseball team or oil corporation feasible (stock markets, banking, legal courts, law enforcement) exist because of the social contract the person entered by deciding to live in the US. Estate taxes (or death taxes, if you wish) are the other side of that social contract: when you die wealthy, you have to pay your dues to the society which made accumulation (or maintenance) of wealth possible.
  - forgotAgain 16y ago
    when you die wealthy, you have to pay your dues to the society which made accumulation (or maintenance) of wealth possible. They did pay their dues as defined by the tax code in place at the time of their deaths.
    - Retric 16y ago
      Semantically, if they paid nothing because they were not required to pay anything, then I don't think you can say they "paid their dues".
    - cullenking 16y ago
      And the tax code that, you know, taxed them while they were alive. It's not like their net worth is pre-tax, and if it was pre-tax, that it would stay that way when capital gains tax hits when an heir sells property, etc.
      - Retric 16y ago
        No, if the appreciated asset was pre-tax, at their death, then their heir's get to immediately sell it without paying capital gains. If you do not have to file a federal estate tax return, then your basis in the inherited property is its appraised value on the date of passing for state inheritance or transmission taxes. Otherwise the property inherited from a descendent usually has its value or basis determined in one of the following four ways: The appraised fair market value as of the date of passing. The fair market value on the alternate valuation date if a personal representative of the estate chooses to use alternate valuation. A special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. When the land that is part of the decedent's estate is a qualified conservation easement, then it may qualify for an adjusted cost basis. http://www.money-zine.com/Financial-Planning/Tax-Shelter/Capital-Gains-Tax/ PS: This loophole still exists for the untaxed portion of an inheritance.
- brlewis 16y ago
  You can say it's the property of the people who died if you have an ancient Egyptian view of the afterlife. Everybody else says you can't take it with you. What happens to someone's former property after death is a public policy question.
sielskr 16y ago
When I saw "the Deaths of Four People Cost the U.S. Government $6.5 Billion" I imagined the government taking 6.5 billion from taxpayers and spending it extremely inefficiently. But I am not a journalist living in New York City (if the blogger wrote the headline or an editor for the New York Times if an editor wrote the headline of the blog post)! What the headline is really talking about is the government's failing to collect death taxes that it could have collected if Congress had voted differently. So apparently according to this journalist every time the government fails to collect X dollars that it could have collected through the legitimate operation of elections, Congressional votes, etc, that failure "costs" the government X dollars. I am having trouble escaping the implication that the headline writer believes that any money that Congress could have voted to collect rightfully belongs to the government, and if the money remains in private hands, maybe that is worth a blog post in the New York Times!
- brown9-2 16y ago
  Let's say you are running a business which sells FooWidgets and you charge $100 for them. Then for the holidays, you decide to only sell them for $50 each. Doesn't the $50 in savings which you are passing on to your customers also represent $50 in potential revenue that you are not collecting, since you decided to be generous?
  - arethuza 16y ago
    I am not an accountant - but that scenario sounds more like a decrease in revenue rather than an increase in costs.
  - jerf 16y ago
    It's not that simple; you have to take into account the customers who would not have purchased at $100 but did at $50. Failing to account for price sensitivity is a major elementary economic mistake. http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Chapter_3/PThy_Chapter_3.html http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Cha...
    - 16y ago
TGJ 16y ago
When the death of a citizen benefits the government, the citizen should seek the death of the government. The government is supposed to be for the benefit of the citizen not the other way around.
- khafra 16y ago
  When the death of a citizen benefits his heirs, should the citizen seek the death of his heirs?
  - TGJ 16y ago
    You are not forced to give your inheritance to your children. You are forced to give it to the government. That's why your rephrasing does not work.
Semiapies 16y ago
And meanwhile, the government spent over a trillion dollars more in FY 2009 than it had received in revenue. Over half of government spending is in three areas that will not be touched by members of either party: Defense, Social Security, and Medicare & Medicaid. Whining about the loss of a piddly $6.5 billion one year is like going on about cutting pork or "waste" - a demonstration that one wants to appeal to peoples' anxieties about unsustainable government spending while being utterly uninterested in doing anything about the problem. http://en.wikipedia.org/wiki/United_States_federal_budget http://en.wikipedia.org/wiki/United_States_federal_budget

26 points by cwan 16y ago

Really poor title for the NY Times. The deaths didn't cause the government to lose money. It's not the government's money to begin with, it's the property of the people who died. It's distressing to see the country's premier newspaper resort to linkbait.

brown9-2 16y ago
Is it really link bait? The amounts in question are tax revenue that the government would have collected in other years which were not collected this year due to the one-year-only-exemption. How is missed revenue opportunity not lost money? The question comes down to semantics of how you interpret a missed chance at revenue, we can probably leave the question of the fairness of the inheritance tax out of it (for now).
- forgotAgain 16y ago
  The tax code is what it is. The deaths of the four people did not cause the government to lose the money. The structure of the tax code did.
  - brown9-2 16y ago
    Dubner's point here is that the timing of the deaths did in fact cause the government to miss out on some tax revenue. I agree he's being a bit cute about the wording, but it is just a blog post - not a NYTimes cover news story. He's trying to make a point about the quirks and odd facets (some might call them ridiculous) of our tax code.
    - spinlock 16y ago
      Or, maybe not. You see, this year, you not only get to avoid the death tax but you also miss out on the step-up in tax basis. So, you can pass assets down to your heirs tax free but they then have a much larger tax bill if they ever realize the gains on those assets.
  - jonhendry 16y ago
    " The structure of the tax code did." Then the decision of the Republicans to structure the tax code so that the kids of billionaires get tax-free windfall income has cost other taxpayers billions.
    - donspaulding 16y ago
      FTFY: ...so that the kids of billionaires get tax-free windfall income just like the kids of non-billionaires...
      - jonhendry 16y ago
        The billionaire kids won't have been saddled with the cost of supporting their ailing parents. The two situations are not just like each other. Also, there's a benefit to society in avoiding a hereditary concentration of wealth in a quasi-aristocracy of Paris Hilton-class morons.
- spinlock 16y ago
  I'm a bit unclear what "link bait" would be but I do think that the title is a tad misleading and sensationalistic but in a good way. It's like pitching a VC your problem statement. You'd be a fool to be pedantic about it. You want to catch their interest so that they'll listen to the rest of your pitch. The title does the same thing. No one would read the blog post if it was titled "How 4 Deaths Delayed an Indeterminant Amount of Government Revenue for an Indeterminant Amount of Time."
  - forgotAgain 16y ago
    Agreed that titles are meant to attract but this specific case I believe goes beyond that. It left me with a negative impression of the NYT. A feeling that I had been misled.
andreyf 16y ago
Really poor title for the NY Times. I'm pretty sure Dubner posts these without review, so it's really his wording, not anything attributable to the NYT. It's not the government's money to begin with, it's the property of the people who died. This is one (perfectly valid) model of property. Another would include the fact that the institutions that make the ownership of a baseball team or oil corporation feasible (stock markets, banking, legal courts, law enforcement) exist because of the social contract the person entered by deciding to live in the US. Estate taxes (or death taxes, if you wish) are the other side of that social contract: when you die wealthy, you have to pay your dues to the society which made accumulation (or maintenance) of wealth possible.
- forgotAgain 16y ago
  when you die wealthy, you have to pay your dues to the society which made accumulation (or maintenance) of wealth possible. They did pay their dues as defined by the tax code in place at the time of their deaths.
  - Retric 16y ago
    Semantically, if they paid nothing because they were not required to pay anything, then I don't think you can say they "paid their dues".
  - cullenking 16y ago
    And the tax code that, you know, taxed them while they were alive. It's not like their net worth is pre-tax, and if it was pre-tax, that it would stay that way when capital gains tax hits when an heir sells property, etc.
    - Retric 16y ago
      No, if the appreciated asset was pre-tax, at their death, then their heir's get to immediately sell it without paying capital gains. If you do not have to file a federal estate tax return, then your basis in the inherited property is its appraised value on the date of passing for state inheritance or transmission taxes. Otherwise the property inherited from a descendent usually has its value or basis determined in one of the following four ways: The appraised fair market value as of the date of passing. The fair market value on the alternate valuation date if a personal representative of the estate chooses to use alternate valuation. A special-use valuation method for real property used in farming or a closely held business if chosen for estate tax purposes. When the land that is part of the decedent's estate is a qualified conservation easement, then it may qualify for an adjusted cost basis. http://www.money-zine.com/Financial-Planning/Tax-Shelter/Capital-Gains-Tax/ PS: This loophole still exists for the untaxed portion of an inheritance.
brlewis 16y ago
You can say it's the property of the people who died if you have an ancient Egyptian view of the afterlife. Everybody else says you can't take it with you. What happens to someone's former property after death is a public policy question.

sielskr 16y ago

When I saw "the Deaths of Four People Cost the U.S. Government $6.5 Billion" I imagined the government taking 6.5 billion from taxpayers and spending it extremely inefficiently. But I am not a journalist living in New York City (if the blogger wrote the headline or an editor for the New York Times if an editor wrote the headline of the blog post)! What the headline is really talking about is the government's failing to collect death taxes that it could have collected if Congress had voted differently. So apparently according to this journalist every time the government fails to collect X dollars that it could have collected through the legitimate operation of elections, Congressional votes, etc, that failure "costs" the government X dollars. I am having trouble escaping the implication that the headline writer believes that any money that Congress could have voted to collect rightfully belongs to the government, and if the money remains in private hands, maybe that is worth a blog post in the New York Times!

brown9-2 16y ago
Let's say you are running a business which sells FooWidgets and you charge $100 for them. Then for the holidays, you decide to only sell them for $50 each. Doesn't the $50 in savings which you are passing on to your customers also represent $50 in potential revenue that you are not collecting, since you decided to be generous?
- arethuza 16y ago
  I am not an accountant - but that scenario sounds more like a decrease in revenue rather than an increase in costs.
- jerf 16y ago
  It's not that simple; you have to take into account the customers who would not have purchased at $100 but did at $50. Failing to account for price sensitivity is a major elementary economic mistake. http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Chapter_3/PThy_Chapter_3.html http://www.daviddfriedman.com/Academic/Price_Theory/PThy_Cha...
  - 16y ago

TGJ 16y ago

When the death of a citizen benefits the government, the citizen should seek the death of the government. The government is supposed to be for the benefit of the citizen not the other way around.

khafra 16y ago
When the death of a citizen benefits his heirs, should the citizen seek the death of his heirs?
- TGJ 16y ago
  You are not forced to give your inheritance to your children. You are forced to give it to the government. That's why your rephrasing does not work.

Semiapies 16y ago

And meanwhile, the government spent over a trillion dollars more in FY 2009 than it had received in revenue. Over half of government spending is in three areas that will not be touched by members of either party: Defense, Social Security, and Medicare & Medicaid. Whining about the loss of a piddly $6.5 billion one year is like going on about cutting pork or "waste" - a demonstration that one wants to appeal to peoples' anxieties about unsustainable government spending while being utterly uninterested in doing anything about the problem. http://en.wikipedia.org/wiki/United_States_federal_budget http://en.wikipedia.org/wiki/United_States_federal_budget