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Yes, especially for the top 1% and 0.1%. However, they're the ones who have enough money to pay for ways to hide their wealth from taxation, so an inheritance t

Yes, especially for the top 1% and 0.1%. However, they're the ones who have enough money to pay for ways to hide their wealth from taxation, so an inheritance tax would be a high + low attack on the middle, further cementing the inequality divide.

Loughla 6y ago
100% with you on this. I am set to inherit a large sum of money when my grandfather dies (150-200k). And yes, 'large sum' is what I said. I honestly thought about writing 'life-changing' sum, because that will allow me to eliminate all of my debt, and substantially change my lifestyle. I'm exactly who this would bite in the ass. I have neither the know-how, nor the real money to spend on moving things around to hide it from taxation. Edit: I know the first million, as illustrated in the scenario this article presents, is exempted. I'm using myself as an example. The point still stands - extreme wealth would be hidden, and the rest of us would have to pay.
- arn 6y ago
  But there's a large exception. You won't be taxed on that amount. You presently get the first $23 million tax-free before any inheritance tax kicks in... and then only for the amount above $23 mil.
  - MereInterest 6y ago
    Agreed. Having more than $23 million in inheritance definitely puts one above "middle class".
    - beamatronic 6y ago
      Perhaps, in some low-cost-of-living areas.
      - MereInterest 6y ago
        $23 million, assuming a low yield of 5% annually, means that a person is receiving $1.15 million every year. The average income in the top 5% of the Bay Area is $808k/year [1]. This is ignoring every other source of income, and only looking at passive income received as a result of already having significant wealth. [1] https://www.kqed.org/news/11799308/bay-area-has-highest-income-inequality-in-california https://www.kqed.org/news/11799308/bay-area-has-highest-inco...
- saalweachter 6y ago
  > An even better approach would be to replace the estate tax with an inheritance tax. Under an inheritance tax, heirs would simply pay income and payroll taxes on their inheritance above a large exemption, just as others do on their wages. > If an inheritance tax exempted the first $1 million received over one’s lifetime and applied the highest income and payroll tax rates to amounts above that threshold, it would raise $790 billion over the next decade.
- mercutio2 6y ago
  Are you sure you understand the estate tax? Even before Bush-era increases to the estate tax exemption, estate taxes only cut in on $1 million and larger estates. These days, the exemption is $5 million. Putting the exemption back down to $1 million doesn’t sound like it would heavily impact you unless your grandfather had a lot of beneficiaries.
  - deleted 6y ago
    [deleted]
  - saalweachter 6y ago
    > Putting the exemption back down to $1 million doesn’t sound like it would heavily impact you unless your grandfather had a lot of beneficiaries. This is also the difference between an estate and an inheritance tax. If someone has a $25 million estate and divides it evenly among 25 heirs, under an estate tax with a $23 million exemption and a 40% tax above that, each heir gets $968k. Under an estate tax with a $1 million exemption, each heir gets $616k. Under an inheritance tax with a $1 million exemption, each heir gets $1 million.
    - sgt101 6y ago
      The main thing is to encourage it to be distributed to a large number of heirs because if 10 people get $1m they will spend far more than 1 person getting $1m and will pay sales tax, property tax and so on with it, also the people they spend it with will do the same and so on. The problem comes when folks pass $10m + pools down through generations.
      - rpiguy 6y ago
        Large accumulators of wealth simply dodge estate taxes all together. They put the money in a foundation and their heirs get a draw on the foundation for the rest of their lives. Whatever reforms are put in place should focus on minimizing that ability to dodge the taxes. Estate taxes are strange things in that they don't affect the poor and middle class because few people inherit more than 1 million dollars and we have exemptions for family farms and inherited small businesses. It also doesn't hurt the ultra-rich, who easily evade inheritance taxes. It hits a very narrow band of wealthy between the middle class and the ultra-rich.
- jellicle 6y ago
  > Edit: I know the first million, as illustrated in the scenario this article presents, is exempted. I'm using myself as an example. The point still stands - extreme wealth would be hidden, and the rest of us would have to pay. So you know that a) you will pay zero taxes under current law even if you received fifty times as much money and b) you'd pay zero taxes under the proposal in the article and yet c) you still use yourself as an example of someone who would pay taxes. Do I have it right?
- mithr 6y ago
  > I know the first million, as illustrated in the scenario this article presents, is exempted. I'm using myself as an example. The point still stands - extreme wealth would be hidden, and the rest of us would have to pay. Except, the point doesn't really stand, does it? Those with "extreme wealth" will indeed be taxed, because those sums would be much greater than 150-200k. Some percentage will find ways to avoid it, but that is true with any law, and those that do will have to make some tradeoffs to do so. "The rest of us", which in this case includes you (and me), will not at all be affected by this. We would only be affected by this as we get closer to having that kind of extreme wealth ourselves. And that's the whole point of only taxing the larger amounts -- that it does not impact the rest of us, and in fact you are precisely not someone this will "bite in the ass". To go a bit further, you yourself say that you consider 150-200k to be a large sum of money, maybe even life-changing. All of these estate taxes, with their minimums in the millions, would absolutely still let you receive life-changing amounts of money as inheritance -- much larger than what you already consider to be life changing -- and only start taxing the portion of it that is more "excessive".
brokensegue 6y ago
even before the tax was cut by Bush only like 2% of estates were taxed. hardly the middle. your estate has to be millions ($23MM according to the article) for this to even begin mattering.
- programmarchy 6y ago
  $23MM+ is the middle, though. Upper middle, but still middle. You're not really a power player in national politics until you are a billionaire (i.e. the top 1%), and that's where the real power inequality lies. For example, Sheldon Adelson recently pledged to drop $100MM into Trump's 2020 campaign, and like the article mentions, he "used a different strategy involving trusts to avoid $2.8 billion in estate and gift taxes between 2010 and 2013".
  - ceejayoz 6y ago
    $23M net worth puts you squarely in the top 1%. I'm not sure how anyone can claim that's middle class. That there's a rarefied 0.01% doesn't make everyone else middle class; it just means we've got a small (numerically, at least) tier of ultra-wealthy.
    - programmarchy 6y ago
      Like I said, people with $23MM net worth aren't influencing national elections with their wealth, though. That's what puts them in middle -- they may live a luxurious life, but they have very little real power. You'd seem to prefer we ignore the existence of the ultra-wealthy, without appreciating the massively outsized influence they have. By pretending they don't exist or don't matter, you are holding them unaccountable for the power they wield on a national, and global scale. Yet they have the most responsibility to bear when it comes to inequality. So you can scapegoat the middle class, but you're just doing a favor to those ultra-rich who hold real power, by eliminating their potential middle competitors for them. This is the high + low vs middle power dynamic.
      - ceejayoz 6y ago
ceejayoz 6y ago
> Today, the first $23 million that a couple transfers is entirely exempt from the estate tax. I think the middle class will be just fine.
jimhefferon 6y ago
> so an inheritance tax would be Is it not possible to imagine effective laws? Near me is a Gilded Age estate, a magnificent place. My understanding is that with the introduction of income tax, the family was eventually forced to turn it over to be a nonprofit in the 1970's. So, if my understanding is right, even folks who were staggeringly wealthy were not able to completely defeat the cross-generational effect of the law.
- klenwell 6y ago
  > Is it not possible to imagine effective laws? Good question. The Defund the Police movement should take notes from the conservative Starve the Beast movement. Defund the Police: Because Our Modern Supercriminals Are Too Smart for Law Enforcement Anyways. https://en.wikipedia.org/wiki/Starve_the_beast https://en.wikipedia.org/wiki/Starve_the_beast
  - charwalker 6y ago
    That's more or less what some cities are going for albeit with shifting the released funds to community support programs, training, and other resources instead of into the pockets of donors and the rich via tax cuts and putting the strain on the deficit. One issue is that most states and municipal governments are required to balance their budget each year or be in the black. I think there are only 2 states that don't have that law. Consider the loss of sales tax and more methods for municipal funding. Unfortunately, to meet that balanced budget requirement many may need to gut several departments through 2020/2021 and starting with the police budget is politically savvy but perhaps won't provide funding for alternative programs but just drop some red ink. I don't think the federal government is functional, split as it is, to address these budget shortfalls and allow local governments to address these issues. I'm hopeful the (likely, by the sources I follow) pending economic disaster is recognized before the election and the feds work together to prevent another major recession slip. Unlikely but hopeful.
    - klenwell 6y ago
      > That's more or less what some cities are going for albeit with shifting the released funds to community support programs, training, and other resources instead of into the pockets of donors and the rich via tax cuts and putting the strain on the deficit. Agreed. The solution for my community? Simply reverse the trends in the graph found here: https://voiceofoc.org/2020/06/oc-shifted-millions-from-public-health-in-last-decade-while-doubling-sheriff-spending/ https://voiceofoc.org/2020/06/oc-shifted-millions-from-publi...
grecy 6y ago
> Yes, especially for the top 1% and 0.1%. However, they're the ones who have enough money to pay for ways to hide their wealth from taxation So because the ultra-rich have found ways to skirt the laws, are you suggesting we just don't bother making the laws? Surely this is a game of whack-a-mole, and it's in society's best interest to keep going after them.
- deleted 6y ago
  [deleted]

Loughla 6y ago

100% with you on this. I am set to inherit a large sum of money when my grandfather dies (150-200k). And yes, 'large sum' is what I said. I honestly thought about writing 'life-changing' sum, because that will allow me to eliminate all of my debt, and substantially change my lifestyle. I'm exactly who this would bite in the ass. I have neither the know-how, nor the real money to spend on moving things around to hide it from taxation. Edit: I know the first million, as illustrated in the scenario this article presents, is exempted. I'm using myself as an example. The point still stands - extreme wealth would be hidden, and the rest of us would have to pay.

arn 6y ago
But there's a large exception. You won't be taxed on that amount. You presently get the first $23 million tax-free before any inheritance tax kicks in... and then only for the amount above $23 mil.
- MereInterest 6y ago
  Agreed. Having more than $23 million in inheritance definitely puts one above "middle class".
  - beamatronic 6y ago
    Perhaps, in some low-cost-of-living areas.
    - MereInterest 6y ago
      $23 million, assuming a low yield of 5% annually, means that a person is receiving $1.15 million every year. The average income in the top 5% of the Bay Area is $808k/year [1]. This is ignoring every other source of income, and only looking at passive income received as a result of already having significant wealth. [1] https://www.kqed.org/news/11799308/bay-area-has-highest-income-inequality-in-california https://www.kqed.org/news/11799308/bay-area-has-highest-inco...
saalweachter 6y ago
> An even better approach would be to replace the estate tax with an inheritance tax. Under an inheritance tax, heirs would simply pay income and payroll taxes on their inheritance above a large exemption, just as others do on their wages. > If an inheritance tax exempted the first $1 million received over one’s lifetime and applied the highest income and payroll tax rates to amounts above that threshold, it would raise $790 billion over the next decade.
mercutio2 6y ago
Are you sure you understand the estate tax? Even before Bush-era increases to the estate tax exemption, estate taxes only cut in on $1 million and larger estates. These days, the exemption is $5 million. Putting the exemption back down to $1 million doesn’t sound like it would heavily impact you unless your grandfather had a lot of beneficiaries.
- deleted 6y ago
  [deleted]
- saalweachter 6y ago
  > Putting the exemption back down to $1 million doesn’t sound like it would heavily impact you unless your grandfather had a lot of beneficiaries. This is also the difference between an estate and an inheritance tax. If someone has a $25 million estate and divides it evenly among 25 heirs, under an estate tax with a $23 million exemption and a 40% tax above that, each heir gets $968k. Under an estate tax with a $1 million exemption, each heir gets $616k. Under an inheritance tax with a $1 million exemption, each heir gets $1 million.
  - sgt101 6y ago
    The main thing is to encourage it to be distributed to a large number of heirs because if 10 people get $1m they will spend far more than 1 person getting $1m and will pay sales tax, property tax and so on with it, also the people they spend it with will do the same and so on. The problem comes when folks pass $10m + pools down through generations.
    - rpiguy 6y ago
      Large accumulators of wealth simply dodge estate taxes all together. They put the money in a foundation and their heirs get a draw on the foundation for the rest of their lives. Whatever reforms are put in place should focus on minimizing that ability to dodge the taxes. Estate taxes are strange things in that they don't affect the poor and middle class because few people inherit more than 1 million dollars and we have exemptions for family farms and inherited small businesses. It also doesn't hurt the ultra-rich, who easily evade inheritance taxes. It hits a very narrow band of wealthy between the middle class and the ultra-rich.
jellicle 6y ago
> Edit: I know the first million, as illustrated in the scenario this article presents, is exempted. I'm using myself as an example. The point still stands - extreme wealth would be hidden, and the rest of us would have to pay. So you know that a) you will pay zero taxes under current law even if you received fifty times as much money and b) you'd pay zero taxes under the proposal in the article and yet c) you still use yourself as an example of someone who would pay taxes. Do I have it right?
mithr 6y ago
> I know the first million, as illustrated in the scenario this article presents, is exempted. I'm using myself as an example. The point still stands - extreme wealth would be hidden, and the rest of us would have to pay. Except, the point doesn't really stand, does it? Those with "extreme wealth" will indeed be taxed, because those sums would be much greater than 150-200k. Some percentage will find ways to avoid it, but that is true with any law, and those that do will have to make some tradeoffs to do so. "The rest of us", which in this case includes you (and me), will not at all be affected by this. We would only be affected by this as we get closer to having that kind of extreme wealth ourselves. And that's the whole point of only taxing the larger amounts -- that it does not impact the rest of us, and in fact you are precisely not someone this will "bite in the ass". To go a bit further, you yourself say that you consider 150-200k to be a large sum of money, maybe even life-changing. All of these estate taxes, with their minimums in the millions, would absolutely still let you receive life-changing amounts of money as inheritance -- much larger than what you already consider to be life changing -- and only start taxing the portion of it that is more "excessive".

brokensegue 6y ago

even before the tax was cut by Bush only like 2% of estates were taxed. hardly the middle. your estate has to be millions ($23MM according to the article) for this to even begin mattering.

programmarchy 6y ago
$23MM+ is the middle, though. Upper middle, but still middle. You're not really a power player in national politics until you are a billionaire (i.e. the top 1%), and that's where the real power inequality lies. For example, Sheldon Adelson recently pledged to drop $100MM into Trump's 2020 campaign, and like the article mentions, he "used a different strategy involving trusts to avoid $2.8 billion in estate and gift taxes between 2010 and 2013".
- ceejayoz 6y ago
  $23M net worth puts you squarely in the top 1%. I'm not sure how anyone can claim that's middle class. That there's a rarefied 0.01% doesn't make everyone else middle class; it just means we've got a small (numerically, at least) tier of ultra-wealthy.
  - programmarchy 6y ago
    Like I said, people with $23MM net worth aren't influencing national elections with their wealth, though. That's what puts them in middle -- they may live a luxurious life, but they have very little real power. You'd seem to prefer we ignore the existence of the ultra-wealthy, without appreciating the massively outsized influence they have. By pretending they don't exist or don't matter, you are holding them unaccountable for the power they wield on a national, and global scale. Yet they have the most responsibility to bear when it comes to inequality. So you can scapegoat the middle class, but you're just doing a favor to those ultra-rich who hold real power, by eliminating their potential middle competitors for them. This is the high + low vs middle power dynamic.
    - ceejayoz 6y ago

ceejayoz 6y ago

> Today, the first $23 million that a couple transfers is entirely exempt from the estate tax. I think the middle class will be just fine.

jimhefferon 6y ago

> so an inheritance tax would be Is it not possible to imagine effective laws? Near me is a Gilded Age estate, a magnificent place. My understanding is that with the introduction of income tax, the family was eventually forced to turn it over to be a nonprofit in the 1970's. So, if my understanding is right, even folks who were staggeringly wealthy were not able to completely defeat the cross-generational effect of the law.

klenwell 6y ago
> Is it not possible to imagine effective laws? Good question. The Defund the Police movement should take notes from the conservative Starve the Beast movement. Defund the Police: Because Our Modern Supercriminals Are Too Smart for Law Enforcement Anyways. https://en.wikipedia.org/wiki/Starve_the_beast https://en.wikipedia.org/wiki/Starve_the_beast
- charwalker 6y ago
  That's more or less what some cities are going for albeit with shifting the released funds to community support programs, training, and other resources instead of into the pockets of donors and the rich via tax cuts and putting the strain on the deficit. One issue is that most states and municipal governments are required to balance their budget each year or be in the black. I think there are only 2 states that don't have that law. Consider the loss of sales tax and more methods for municipal funding. Unfortunately, to meet that balanced budget requirement many may need to gut several departments through 2020/2021 and starting with the police budget is politically savvy but perhaps won't provide funding for alternative programs but just drop some red ink. I don't think the federal government is functional, split as it is, to address these budget shortfalls and allow local governments to address these issues. I'm hopeful the (likely, by the sources I follow) pending economic disaster is recognized before the election and the feds work together to prevent another major recession slip. Unlikely but hopeful.
  - klenwell 6y ago
    > That's more or less what some cities are going for albeit with shifting the released funds to community support programs, training, and other resources instead of into the pockets of donors and the rich via tax cuts and putting the strain on the deficit. Agreed. The solution for my community? Simply reverse the trends in the graph found here: https://voiceofoc.org/2020/06/oc-shifted-millions-from-public-health-in-last-decade-while-doubling-sheriff-spending/ https://voiceofoc.org/2020/06/oc-shifted-millions-from-publi...

grecy 6y ago

> Yes, especially for the top 1% and 0.1%. However, they're the ones who have enough money to pay for ways to hide their wealth from taxation So because the ultra-rich have found ways to skirt the laws, are you suggesting we just don't bother making the laws? Surely this is a game of whack-a-mole, and it's in society's best interest to keep going after them.

deleted 6y ago
[deleted]