Would you support an estate(death) tax of 75%?

[God Save The King]

brackets are the worst thing you can do with taxes

either make it static
or make it lineary increase
otherwise you're punished for barely going over the line

Yeah that's not how brackets work, they're progressive, not regressive.

If the brackets are:

$0-50,000: 25%
>$50,000: 50%,

Making 60,000 doesn't mean you pay 30,000 in taxes, that's insane.

What actually happens (literally everywhere I've ever seen with tax brackets):
The first 50k are taxed at 25%, all above 50k at 50%,

So that $60,000 is taxed at
(50,000)*(0.25) + (10,000)*(0.50) = $17,500 in taxes, or a $42,500 net.


This is how the American tax brackets work.

[Evangeliste]

When people mean estate tax, is doesn't automatically mean children or known as issues, are the sole benefactors. In a will they can actually dedicate parts of the total estate wealth to wife, family members even charities - it's basically what ever they want to do with the money. All can be very innocent and loving, some however are not and would like to continue that wealth being held away from being placed back into the economy. Even if it's buying another luxury.

I think 75% is way too high overall, but it is for the bracket of over 250k if I can recall from the article? That already in itself, is in a band of payroll that can quickly amass an estate and pool it.
I'm on the fence as always, I see both sides and basically a minority spoil the majority. I do believe that people should be allowed to maintain wealth and be abolished. But at the same time, keeping out of the economy is not going to help others than the sponsored individuals really. Especially when it's to purposely keep out of the economy and amass even more wealth.

For example, not many beneath the 250k payroll band would really mind it being taxed a little more especially those right near the bottom, instead of hording it away really. That over spill of earned money will most likely go into a number of things, the things that improve lifestyle and status but also a lot can be investments that can be place that wealth outside the cycle of economy.

Trying to balance it all is a nightmare. But still 75% is a little insane.

[Akka]

brackets are the worst thing you can do with taxes

either make it static
or make it lineary increase
otherwise you're punished for barely going over the line

As I said above, you have no idea how taxes work.
A bracket apply the taxation only on the money inside itself. It doesn't bleed over the other brackets. Duh.

[God Save The King]

As I said above, you have no idea how taxes work.
A bracket apply the taxation only on the money inside itself. It doesn't bleed over the other brackets. Duh.

I tried to give an example in both of my posts, they ignored the first one, perhaps they'll read the second.

I was surprised after talking with my coworkers during tax season, how many believe that tax brackets were regressive, and affected money in other brackets.

[Logwyn]

You earn money, you pay tax on it, you save it, you die, the money is taxed a second time?

No double taxation please.

Its taxed more than that!!!!

[Akka]

I tried to give an example in both of my posts, they ignored the first one, perhaps they'll read the second.

I was surprised after talking with my coworkers during tax season, how many believe that tax brackets were regressive, and affected money in other brackets.

Yeah, same thing happened to me at work some years ago.
It's pretty incredible how people can be so stupid (as it's blatantly obvious how brackets are intended to work), and especially considering that the working of taxes are something like two clicks away in a Google search and tend to be explained and detailed by government agencies, and easily checked by just looking at the taxes you pay each year.

[Grauk]

Yeah, very few people understand how taxes or tax brackets work in the US. Estate taxes are one of the things people think affects them but very few people are actually "harmed" by estate taxes as I would have to leave my kids more than 10 million if I was married for it to be taxed right now. The only people that really get hurt by estate taxes are super land rich farmers that are asset poor which is extremely rare and only applicable in very specific cases (Less than 50 small businesses or farms will be affected in 2017 and they will owe less than 6% of their value in taxes.) The vast VAST VAST majority of people will never be effected by estate taxes, this is not doctor or lawyer money, in 2013 less than .2% of Americans were effected, as 4700 estate tax returns were filed and of those many were able to use the GRAT (grantor retained annuity trusts) in order to avoid paying the taxes. Second, this idea of double taxation is nonsensical for a few reasons; one, many things are taxed twice in seperate circumstances. Two and more importantly, the largest portion of estates that owe estate taxes, have never been taxed in the first place because they come from unrealized capitol gains (basically the value isn't updated until it is sold usually, though it can be for other reasons). Estate taxes are a non-issue for most Americans, however they are a specificly progressive tax(the most progressive in the US, actually.) Furthermore, they are a major source of revenue that costs us very little. I do tax work for a living and am happy to explain more, but of any tax that almost certainly should be increased the Estate tax is at the very top of the list.

Sources are the CBPP or the Center on Budget and Policy Priorities (Which is considered nonpartisan by many or slightly left-leaning) however, I merely pulled numbers backed by data, not analysis.

[Mackeyser]

Most people in this thread will end up having very little to tax on their death. That's just the reality. Moreover, as of 2017, the estate tax only BEGINS taxation on amounts over $5.49M. Thus, the ONLY amounts taxed would be for the amount of the estate beginning at $5.49M and up. The first $5.49M is not subject to the estate tax.

Moreover, as most people on these forums are under 35, the MASSIVE changes coming to the workforce in the next 20 years mean that these questions will have to be viewed in a different context. The reason is automation and AI. Professions from fast food worker to pilot, doctor and lawyer can in large part be fully automated. For example, no one needs a night school law grad to make out a simple will, auto pilots can already safely take off and land planes like the A380.

The reality is that especially in America, there is tremendous wealth distribution, UP. The wealthy are effectively taxed at a much lower rate than wage earners, especially if we take into account Capital Gains v Income as well as a tax code which protects wealth. The wealthy also us a massively lower ratio of their various incomes to fund their daily maintenance.

As for the workplace 20 years from now, people will find that there literally isn't enough work for everyone. Granted, that's a UBI issue, but it pertains to this discussion as well.

If millions are displaced from the capability to earn a wage and the tax code incentivizes the retention of wealth, then most capital will gravitate upwards.

The estate tax is a crude, but effective instrument to balance the current systemic economic imbalance which inculcates our current system.

And the reality is that unless you have an estate greater than $5.5M, then you have nothing to lose if the estate tax is 100%. Moreover, if you have an estate less than that, it's literally in your financial interest for the estate tax to be as big as possible.

But people voting and having opinions that directly contradict their linear interests, be they economic, social, political, etc, is par for the course... at least in America.

[Milchshake]

I tried to give an example in both of my posts, they ignored the first one, perhaps they'll read the second.

I was surprised after talking with my coworkers during tax season, how many believe that tax brackets were regressive, and affected money in other brackets.

Welcome to every tax thread on this forum. There's even a few standouts claiming to be studying "economics" who completely miss the concept of brackets and progressive taxes. It's usually expressed as "why would I bother to earn more than $49,999?!"

There's also a lot of overlap with the same people complaining that liberal arts aren't real degrees.

[Mackeyser]

Holy shit, this is one of the dumbest ideas I ever heard of.

First of all, the whole premise is dumb: if children are not "capable", either they or their children will lose all inherited money, therefore in most cases money WILL re-distribute naturally anyway.

Second, as many people have already pointed out here, double taxation is a no-no. How about raising taxes for very rich people instead?

Third, what's the point of working your ass off, if you can't pass anything you earned to your children when you die? This idea is a huge demotivator.

Money does not redistribute naturally. Actually, capital tends to aggregate.

That's basic macro-economics. Pointing out a theoretical idiot inheritor or an example of one does not change the math or social science of economics.

[Fugus]

Really would like to see the names on the votes up there to see 70%+ voting for no estate taxes. Can't help but wonder if they are a lot of low post count alts.

Edit: Upon rereading it,

I might have read it wrong due to a missing comma.

[Sinyc]

When you die your estate has to pay an estate or "death" tax. Republicans coined the term "death" tax and they've been working hard to reduce it. For example, only 2 out of a thousand estates have to pay any estate tax now.

https://www.cbpp.org/research/federa...ral-estate-tax

It's an ideal tax because the person you're taxing is dead and won't care.

Why pass on all that wealth to children who might not be as capable? Redistribute the wealth and let it fall into more able hands.

We can use all that money to ease the tax burden on the poor or for whatever.

Warren Buffet is for this idea.

You mean the multi millionaire who paid less effective tax than I did in 2015? LOL

No thanks. Taxes are already wasted today, why give the government more to waste?

I'd rather my family/children be set as opposed to the money being used for who knows what.

[Independent voter]

The reality is that especially in America, there is tremendous wealth distribution, UP. The wealthy are effectively taxed at a much lower rate than wage earners, especially if we take into account Capital Gains v Income as well as a tax code which protects wealth. The wealthy also us a massively lower ratio of their various incomes to fund their daily maintenance.

As for the workplace 20 years from now, people will find that there literally isn't enough work for everyone. Granted, that's a UBI issue, but it pertains to this discussion as well.

Warren Buffet, the second richest man in the world, was talking on NPR. He said his cleaning lady paid 15% tax, he paid 19% tax. He said that was unfair. His taxes were done following the tax laws.

[Mackeyser]

We call it "inheritance tax". I've always found it to be a stupid and unfair thing; not only does it stem purely from jealousy towards "the rich", but it also effectively prevents poorer families from accumulating wealth.

This is ABSOLUTELY false. The estate tax doesn't even APPLY until an estate reaches over $5.49M or $10.98M for a married couple should they expire at the same time.

The estate tax not only isn't unfair to the poor, it benefits the poor to the degree that the apportioned taxes go to programs that benefit them.

Again, because so many have missed it: unless an estate is greater than $5.49M, THE ENTIRE ESTATE IS IMMUNE TO THE ESTATE TAX.

The misconceptions about the estate tax are legion it seems.

[Fugus]

You mean the multi millionaire who paid less effective tax than I did in 2015? LOL

No thanks. Taxes are already wasted today, why give the government more to waste?

I'd rather my family/children be set as opposed to the money being used for who knows what.

Didn't Buffet actually support having his taxes raised?

And unless you are leaving your kids over 10 million each (5 million per parent), you won't be paying more money.

Also, if you want to help fix the wasteful spending, get the money out of politics but so long as money is allowed in politics companies and individuals will continue to game them for profits.

[Mackeyser]

Warren Buffet, the second richest man in the world, was talking on NPR. He said his cleaning lady paid 15% tax, he paid 19% tax. He said that was wrong.

I'm not sure those percentages are right, but even so. The reason for a progressive tax rate is that 15% of $30k has a much stronger effect on the overall economic status of the taxpayer than 19% of $12M.

Thus, while the rates do need to change, the problem is "effective tax rate". The tax rate for Warren Buffet is 39.4% for monies earned at the top bracket rate which is 39.6% for monies of $418,401 and above as a single filer, $470,701 and above if he's married (I don't recall, so I included both). His taxation on dividends, sale of stocks and other monies is at a lower rate.

The point is that he pays an effective tax rate of 19% due to the tax system being weighted to protect wealth.

The easiest illustration of how this affects most families is the battle over the Earned Income Tax Credit versus the Capital Gains Tax. There are regular attempts to mitigate or eliminate the EITC whereas the same forces trying to INCREASE the taxation on the poor and working class are trying lessen the tax burden on the wealthy reducing or eliminating the Capital Gains Tax, which is a tax on monies earned as a result of investment income be it dividends or the profit from the sales of stock.

[Grauk]

Buffet pays low taxes because conservatives have been tricked into thinking that taxing capital gains will hurt them and vote in wealthy people who make their money through capital gains who then lower those rates, despite all evidence showing the opposite.

[Mackeyser]

No actually you didn't, as that question was quite obviously "tongue in cheek"/rhetorical.

A TAX is taken against your will and goes to the federal government (a non profit that provides a service to society) or state/local but in this case estate tax is federal.

A CHARITY is money given of your own volition to a (non profit that provides a service to society)

Warren Buffet gives 1.8 MILLION to the government and gives 2.8 BILLION (not 3.8) which is only 4.3% of his 65 BILLION dollar fortune (not 99%)
https://www.bloomberg.com/news/artic...15-return-data

The point is that if we are/were to emulate his actions charities are ~2000 times more worthy of our money than the federal government. You can't give to said charities if the government is taking 75% of your assets upon death.

So again... if he truly felt that the government was the best place to "Redistribute the wealth and let it fall into more able hands." @Hubcap then he would be donating a pittance of 1.8 MILLION to charity, and letting the Federal Government have 2.8 BILLION. He quite clearly doesn't do that so we have to question why... or you should, and perhaps question whether the statement "Warren Buffet is for this idea." is even truthful.

Just because you don't understand something... doesn't make it shit posting.

Sorry you don't understand taxation.

Mr. Buffet doesn't "give" money to the government. It is paid as taxation on income, both earned and capital gains at differing rates.

There is NO direct relation between his rate of taxation, which the government decides, and what percentage he gives to relatives or charities.

Saying that because Mr. Buffet pays his taxes and then decides where to give charitably that we can extrapolate that he deems charities 2000X more deserving is simply wrong. He gives to charity because it's in his heart to do so AND he has no say over where the government spends money. If we all could determine where our money would go, our national budget would look very, very different. And who knows if Buffet, Gates, Koch, Walton, Soros or other billionaires would increase giving to the government in that case? No way to know.

But that 2000x figure is meaningless and makes no sense in any context.

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The only time the estate tax is a real issue is when it pertains to a family farm and nationwide that number can't be more than a few thousand at most.

Moreover, it only pertains to farms that haven't incorporated, which... if the total assets are worth more than $5.5M, then even a basic accountant would have to insist that they incorporated unless they wanted to sell the farm and distribute the proceeds upon death (maybe the kids don't come back to the farm or there are no living relatives).

[araine]

excellent choice, 25% left is still a shitload of $$$ left when all you did was being a lucky sperm

[A dot Ham]

Sorry you don't understand taxation.

Mr. Buffet doesn't "give" money to the government. It is paid as taxation on income, both earned and capital gains at differing rates.

There is NO direct relation between his rate of taxation, which the government decides, and what percentage he gives to relatives or charities.

Saying that because Mr. Buffet pays his taxes and then decides where to give charitably that we can extrapolate that he deems charities 2000X more deserving is simply wrong. He gives to charity because it's in his heart to do so AND he has no say over where the government spends money. If we all could determine where our money would go, our national budget would look very, very different. And who knows if Buffet, Gates, Koch, Walton, Soros or other billionaires would increase giving to the government in that case? No way to know.

But that 2000x figure is meaningless and makes no sense in any context.

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The only time this is a real issue is when it pertains to a family farm and nationwide that number can't be more than a few thousand at most.

Moreover, it only pertains to farms that haven't incorporated, which... if the total assets are worth more than $5.5M, then even a basic accountant would have to insist that they incorporated unless they wanted to sell the farm and distribute the proceeds upon death (maybe the kids don't come back to the farm or there are no living relatives).

Another obnoxious and snarky know it all. Please do me a favor and provide your CPA license number.

In any case you are only proving my point. You're right it isn't given... its TAKEN. So one can only assume that if given the option he would pay no taxes at all.

But if he was so confident that by taking 75% of an estate that the federal government would effectively "Redistribute the wealth and let it fall into more able hands." and he is on board with such tax reform and confident in the capabilities of the federal government, why he wouldn't just gift that money to the federal government instead of giving to various charities (overhead unknown, corruptability unknown, effectiveness unknown).

As far as the 2000 comment is concerned. Its not 2000, the number is 1555 I rounded up... 1.8 million X 1555 = 2.8 Billion. 2000 was closer to the original (incorrect) citation of 3.8 Billion. As I said to the last person, just because you don't understand something doesn't make it meaningless/not make sense. Tis a personal problem, try to keep up... I won't walk you through it again.