Go Back   This Blue Marble, a Global Current Events Discussion Forum > Main Floor > Economy

Economy Economy discussion forum. Discuss the politics and effects of the general economy and global economic collapse here. Please keep all politics out of the Finance and Investment subforum.

Reply
 
Thread Tools Search this Thread Display Modes
Old 07-16-2010, 06:12 PM   #1
flourbug
fumbling around in the dark
 
flourbug's Avatar
 
Join Date: Aug 2008
Location: LOL, Florida!
Posts: 19,725
Thanks: 1,544
Thanked 2,909 Times in 1,703 Posts
Default The Deadly Impact of the Death Tax

http://www.cato-at-liberty.org/2010/...the-death-tax/
__________________
Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are inevitably ruined. ~ Patrick Henry

Price history
flourbug is online now   Reply With Quote
Old 07-17-2010, 06:05 PM   #2
spinnerholic
Senior Level 3
 
Join Date: Aug 2008
Location: Virginia
Posts: 3,319
Thanks: 395
Thanked 246 Times in 81 Posts
Kinda makes my skin crawl.

But it sure says a lot about people who struggled so to live long enough to spare their heirs, doesn't it?
__________________
There will be *NO* crises this week.

My schedule is full.
spinnerholic is offline   Reply With Quote
Old 07-17-2010, 06:22 PM   #3
Ought Six
Dismember
 
Ought Six's Avatar
 
Join Date: Oct 2008
Posts: 35,164
Blog Entries: 15
Thanks: 177
Thanked 390 Times in 326 Posts
Arrow

Struggle, innovate and build a business, pouring your blood, sweat and tears into it so that you can pass it on to your children the government can destroy it and steal the proceeds when you pass on. What a great incentive for our budding entrepreneurs to start a business, hire people and save our economy!
__________________
* I have the right to live, thus I have the right to defend my life from attackers who would take it from me.
* I have the right to my private property, thus I have the right to defend my property from thieves who would take it from me.
* I have the right to self-determination, thus I have the right to defend my liberty from tyrants who would take it from me.
* The only usable tools for these tasks are guns, and thus I have the right to shoot anyone who would take my guns from me.
Ought Six is offline   Reply With Quote
Old 07-18-2010, 03:52 AM   #4
Fiddlerdave
Not Active
 
Join Date: Aug 2008
Posts: 4,847
Thanks: 0
Thanked 0 Times in 0 Posts
I find it amusing that the people who get money for nothing from Daddy are not characterized as the "slacker, lazy children of entrepreneurs who did nothing to earn their money" as other peopple who get freebies are called. Somehow, they are the poor victims because of a plan to prevent them from receiving enormous sums free of any income tax whatsoever!

Why should the income from the sweat of a person's brow be taxed, but the income from the happy choice of wealthy forefathers be tax free?

The 3.5 million cash exemption of last year, and the worst case 1 million dollar (certainly to be raised much higher) complete exemption of next year means none of these people will want for anything, and would actually have plenty of money to build up their own fortunes to be proud of!

Everyone should pay the same rates of tax on income from any source. Once we are all in the same boat, maybe the best course could be easier set.
Fiddlerdave is offline   Reply With Quote
Old 07-18-2010, 07:26 AM   #5
Ross
Senior Level 6
 
Ross's Avatar
 
Join Date: Aug 2008
Location: Melbourne Australia
Posts: 9,513
Thanks: 907
Thanked 1,400 Times in 802 Posts
Dave , sorry man but you just do not get it .

Just one of ten thousand possible examples ..........

Even the smallest manufacturing business may have
equipment worth several hundred thousand dollars.
Example ... For simplest water jet profile cutting business
the equipment would easily be worth a minimum of 500K .

So Dave are you saying that a manufacturing business should close
when the owner dies and the employees dismissed given that many
such businesses would be unable to find the cash for death duties ?

Nothing could be more calculated to play right in to the hands of
corporations that are not subject to death duties and would love to
see their small competitors destroyed .
__________________
All paper is a short position on gold.

“Gold is money. Everything else is credit.”
.

Last edited by Ross; 07-18-2010 at 09:12 AM.
Ross is offline   Reply With Quote
Old 07-18-2010, 08:08 AM   #6
Cactus Az
Member Level 5
 
Cactus Az's Avatar
 
Join Date: Aug 2008
Location: held hostage in NM
Posts: 863
Thanks: 335
Thanked 82 Times in 49 Posts
My SIL`s father owns the ranch. Worth about 3.5 million.
The only way his heirs could pay 1.5+ million in death taxes would be to sell it.Probably to some type of developer.
These are "land poor" folks. It`s not even a working ranch,just lots of acres.
The kids are certainly not lazy rich kids. They all have jobs. The 2 sons work at an openpit coal mine.
The parents are my age, so, hopefully they will live for many more years. But, the father has health issues due to Post-Polio syndrome.
Cactus Az is offline   Reply With Quote
Old 07-18-2010, 08:42 AM   #7
flourbug
fumbling around in the dark
 
flourbug's Avatar
 
Join Date: Aug 2008
Location: LOL, Florida!
Posts: 19,725
Thanks: 1,544
Thanked 2,909 Times in 1,703 Posts
Cactus Az, DH's family is in much the same situation. Large ranch producing wheat and beef, two sons, 99.9% of their wealth is in the land - and any profits are plowed right back in to buy more land and make it productive. The ranch has been passed down and added to, generation after generation. Jason's dad greatly expanded it, I believe more than doubling in size.

Developers are out - not building houses any more, certainly not in the wheatfields of Kansas. Large AG will buy at greatly reduced prices, or if it can't be sold at all then the government will take it.

Control the food, control industry...
__________________
Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are inevitably ruined. ~ Patrick Henry

Price history
flourbug is online now   Reply With Quote
Old 07-18-2010, 08:48 AM   #8
DReynolds
irishisasirishdoes
 
Join Date: Dec 2008
Location: lonestarstate
Posts: 3,125
Thanks: 0
Thanked 4 Times in 2 Posts
The argument for the death tax is, and always has been, based on a Talmudic "fairness" doctrine, that says babies should be born into a level playing field.

But Capitalism only guarantees that everyone is free to play by the same rules. It doesn't guarantee equal outcomes, as we've known for centuries. Want a system that is based on freedoms? Then some families will end up rich, and some poor. There's no such thing as a system based on freedoms, that also insures all kids are born with the same pile of stuff.
DReynolds is offline   Reply With Quote
Old 07-18-2010, 09:02 AM   #9
flourbug
fumbling around in the dark
 
flourbug's Avatar
 
Join Date: Aug 2008
Location: LOL, Florida!
Posts: 19,725
Thanks: 1,544
Thanked 2,909 Times in 1,703 Posts
There's also a difference between personal wealth and a family business, though obviously the more successful that business is the more likely the personal wealth of those involved will grow. Cactus AZ and Ross highlighted that quite well. We're not going to see fewer rich people or a level playing field for the next generation, we're seeing wealth move from the producers to the manipulators.
flourbug is online now   Reply With Quote
Old 07-18-2010, 09:12 AM   #10
DReynolds
irishisasirishdoes
 
Join Date: Dec 2008
Location: lonestarstate
Posts: 3,125
Thanks: 0
Thanked 4 Times in 2 Posts
Yes, but even if the death tax was not applied to family businesses at all, even if it was strictly applied only to liquid assets like cash, stocks and bonds, it still would be crazy. Because the justification for it is that babies should be born into equal circumstances, which is totally at odds with capitalism.

Who among us wants to live in a world where we can't have the choice to work hard to give our kids a nice house? It's a sure way to take away the motivation to work hard. And that's always been my complaint with "progressives" -- they don't believe in incentives. (They don't believe that unemployment insurance incentivizes people to work less either).
DReynolds is offline   Reply With Quote
Old 07-18-2010, 09:26 AM   #11
flourbug
fumbling around in the dark
 
flourbug's Avatar
 
Join Date: Aug 2008
Location: LOL, Florida!
Posts: 19,725
Thanks: 1,544
Thanked 2,909 Times in 1,703 Posts
DR, I agree with you! I was born into a family where we were expected to make good and then support our parents, lol... so "family wealth" is something I did not enjoy personally. My children are in the same boat. All they'll get from me is a pile of ashes and some well worn kitchen appliances. But I'll defend YOUR right to inherit. 0-tax inheritance can be a foundation stone of a successful country.
flourbug is online now   Reply With Quote
Old 07-18-2010, 09:28 AM   #12
DReynolds
irishisasirishdoes
 
Join Date: Dec 2008
Location: lonestarstate
Posts: 3,125
Thanks: 0
Thanked 4 Times in 2 Posts
A clever construct in the Talmud is this: if you want to think about whether a particular issue is "fair' for society, perform the following thought experiment. Ask yourself, if I was a baby about to be born and I didn't have any idea which family I was about to be born to, then would I be in favor of this policy?

This rules out, for example, slavery. The idea being nobody would take the chance of being born into slavery. But this clever device is for Social Justice, it was not supposed to be applied to money or wealth and it doesn't make any sense anyway to apply it to wealth.
DReynolds is offline   Reply With Quote
Old 07-18-2010, 10:28 AM   #13
flourbug
fumbling around in the dark
 
flourbug's Avatar
 
Join Date: Aug 2008
Location: LOL, Florida!
Posts: 19,725
Thanks: 1,544
Thanked 2,909 Times in 1,703 Posts
DR, inheritance works personally, by giving people an incentive to preserve and create wealth. But taking or taxing the wealth left by the dead benefits government and big business.

We have an example of Ross's small manufacturing company NOW, in the housing crash. Millions of homes are on the market, which is driving prices down. I happen to live in one of the hardest hit counties in the country. My neighbors bought the same house as mine in 2006 for $310k. Now they are selling for $90-120k. Since the incentives have ended there's been a strong uptick in cash sales. 27% of all home sales are for CASH. No one is fooled that these are first time buyers or people moving up. People who own houses would be foolish to sell in this market. These are investors, many out of state, many out of the country. Go to Auction.com and look at the bulk deals. You can buy lots of dozens of houses for less than 50% of the asking price. Check Zillow and you'll find scores of houses in one town where the last sale is listed at $100 - part of these group buys. Who is flush with cash these days? Well of course, people who work for investment companies, banks, stock traders, etc. who were the beneficiaries of the huge bonuses purchased with our stimulus money. They are now LLC's buying up the homes people can no longer afford, so they can rent them back to us. It is serfdom, 2010 style.

The inheritance tax will do the same thing. It will create a glut on the market of businesses and farms that will never again be owned by an individual or a family. They will be owned by the government, who will either collect it's 55% or take 100% for failure to pay. Then they will be sold at auction or for sweetheart deals like we see the Feds doing for BoA with Wachovia.

All those babies born on a level playing field will be living in rented homes and working in businesses owned by large corporations that keep the government well greased.
flourbug is online now   Reply With Quote
Old 07-18-2010, 10:38 AM   #14
DReynolds
irishisasirishdoes
 
Join Date: Dec 2008
Location: lonestarstate
Posts: 3,125
Thanks: 0
Thanked 4 Times in 2 Posts
Quote:
Originally Posted by flourbug View Post
Who is flush with cash these days? Well of course, people who work for investment companies, banks, stock traders, etc.
Perilous times we live in, and you are in FL I take it, which had one of the worst housing crashes fer sure. It's been a long time since you could buy a house for $100 in most reasonable places in the US.

But I'm not sure I agree with yer characterization of who has money. In Houston at least, the people with excess cash these days are those who work for oil companies and those who have positions with high job security. Everyone else (not oil companies or people who can get fired easily) are hurting. And aint no inheritence tax gonna help them either.

(In my neighborhood, maybe 75% of residents are employed directly or indirectly by oil companies. And they are not hurting, at $75/barrel. You can tell from the cars in the driveways)
DReynolds is offline   Reply With Quote
Old 07-18-2010, 11:03 AM   #15
flourbug
fumbling around in the dark
 
flourbug's Avatar
 
Join Date: Aug 2008
Location: LOL, Florida!
Posts: 19,725
Thanks: 1,544
Thanked 2,909 Times in 1,703 Posts
Pasco County, FL.

It's just above Tampa, really a giant bedroom community for the city. The county sits on the Gulf of Mexico to the west so there are lots of pretty white sand beaches and small houses on carved canals, but immediately inland it was all cattle farms until around 2004. Construction fueled the growth, and ended it. Developers bought up the ranches and built tens of thousands of cookie cutter houses in scores of pretty little middle class developments. So many investors bought those new houses, seeing their money double in two or three years, most towns passed owner/occupier tax incentive ordinances. When the market crashed (and I think the high gasoline prices had a LOT to do with it) the renters moved out and the investors just walked away. That depressed the values of all homes and it has been one rolling ripple effect since. They say one in four homes is empty around here, but it is more like one in three in my neighborhood now. Our HOA fees are $600 per year. Last month we got a bill for $100 because they hired extra security, now they want $504 more because so many homes are abandoned - and because of all the extra work the HOA management staff is giving themselves a nice raise.

The result is thousands of houses on the market, and a good number of them have been abandoned or stripped and thus do not qualify for conventional loans.

Those who are paying cash around here are not Bill and Sally who saved up and are now fixing up their home themselves or even using local contractors. Temporary fences go up and outside crews come in to clean the homes, renovate, fix the lawns, etc.
__________________
Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are inevitably ruined. ~ Patrick Henry

Price history
flourbug is online now   Reply With Quote
Old 07-18-2010, 02:55 PM   #16
dharma
balrog
 
Join Date: Sep 2008
Posts: 4,456
Thanks: 337
Thanked 718 Times in 384 Posts
Quote:
Originally Posted by Fiddlerdave View Post
I find it amusing that the people who get money for nothing from Daddy are not characterized as the "slacker, lazy children of entrepreneurs who did nothing to earn their money" as other people who get freebies are called. Somehow, they are the poor victims because of a plan to prevent them from receiving enormous sums free of any income tax whatsoever!
1) The money they receive has already been taxed.

2) It is freely given, as opposed to stolen.

3) They are not the victims; the people whose choice what do to do with their own money is taken away are. The money I have at the end of my life is mine to do with as I choose, not yours or the welfare mother down the street's or Barry Soetoro's. If I choose to pile it all up the backyard and burn it, that is my prerogative. If I choose to give it to my children: same thing. If anyone else thinks they have a right to make that decision, they are welcome to sod right off.
dharma is offline   Reply With Quote
Old 07-19-2010, 01:59 PM   #17
3wood
Junior Member
 
Join Date: Jan 2009
Location: SE Mich
Posts: 31
Thanks: 0
Thanked 0 Times in 0 Posts
I think the truth be told the government does not like anyone but themselves to obtain wealth. Besides they know where your money should be better than we do.
3wood is offline   Reply With Quote
Old 07-19-2010, 03:10 PM   #18
Auburn Boy
Denizen of the Gold Fields
 
Auburn Boy's Avatar
 
Join Date: Aug 2008
Posts: 6,910
Thanks: 575
Thanked 244 Times in 196 Posts
Quote:
Originally Posted by flourbug View Post
DR, inheritance works personally, by giving people an incentive to preserve and create wealth. But taking or taxing the wealth left by the dead benefits government and big business.
The converse of the problem is that inheritance taxes create a disincentive to build wealth, and to "spend it before you die."

Not a good way to build a country, and contrary to capitalism entirely.

The inheritance tax not only "levels the playing field" it "redistributes the wealth." Entirely a progressive concept IMO.

If the kids are slackers, then their wealth will erode over time anyway. The DEAD don't have to worry about that part. But to rip the family business away from a potentially enterprising heir, automatically disillusions them in the process.

I think there are just too many negatives in inheritance taxes for the "average" heirs.
__________________
(\__/)
(='.'=) This is Bunny. Copy and paste bunny into your
(")_(") signature to help her gain world domination
Can't leave the Siwwy Wabbit behind!!
Auburn Boy is offline   Reply With Quote
Old 07-19-2010, 04:05 PM   #19
Ought Six
Dismember
 
Ought Six's Avatar
 
Join Date: Oct 2008
Posts: 35,164
Blog Entries: 15
Thanks: 177
Thanked 390 Times in 326 Posts
Arrow

The death tax is theft, plain and simple. The Constitution is supposed to ban direct unapportioned taxes such as that, but the courts have shredded and sh*tcanned that document, so that is a moot issue.
__________________
* I have the right to live, thus I have the right to defend my life from attackers who would take it from me.
* I have the right to my private property, thus I have the right to defend my property from thieves who would take it from me.
* I have the right to self-determination, thus I have the right to defend my liberty from tyrants who would take it from me.
* The only usable tools for these tasks are guns, and thus I have the right to shoot anyone who would take my guns from me.
Ought Six is offline   Reply With Quote
Old 07-19-2010, 04:46 PM   #20
rc
Senior Level 2
 
Join Date: Aug 2008
Posts: 2,047
Thanks: 0
Thanked 0 Times in 0 Posts
While we're busy debating the philosophical underpinnings of the dea --- er, I mean Estate Tax, one thing to keep in mind is that in practice, it's never really conformed too well to those philosophical underpinnings.

In practice, the Estate Tax is really a trap for the unwary, albeit those unwary people have to be slightly on the "filthy rich" side. It really amounts to a Lawyers and Accountants Relief Act, since if one sets one mind to it, it is usually quite possible to almost completely avoid having to pay it, provided that you hire sufficiently intelligent lawyers and accountants to set things up right.

The people who wind up getting hit with it are those who never bothered trying to avoid it, perhaps because they didn't realize that they were filthy rich, such as farmers, owners of small businesses, etc.

The moral of the story is that if your net worth starts flirting with seven digits, then you should probably sit down with a smart lawyer and accountant, because otherwise your heirs might be in for an unpleasant surprise. And be sure to bring your checkbook to that meeting. It will be expensive, but probably less than the unpleasant surprise.

Those of us whose net worth isn't close to seven digits probably don't have to worry about it. We can sit around and debate whether or not we should soak the filthy rich, even if we only manage to get a few ignorant ones.
rc is offline   Reply With Quote
Old 07-19-2010, 04:51 PM   #21
Auburn Boy
Denizen of the Gold Fields
 
Auburn Boy's Avatar
 
Join Date: Aug 2008
Posts: 6,910
Thanks: 575
Thanked 244 Times in 196 Posts
Living Trust.
__________________
(\__/)
(='.'=) This is Bunny. Copy and paste bunny into your
(")_(") signature to help her gain world domination
Can't leave the Siwwy Wabbit behind!!
Auburn Boy is offline   Reply With Quote
Old 07-19-2010, 05:01 PM   #22
CanadaSue
SuperModerator
 
CanadaSue's Avatar
 
Join Date: Nov 2008
Location: In my gardens or online
Posts: 25,193
Blog Entries: 28
Thanks: 865
Thanked 2,544 Times in 1,503 Posts
I may be off topic - probably am but I don't see inheritance taxes as leveling any playing field. Before I go on & out of curiosity, is any rationale, any justification given for taxing wealth upon the death of its creator or those who inherited it previously?

I'd agree with dharma, at many levels in many ways, that wealth has already been taxed.

In my eyes, inheritance tax says: "The wealth YOU have earned or accumulated isn't yours because We, the government do not trust you to assign its stewardship after your death. Go ahead & use it while you're alive & know that the very act of dying - no more, no less - will lead to your estate losing much of its accumulated wealth."

What the government does with that wealth matters not not - it's been stolen pure & simple. The % of your time equal to the % of wealth taxes has been othing other than involuntary servitude to the government. Don't know about anyone else but I call that slavery.

What happens to your wealth should be your choice - before or after you die. Whatever you do with it, it stays in the economy. Your heir or heirs may steward it carefully, growing it through astute decisions or even sheer, blind luck. They may piss it away buying expensive toys. No matter, that still keeps it in circulation.

What does the government do with wealth it gobbles up through inheritance tax? I submit it will vanish into debt repayment or general expenditures that do not grow the economy. I may be wrong on that - time will tell. And that point doesn't really matter. What matters is that it is theft, pure & simple.
__________________
If a man speaks where no woman can hear, is he still wrong?
CanadaSue is offline   Reply With Quote
Old 07-19-2010, 05:28 PM   #23
sandyd
Beach Fun
 
sandyd's Avatar
 
Join Date: Aug 2008
Location: SoCal
Posts: 6,928
Thanks: 394
Thanked 240 Times in 197 Posts
At what amount is it kicking in? I remember when the first 600k was tax free but the rest was taxed.
I dunno what is it now.

And since living trusts are so popular, how are they affected?
__________________
"The danger is not that a particular class is unfit to govern: every class is unfit to govern." Lord Acton

The only way to win is to not play...(like global thermal nuclear war).
sandyd is offline   Reply With Quote
Old 07-19-2010, 06:04 PM   #24
rc
Senior Level 2
 
Join Date: Aug 2008
Posts: 2,047
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by sandyd View Post
At what amount is it kicking in? I remember when the first 600k was tax free but the rest was taxed.
I dunno what is it now.

And since living trusts are so popular, how are they affected?
It was $600,000 for a very long time, and then I believe it went up to a million. If the total size of your estate is below that number, then you basically don't have to worry about it.

Until December 31, it is zero. So if you die this year, you're in luck. It will presumably kick back in (at or near a million, I believe) on January 1. So I'm guessing there will be some pressure on doctors to fudge the exact time of death for folks who die on New Year's Eve, and probably litigation involving time zones, etc.

Basically, if you think your estate will be under a million or so when you die, there's not much to worry about. If it's getting close to a million (as in the case of many farmers), then you should probably sit down with an attorney experienced in such matters.

I'm a lawyer, and of all the wills I've drafted, there were only a couple of times I told people to do some serious estate planning, because they might be over that limit (or whatever the limit is at that time) when they die. It's a very specialized area, and unfortunately, a lot of smart lawyers devote all of their intelligence to this arcane area of the law.

I often go to continuing education events put on by these lawyers (because they're usually cheap or free, and I need the credits), and the main thing I get out of it is that if these people had spent their lives working on a cure for cancer, or building a better moustrap, then the world would probably be a lot better place, because they typically are very smart people. But instead, they've spent their entire adult lives worrying about the Internal Revenue Code, which doesn't seem like the best use of their talents.
rc is offline   Reply With Quote
Old 07-19-2010, 06:11 PM   #25
Ought Six
Dismember
 
Ought Six's Avatar
 
Join Date: Oct 2008
Posts: 35,164
Blog Entries: 15
Thanks: 177
Thanked 390 Times in 326 Posts
Arrow

A family business like a corner drug store or hardware store easily has a couple million in inventory and equipment. Operating a businesses that exists within a living trust is just not feasible. You must have the trustee sign virtually every meaningful document and order in day to day business transactions.
__________________
* I have the right to live, thus I have the right to defend my life from attackers who would take it from me.
* I have the right to my private property, thus I have the right to defend my property from thieves who would take it from me.
* I have the right to self-determination, thus I have the right to defend my liberty from tyrants who would take it from me.
* The only usable tools for these tasks are guns, and thus I have the right to shoot anyone who would take my guns from me.
Ought Six is offline   Reply With Quote
Reply

Tags
deadly, death, impact, tax

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -4. The time now is 12:59 PM.


Powered by vBulletin®
Copyright © Jelsoft Enterprises Ltd.