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"Social Progressives" and the Death Tax
Posted by: McQ on Monday, June 05, 2006

Sebatstian Mallaby, in an article entitled "Reward for the Hereditary Elite ..." begins:
It doesn't matter if you are liberal or conservative, Democrat or Republican. There is no possible excuse for doing what Congress is poised to do this week: Abolish the estate tax.
Well is certainly does if you're a libertarian or have any libertarian leanings. My property. I own it. Taxes have already been paid on it. And besides, in a free country, it should be none of the government's business who I choose to leave it too.

But let's examine Mallaby's defense of keeping such confiscatory taxes:
The federal government faces a future of expanding deficits.
How is that the fault of those who have hereditary money and how is taxing those estates going to somehow magically erase the deficit problem?

Of course it won't, because lack of revenue isn't the real problem. The problem of expanding deficits is to be found in the continued refusal of Congress or Presidents to be fiscally responsible and spend no more than government takes in. Perhaps Congress could begin to address the deficits it has amassed by refusing to pass more welfare legislation it has no business passing, can't afford and can't touch once it is passed. And then it could address dismantling, or at least cutting way back, on those programs it has passed into law.

Instead of addressing the source of the problem, Mallaby is upset that a "source of revenue" is being abolished. Instead of criticizing irresponsible legislation which requires more and more tax money he criticizes the idea that a confiscatory tax is being abolished. He wonders how we will pay for what he obviously considers socially desireable but unaffordable programs.

In his search for answers, he then turns to the "income inequality" argument.
The nation faces rising inequality. Since 1980 the gap between the earnings of the top fifth and the bottom fifth has jumped by almost 50 percent. The United States is by some measures the most unequal society in the rich world and the most unequal that it's been since the 1920s. What is the dumbest possible response to this? Identify the most progressive federal tax and repeal it.
Naturally, in the eyes of someone who considers the role of government to be that of a social engineer, it falls to government to equalize economic outcome (instead of opportunity) as well. Thus the purpose of "progressive taxation", which Mallaby claims also includes an estate tax, is to right social wrongs instead of just funding a Constitutional government.

Lastly, the "moral" argument also known as the "greed "argument, the "robber-baron" argument, etc is trotted out for your consumption.
For most of the past century, the case for the estate tax was regarded as self-evident. People understood that government has to be paid for, and that it makes sense to raise part of the money from a tax on "fortunes swollen beyond all healthy limits," as Theodore Roosevelt put it. The United States is supposed to be a country that values individuals for their inherent worth, not for their inherited worth. The estate tax, like a cigarette tax or a carbon tax, is a tool for reducing a socially damaging phenomenon — the emergence of a hereditary upper class — as well as a way of raising money.
Per Mallaby, government's third job is to arbitrarily decide when enough is enough and to take what it deems to be "too much". That harkens back to the second argument about equal economic outcomes, but adds a moral dimension. The estate tax is important because, per Mallaby, it saves us from the worst of all moral disasters: the emergence of a "hereditary upper class". Government now has a moral responsiblity to save us from ourselves by taking money heirs haven't "earned."

That's important because, you see, rich people put their money in a pile and sit on it. Or bury it in the back yard. Or stuff matresses with the loot and lie on them in insolent luxury. Everyone knows that.

Of course if government had the money, well, naturally it would be spent both wisely and well, as we witness daily (cough, cough). The reason we have deficits is because the rich have too much.

Naturally, this three pronged argument completely ignores the primary moral rights of property and ownership, to include the right to dispose of property as the owner sees fit.

Ludwig von Mises in "Human Action" addresses the economic issues found in Mallaby's argument and points out why they are anything but sound:
Taxes are necessary. But the system of discriminatory taxation universally accepted under the mileading name of progressive taxation of income and inheritance is not a mode of taxation. It is rather a mode of disguised expropriation of the successful capitalists and entrepreneurs. Whatever the governments' satellites may advance in its favor, it is incompatible with the preservatin of the market economy.

[...]

Economics is not concerned with the spurious metaphysical doctrines advanced in favor of tax progression, but with its repercussions on the operation of the market economy. The interventionist authors and politicians look at the problems involved from the angle of their arbitrary notions of what is "socially desirable". As they see it, "the purpose of taxation is never to raise money", since the government "can raise all the money it wants by printing it". The true purpose of taxation is "to leave less in the hands of the taxpayer".
That is exactly the appeal Mallaby is making with his piece. "Hereditary elite", "income inequality", "fortunes swollen beyond all healty limits" are the words and phrases of the social interventionist.

Taxation, for progressives such as Mallaby, is a tool of social engineering and not a necessary evil to be used wisely and reluctantly and limited to funding the Constitutionally agreed upon workings of government.

Again, von Mises:
Economists approach the issue from a different angle. They ask first: what are the effects of confiscatory taxation on capital accumulation? The greater part of that portion of the higher incomes which is taxed away would have been used for the accumulation of additional capital. If the treasury employs the proceeds for current expenditure, the result is a drop in the amount of capital accumulation.

The same is valid, even to a greater extent, for death taxes. They force the heirs to sell a considerable part of the testator's estate. This capital is, of course, not destroyed; it merely changes ownership. But the savings of the purchasers, which are spent for the acquisition of the captal sold by the heirs, would have consituted a net increment in capital available. Thus the accumulation of new capital is slowed down. The realization of technological improvement is impaired; the quota of capital invested per worker employed is reduced; a check isplaced upon the rise in the marginal productivity of labor and upon the concomitant rise in real wage rates.

It is obvious that the popular belief that this mode of confiscatory taxation harms only the immediate victims, the rich, is false.
It also changes the way capitalists and entrepreneurs do business:
If capitalists are faced with the likelihood that the income tax or the estate tax will rise to 100%, they will prefer to consume their capital funds rather than to preserve them for the tax collector.

Confiscatory taxation results in checking economic progress and improvement not only by its effect upon capital accumulation. It brings about a general trend toward stagnation and the preservation of business practices which could not last under the competitive conditions of the uhampered market economy.
Economically the elimitation of the estate tax makes perfect sense in a free market. It will stimulate growth, not slow it. It will effect other areas of the economy, such as wages and technological improvement by increased capital accumulation.

It also reestablishes the imperative of property and ownership and the right of owners to dispose of their property as they see fit.

Just as importantly it should be eliminated is as a direct repudiation of the dangerous social engineering those like Mallaby want to inject into the realm of taxation. Arbitrary, capricious and self-defeating, confiscatory taxation such as the estate tax, has no place in a true market economy or a country founded on the principles of property and ownership rights.
 
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Becker and Posner blogged about this topic, and it’s often interesting to read a Nobel laureate in economics’s thoughts on economic issues. I find myself agreeing with the basic premise: tax inheritances rather than bequests; that is, tax the recipient, not the giver.

In my opinion, a basic premise of capitalism is that control of the means of production rests with those who have proven that they are good at controlling the means of production. If you make wise investment choices, you control more investments. If you make poor investment choices, you control less. Concentration of wealth through inheritance subverts this feedback, as the inherited money was not earned by the person now controlling it. (As an aside, I hate it when people call inheritance "unearned money" - it’s not, it was earned by someone originally).

For whatever economic reason, we have hundreds of years of evidence that concentration of wealth through inheritance has substantial negative consequences on society. Of course, your personal values will balance this against the freedom to give your money to whomever you want to, but I come down on the side of discouraging concentration of wealth across generations as I’m a big believer in Capitalism.

In any case, if we’re going to tax inheritance for whatever reason — economics, or some theory of "social justice" — we should do so in such a way that encourages people to divide their bequests amoungst many heirs. But, realistically, the reason we tax inheritance today is not based on any theory of economics or social justice, but simply "hey, look: money" so rationality probably won’t enter into it.
 
Written By: Skorj
URL: http://
You are in unusually high dudgeon about this tax. What you don’t explain is why the estate tax is any more arbitrary or confiscatory than any other tax.
With the estate tax, in large part, we’re talking about timing differences. If the estate tax is repealed, I am assuming that the basis step up in the inherited property will also be eliminated. Thus, the untaxed embedded gain in the estate will be taxed at some point in the future when the property is sold. Since a very small number of Americans will ever come within sniffing distance of having to pay estate taxes, this whole debate is primarily one of symbolism, which is why it is so difficult to resolve (given that the compromises necessary to solve the "family farm" and "small family business" cases are relatively easy and painless).

To my mind, the best argument against the estate tax is that it would eliminate the incredible amount of resources that are used to avoid it.
 
Written By: Steven Donegal
URL: http://
Hmmmm, I see people are convinced that my money is not really mine to do what I see fit with. Squander, leave to my cat or dog, or 3 sons, or 1 son. Though I’ve paid taxes on it, as property, as income, as investment, it’s just still not ’mine’ enough to allow me to determine where it ought to go without the government dipping its hand into the kitty just one more time in some way, preferably so as to prevent a concentration of ’unearned’ wealth. Ahhhh yes, I see. So kind of people to cite history as a reason why my descendants shouldn’t benefit from my work.

OTHER people’s descendants should though....eh?
 
Written By: looker
URL: http://
In any case, if we’re going to tax inheritance for whatever reason — economics, or some theory of "social justice" — we should do so in such a way that encourages people to divide their bequests amoungst many heirs. But, realistically, the reason we tax inheritance today is not based on any theory of economics or social justice, but simply "hey, look: money" so rationality probably won’t enter into it.
Well, Skorj, that’s your assertion, but it certainly isn’t Mallaby’s claim and that was the point of the rebuttal.

Steven:
You are in unusually high dudgeon about this tax. What you don’t explain is why the estate tax is any more arbitrary or confiscatory than any other tax.
Actually this is quite mild for me in terms of discussing taxes. And no I have no vested interest in this, as all my inheritance has been received.

In my ideal world, one which will never exist, taxes aren’t collected because everyone pays their way.

In reality, taxation is simply a legal form of theft, not much different that Uncle Vinny and the boys collecting protection money and putting a swing set for the neighborhood kids in the vacant lot across from the deli.

But it is the way we have apparently chosen to operate government. So I’m using the opportunity this absolutely atrocious but revealing Mallaby piece presents (you rarely get a social engineer type to be so forthcoming with his agenda and thoughts) to speak out a bit on the sort of taxation he sees as both necessary and useful (the estate tax being one among them) and laying out the arguments against such confiscatory taxation.

But I never said the estate tax was the only confiscatory tax, it’s just the one that enabled me to address the issue.

I really don’t get the "high dudgeon" characterization either. I thought it was a pretty measured response to Mallaby’s piece which did actually seem to be one of high dudgeon.
 
Written By: McQ
URL: http://www.qando.net/blog
"Hmmmm, I see people are convinced that my money is not really mine to do what I see fit with."
So, how is this fundamentally different from sales tax? I have to pay the government to buy things. How is an estate tax worse than this? "It’s already been taxed"? So has my income. The government taxes money transfers from legal entity A to legal entity B.

Can someone point me to some economic theory as to why investment income (capital gains, dividends) should be taxed less than labor income (salary)? Or why companies should pay taxes after expenes, while people pay before expenes?
(Not trying to be snarky, it just seems to be assumed here, and I wondering if there is a book I should read.)


 
Written By: Tito
URL: http://
In reality, taxation is simply a legal form of theft, not much different that Uncle Vinny and the boys collecting protection money and putting a swing set for the neighborhood kids in the vacant lot across from the deli.
Legal theft? There is no such thing. Theft is by definition illegal. If you have to rely on an oxymoron to make your point, you have already lost the debate. It’s this kind of muddy thinking that gets you into trouble, McQ.

Oh - and the key difference between Uncle Vinny and the lawmaker who imposes the taxes is that you get to vote for lawmaker; you don’t get to vote for Vinny. That difference may not mean anything to you, but it does to most of us. Remember the Boston Tea Party? They attendees weren’t objecting to taxation per se, only to taxation without representation.

It seems Malaby is dealing with reality. Big spending is here to stay. Now, how do we pay for it? Those who support repeal of the estate tax are effectively saying that we should borrow the money to do it. Malaby is saying we should leave the estate tax in place to do it.

The better question is this: If you are so upset about taxes, why not focus on one that is regressive, e.g., FICA. (I think I know the answer.)

 
Written By: mkultra
URL: http://
All taxation is a form of social engineering, whether proposed by progressives or conservatives, because taxation will drive behavior. The trick is to find the methods and levels of taxation which distort behavior the least. The estate tax in its present form is particularly distortion producing since the few folks affected by it go to such extreme lengths to avoid it.

I only made the high dudgeon comment because I don’t understand why reasonable people get so exorcised about this particular tax.
 
Written By: Steven Donegal
URL: http://
"why investment income (capital gains, dividends) should be taxed less than labor income (salary)?"

social engineering aside (eg gvt wanting to encourage investment and fluidity in markets) i think a large part of the argument is that dividends have already been taxed against a fictitious person in the form of the corporate tax.

people don’t always pay before expenses — business expenses for example are deductible (after a certain threshold is met). For a corporation, however, everything is a business expense.
 
Written By: Sean
URL: http://www.myelectionanalysis.com
Well, I will probably be a lone voice on this one, but I FAVOR a highly progressive estate tax.

Why?, well the government needs some revenues, and I would just rather tax dead people than living ones. Inherited wealth is often either ill used. (Not a value judgment, I am talking about it not being reinvested.) that is especially true after more than two generations.

Think about it, who does start up business? Who strives to be all they can be?
The previously poor, or rich trust fund kids like the Kennedy’s? It is a socialist
impulse I will grant you, but it makes sense as well.

Now, I am not against leaving something to your children, but very large amounts of wealth should be taxed at death. If you want to you can set up a foundation to spend your money on things you think are important, or you can give your wealth to your heirs while you are alive.

I know this won’t be popular, but I am sticking with it.
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
"we have hundreds of years of evidence that concentration of wealth through inheritance has substantial negative consequences on society"

What are these alledged consequences, other than a few envious people having a snit?

"In my opinion, a basic premise of capitalism..."
"I’m a big believer in Capitalism."

You are a big believer in your own definition of capitalism, which in my opinion is not held by a majority of people.
 
Written By: timactual
URL: http://
"Why?, well the government needs some revenues, and I would just rather tax dead people than living ones."

I think the problem is that it does both. If it were one or the other, the estate tax wouldn’t be so bothersome.
 
Written By: Sean
URL: http://www.myelectionanalysis.com
To say high taxes gives people less incentive to work hard, I tend to disagree. What keeps most people working is the threat of running out of money and not being able to pay your bills. Most americans aren’t in the situation of having more money than they know what to do with; that’s for sure.

Second I would argue that if you have too much money handed down to your kin, they will have less incentive to earn a living for themselves and the odds are they will be bank-rich but emotionally empty, purposeless, spoiled, and unhappy. There is a such thing as giving your kids too much.

All that said, that’s how I intend to spend my money, and I have no opinion on how the wealthy chooses to spend theirs. I would just advise that sometimes what you think your kids need the most of isn’t money. Society would be better off if we realized money doesn’t solve all our problems. It is after all the root of all evil. It will keep you out of the poor house but you can still be morally bankrupt, friendless, guilt-ridden, bitter, materialistic and purposeless with scads of money.
 
Written By: Mr. K.
URL: http://www.webomatica.com
The argument that the money has already been taxed is not correct. The increase in the value of the assets has not been taxed. And that is the part that the estate tax essentially captures. As Steven Donegal correctly pointed out, it is a matter of timing. Doing away with the estate tax also requires doing away with the stepped up basis; otherwise, the gains would never be taxed.

As far as why dividends are taxed differently - the only justification is really to distribute more wealth to those who already have it. If dividends are taxed at a lower rate, why not interest? Aren’t both investors in effect making more money available for investment purposes?

Finally, I take issue with calling it the "death tax" since it is not death that is being taxed.
 
Written By: Vivian J. Paige
URL: http://vivianpaige.wordpress.com
Legal theft? There is no such thing. Theft is by definition illegal. If you have to rely on an oxymoron to make your point, you have already lost the debate. It’s this kind of muddy thinking that gets you into trouble, McQ.
I’ve been in trouble? Wow, I must have missed that.

OK, it’s legalized theft. The point is theft is taking without the uncoerced permission of the owner. And whether you write a law or not to cover the process, it still is a coerced payment.

Of course the phrase is used to make a point, because, as I illustrate, it’s not much different than Uncle Vinny and the boys and their protection racket.
Oh - and the key difference between Uncle Vinny and the lawmaker who imposes the taxes is that you get to vote for lawmaker; you don’t get to vote for Vinny.
Well there are all kinds of voting MK. If, for instance, the majority of the neighborhood is ok with Vinny and how he operates, seems they’ve "voted" for him and what he does, haven’t they?
It seems Malaby is dealing with reality. Big spending is here to stay. Now, how do we pay for it? Those who support repeal of the estate tax are effectively saying that we should borrow the money to do it. Malaby is saying we should leave the estate tax in place to do it.
Well there’s a brilliant defense of the status quo if ever I’ve seen one.
The better question is this: If you are so upset about taxes, why not focus on one that is regressive, e.g., FICA. (I think I know the answer.)
Frankly I’d like to see all taxes dumped. But that isn’t going to happen. But I’d dearly love to see withholding ended so people actually had to write the check at the end of the year. That would lead to the dismantling of the IRS and limiting the taxing authority of the government so quickly even your head would swim.
 
Written By: McQ
URL: http://www.qando.net/blog
All taxation is a form of social engineering, whether proposed by progressives or conservatives, because taxation will drive behavior.
Well it doesn’t have to be, and that’s the point. Find a neutral way to fund Constitutionally mandated government functions and limit the taxing authority to that.

Like I said, I see taxation as a necessary evil. And it is an act of coercive government, make no mistake. That’s why I prefer some sort of mechanism to fund government that is untouchable by Congress. That would remove a lot of the social engineering aspect from taxation.

I’d also like to see a Constitutionally mandated limit on government spending (limited to revenue collected). And Congress Constitutionally limited to that budget and nothing more. No borrowing except in time of national emergency and only if the necessary funds aren’t available in the treasury.

But that’s just innately libertarian side of me coming out.
I only made the high dudgeon comment because I don’t understand why reasonable people get so exorcised about this particular tax.
In my case, as I explained, because it was convenient today.
 
Written By: McQ
URL: http://www.qando.net/blog
social engineering aside (eg gvt wanting to encourage investment and fluidity in markets) i think a large part of the argument is that dividends have already been taxed against a fictitious person in the form of the corporate tax.

people don’t always pay before expenses — business expenses for example are deductible (after a certain threshold is met). For a corporation, however, everything is a business expense.
Well now you’re just assuming some sort of pseudo right for government to get these taxes because, well, they always have.

Owned property, with the right to dispose of it as I choose without interference from others to include government.

Believe me the money will circulate enough times for Caeser to get his share.
 
Written By: McQ
URL: http://www.qando.net/blog
To say high taxes gives people less incentive to work hard, I tend to disagree. What keeps most people working is the threat of running out of money and not being able to pay your bills. Most americans aren’t in the situation of having more money than they know what to do with; that’s for sure.
Who said anything about "working hard"? It’s about capital accumulation or spending it before the tax man cometh. You grow economies with accumlated capital, not spending as you go. If the tax system encourages spending as you go (by penalizing capital accumulation) you hurt the economy’s growth potential.
Second I would argue that if you have too much money handed down to your kin, they will have less incentive to earn a living for themselves and the odds are they will be bank-rich but emotionally empty, purposeless, spoiled, and unhappy. There is a such thing as giving your kids too much.
Then don’t do it ... but that should be your choice, not government’s.
It is after all the root of all evil.
Well the actual saying is "the love of money" is the root of all evil. And I’d point out that the entity that loves your money is seated in Washington DC and trying to find ways of getting more of it.
 
Written By: McQ
URL: http://www.qando.net/blog
The increase in the value of the assets has not been taxed. And that is the part that the estate tax essentially captures. As Steven Donegal correctly pointed out, it is a matter of timing.
So? Again the argument that concludes that the government is somehow entitled to this money because it has held a gun at everyone’s head in the past and made them pay it.
Doing away with the estate tax also requires doing away with the stepped up basis; otherwise, the gains would never be taxed.
Unless the money is going to sit in a hole, it is going to be circulated and there are going to be plenty of opportunities to tax it when it is.
As far as why dividends are taxed differently - the only justification is really to distribute more wealth to those who already have it. If dividends are taxed at a lower rate, why not interest? Aren’t both investors in effect making more money available for investment purposes?
Well we’re back to the social engineering aspect of taxation aren’t we? And the preferred behavior, among those you list is which?
Finally, I take issue with calling it the "death tax" since it is not death that is being taxed.
Be that as it may, nothing happens in terms of taxes until someone dies and has the temrity to attempt to leave his earnings and/or property to a person or entity of his choosing.

Somehow government figures they’re owed a cut of this for some reason which is entirely beyond me (being one of those odd fellows who believe in property and ownership rights).
 
Written By: McQ
URL: http://www.qando.net/blog
Ridiculous, self-contradictory tripe.


Just as importantly it should be eliminated is as a direct repudiation of the dangerous social engineering those like Mallaby want to inject into the realm of taxation.

Social engineering is evil, huh? Then what the h*ll is this?


But the savings of the purchasers, which are spent for the acquisition of the captal sold by the heirs, would have consituted a net increment in capital available. Thus the accumulation of new capital is slowed down. The realization of technological improvement is impaired; the quota of capital invested per worker employed is reduced; a check isplaced upon the rise in the marginal productivity of labor and upon the concomitant rise in real wage rates.
It is obvious that the popular belief that this mode of confiscatory taxation harms only the immediate victims, the rich, is false.


This passage attemtps to argue that the common good of everyone involved, rich and poor alike, is benefitted by the nonexistence of the estate tax. How is that not a moral argument? Furthermore, how is that not an appeal to social engineering? "Don’t repeal the estate tax, its allowance of the maxiumum accumulation will help society turn out as good as possible!" Social engineering? What?

Moving on, how does the common good argument, (which by the way is sort of comparable on an ignoring-reality level to "Disciplining your kids with a stick is something they’ll thank you for later.") not directly contradict your other argument about your so-called absolute right to pass 100% of your assets onto your kids when you die? That argument is about absolute obedience to the principle of property rights as the #1 value our society ought to be holding, isn’t it?
How the h*ll is *that* not also a moral argument?? (I’d call it an immoral argument, but it still appeals to morality - the morality of your "rights".)


Taxation, for progressives such as Mallaby, is a tool of social engineering.
Again, big f*cking deal. Consevatives are thrilled to use tax breaks to promote marriage, the defense industry, health care, f*cking anti-obesity programs, anything you like. Libertarians and economists suggest using differential taxation to promote optimal economic outcomes all the time. It’s their bread and butter.

Your problem with the estate tax is this: a) you don’t get that rising income inequality is the death-spiral of social cohesion and macroeconomic stability, and b) you just don’t like the government helping poor people if some fractional amount of that comes out of your pocket.

Stick to those truths. It’s less insulting.

 
Written By: glasnost
URL: http://
I’ve been thinking...

Capitalism is far better than other economic systems (communism, mercantilism, barter, what have you) for encouraging the creation of valuable items through work. It does so by incentivizing the accumulation of capital.

The problem is when capital is accumulated, effort is sometimes made to retain capital, and that is different than initial accumulation. It is in the retention of capital that we have market manipulation, monopolies, attempts to create artificial supply shortfalls, etc.

I’d prefer to set up an economic system that incentivizes earning. You have to work to earn what you get. I have never seen anything good come from people getting stuff for free. The only way people value things is by earning it. That’s just plain human nature.

That might disincentivize saving, but I’m not sure that’s a bad thing.

But one thing that establishing a system where you only get what you earn would mean is the elimination of welfare, but the imposition of a 100% estate tax, with no exemption.

That would mean the government isn’t allowing you to dispose of your property as you see fit, propert that has already been taxed. Well, what’s so wrong about that? Let’s say I buy a bunch of wood, and a bunch of wires, and put some work into it, and then start selling 100 guitars a month. I already paid taxes on all that stuff. The value I add is my own skill; what right does the government have to tax me selling ’em? That’s a clear case of not being able to dispose of my property as I see fit without taxes, right?

So if you want to transfer wealth to a family member, better make ’em an employee. And pay taxes on that transfer like you would any other employee. But that way is more likely to have people earn the wealth they get.
 
Written By: Nathan
URL: http://brain.mu.nu/
The funny thing about the tax is that it’s only the middling rich who have to pay it.

The Heinz-Kerry’s and their ilk use trusts and foundations to avoid it.
 
Written By: Harun
URL: http://
The increase in the value of the assets has not been taxed. And that is the part that the estate tax essentially captures. As Steven Donegal correctly pointed out, it is a matter of timing.
So? Again the argument that concludes that the government is somehow entitled to this money because it has held a gun at everyone’s head in the past and made them pay it
No. It’s a fairness issue. If I sell appreciated stock, I pay taxes on the gain. If a person dies while holding appreciated stock, the estate pays taxes on it (which, less the amount not taxed, is roughly the same as the gain). So it ends up being the same thing.
Doing away with the estate tax also requires doing away with the stepped up basis; otherwise, the gains would never be taxed.
Unless the money is going to sit in a hole, it is going to be circulated and there are going to be plenty of opportunities to tax it when it is.
Not necessarily. What if I inherit a stock and never sell it? Have I put any money out there in circulation? No. Think about wealth accumulation.

Obviously, we are not going to agree. I believe the estate tax is fair to all.
 
Written By: Vivian J. Paige
URL: http://vivianpaige.wordpress.com
No. It’s a fairness issue. If I sell appreciated stock, I pay taxes on the gain. If a person dies while holding appreciated stock, the estate pays taxes on it (which, less the amount not taxed, is roughly the same as the gain). So it ends up being the same thing.
I think you’re missing my point. It isn’t about fairness, it’s about taxing everything that moves, or in this case, doesn’t move. It’s only a fairness issue to you because you buy into the idea that the government has a right to tax the gain on your appreciated stock. I’m actually arguing it doesn’t, and that when the money circulates it will have plenty of opportunities to tax it.
Not necessarily. What if I inherit a stock and never sell it? Have I put any money out there in circulation? No. Think about wealth accumulation.
All you have is the certificate. The money is being used by the company to make more money which, btw, is being taxed. Your certificate is simply a promise to pay you at the prevailing stock price when demanded. When banks loan money to companies, they’re paid interest. You otoh, have to pay the government a tax on anything you make, assuming you make anything.
Obviously, we are not going to agree. I believe the estate tax is fair to all.
Heh ... you’re right, we’re not going to agree, but that’s primarily because we come at taxation from completely different ideological directions I would guess.
 
Written By: McQ
URL: http://www.qando.net/blog
In the end, it dosen’t matter, I work for the betterment of my family, and if the US government doesn’t allow for that, I will move my captial one that does. If you prefer to work your entire life for the government, that is your business.
 
Written By: John
URL: http://
I am surprised, actually more people agreed with me than I thought might.
 
Written By: kyle N
URL: http://impudent.blognation.us/blog
It is after all the root of all evil.
Well the actual saying is "the love of money" is the root of all evil. And I’d point out that the entity that loves your money is seated in Washington DC and trying to find ways of getting more of it.
I filled out my student loan apps fair and square, McQ!

:P
 
Written By: OrneryWP
URL: http://
Ridiculous, self-contradictory tripe.
Heh ... I always know when I’ve gotten something right when comments which begin thusly appear from either MK or his brother, Glasnost.
This passage attemtps to argue that the common good of everyone involved, rich and poor alike, is benefitted by the nonexistence of the estate tax.
Well actually, no it doesn’t. It says that thousands, no, millions of individual transactions unimpeded by government interference have the tendency to help and economy, while government interference usually tends to hurt it.

Imagine that.

But I know it’s useful to wave the "common good" strawman around so you can make other invented points, and frankly, I don’t have the time or inclination to chase your little straw guys around tonight. So cheers, ’nost. I’m off to have a nice glass of highly taxed port.

But before I do:
Your problem with the estate tax is this: a) you don’t get that rising income inequality is the death-spiral of social cohesion and macroeconomic stability, and b) you just don’t like the government helping poor people if some fractional amount of that comes out of your pocket.
I’ve seen crocks of crap represented as profound statements of fact before, but this one puts all the other crocks to shame.

"The death-spiral of social cohesion and macroeconomic stability?"



Thanks for that, really, I needed the laugh.

G’night, ’nost.
 
Written By: McQ
URL: http://www.qando.net/blog
McQ,

I am entirely in your corner on this one. To penalize a person’s family (or other legitimate heirs) for his death is morally reprehensible. Furthermore, as you point out, I do not see it as a particularly effective revenue generating device.

As to glasnost’s comment about your ideas and positions being insulting or "less insulting," I find his entire post insulting. If you must resort to oafish vulgarity (censored or not) to emphasize a point, you not only immediately lose whatever argument you are involved in, but also demonstrate your poor command of English and essential inability to operate a thesaurus.

I find the arguments of some who are posting here in favor of the estate tax remind me very much of some of the arguments and positions discussed in Jon’s earlier posting on the Religious Left. It seems that some of those here are justifying support of this particular tax (and perhaps by extension other taxes in general) based on a loose premise of social justice (which is built on the beliefs of the religious left). I find this to be a particularly contradictory position as most of those who support this tax and the idea of social justice are notorious for their support of the separation of church and state (or phrased more accurately the separtation of religion and politics).
 
Written By: The Poet Omar
URL: http://
McQ,

I don’t mean a hill of beans to 500 million Red Chinese, or words to that effect, but for a brief period here, I sort of began to respect some of your reasoning even while I thought other large chunks of it were absolutely wrongheaded and blindly anti-rational. Beginning with the paper tiger thread, you’ve basically stopped attempting to argue factually with me about things you said, I said, or what they mean, motives, evidence and so on, and started responding with horseh***t outright dismissals under a thin veneer of psuedo-camraderie. You’re a dead horse.

I expect nothing from the monkeys in the audience, and therefore don’t care either way about the ad hominem slander but you’ve managed to really p*** me off, and at this point all I want to do to your posts is verbally abuse them.

Since this isn’t really a productive use of my time, I’m done commenting on your posts, period.

You can have what you want and what you deserve: entertainment and a circle j*** of like-thinking buddies to reinforce your bull**** hysterias and absurdities.
Maybe someone else who with an actually widely different point of view will stop by here someday, and if you’re intelligent enough to be bored of it yet, you might be a little less condescending. Personally, I doubt it.
 
Written By: glasnost
URL: http://
Beginning with the paper tiger thread, you’ve basically stopped attempting to argue factually with me about things you said, I said
There’s no arguing with someone who’s blind to the facts even when they’re put in front of him with links. And that’s precisely what I did with the "paper tiger" thread and your rebuttal, such that is was, was to simply deny the obvious and attempt to redefine what I was talking about.

Given that and other examples, why in the world should I take anything you have to offer since then seriously? And, as you’ve probably have noticed, I haven’t.

Have a nice day, Glasnost.
 
Written By: McQ
URL: http://www.qando.net/blog
You can have what you want and what you deserve: entertainment and a circle j*** of like-thinking buddies to reinforce your bull**** hysterias and absurdities.
Clearest example of projection I’ve seen in a good while.
 
Written By: Billy Hollis
URL: http://
Clearest example of projection I’ve seen in a good while.
I have a feeling this isn’t the first blog at which that message has been left. ;)
 
Written By: McQ
URL: http://qando.net
I think inheritance should be completely abolished. When you die, your remaining estate goes to the government. Everybody gets an equal chance in life, more money is spent on real-life goods and services, and everyone is motivated to work.
 
Written By: Blewyn
URL: http://
Elimination of the Inheritance Tax is the most serious threat to the USA since Pearl Harbor:

1) Middle Class America will see a 15% tax on their inherited assets. why? Elimination of stepped up basis in this bill before the Senate. This is what happens: Most middle income people will sell all the assets (homes, stocks, etc.) that they inherit since they need to pay off loans, bills, education, etc. The superwealthy do not sell since they often own commercial RE, bonds, etc. So before where you could have inherited your parents’ $250,000 home (that they bought in 1955 for $10,000) with no tax bill, you will now pay around $40,000 in taxes!! I call that a tax increase. Funny how no one is talking about this change in the code. Read the Wall Street Journal editorial on Monday to see how much money they project to raise off of middle America! all the WSJ is no liberal rag

2) Middle America is double taxed all all their income. Why? Because they typically spend 100% of their take home pay. In most states with regressive tax structures, there is a hefty sales tax often over 8%. Every time they go out an buy a car, sweater, etc. they pay another tax. Why isn’t anyone talking about that double taxation.

3) Concentrations of Wealth Threaten Democracy. There is no argument here. In any country where you have extreme concentrations of wealth you find a corrupt government completely controlled by an oligarchy. The courts, the police, the press, etc. are all bought off.

4) Eliminating a tax on the wealthy has always been paid for by the middle class . Since 1980 the top 5% of earners have seen their taxes go down by 50% or more. Yet, middle class America have seen their taxes at least double. Why? Because I am including all taxes: RE, sale, excise, and Social Security which in itself has double since 1980 for middle income.

This position to eliminate inheritance tax doesn’t address the fact that most of us will be paying at least 15% capital gains tax on our hard earned savings when we start to go into capital to fund our retirement. That’s what should be addressed by Congress.
 
Written By: Mike Tracy
URL: http://
." There is no argument here."

Actually, there is.
 
Written By: timactual
URL: http://
Well argued McQ. While I don’t think there will ever be widespread objection to the idea that the government has the right to tax whatever it wants to, it’s nice to see the occasional remider that it hasn’t.
The superwealthy do not sell since they often own commercial RE, bonds, etc.
I don’t have debt to pay off, and I own some some commercial RE, bonds, etc. I still have to work for a living, and can’t afford a house near where I work, but it’s cool to know that Mike Tracy considers me super-wealthy.

Has America fallen so far that simply having a positive net worth is such a foreign concept? No wonder "privatized" Social Security was such a scary idea to so many. It’s an unhappy thought, and probably why the tax repeal ultimately failed. If the average American no longer expects to die wealthy, something very important has been lost.

 
Written By: Skorj
URL: http://
I’m no fan of the estate tax, for multiple reasons. That being said, I find it more annoying than anything to use the term "Death Tax" which is little more than Republican spin. Just my 2 cents.
 
Written By: Rosensteel
URL: http://
(Regarding the original posting.)

Well said McQ, very well said.
 
Written By: Rosensteel
URL: http://
Glasnost wrote:
"Maybe someone else who with an actually widely different point of view will stop by here someday, and if you’re intelligent enough to be bored of it yet, you might be a little less condescending."
OH I don’t know Glasnost, MK stops in fairly regularly.

It’s just that the left side of the spectrum has no truth or wisdom to bring to the table.

And Rosensteel, its a death tax because it happens when you die. That’s not spin—again, nothing true to bring to the table.

Yours, TDP, ml, msl, & pfpp
 
Written By: Tom Perkins
URL: http://

 
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