This was an interesting thread with varied reactions. Once you filter out the far right and the far left folks, you're left with some pretty good, rational ideas. Usually its left vs. right exclusively around here, but this topic seemed to have some middle ground to it. Interesting to say the least. I suppose asking a general "how is it fair" was a bad idea... perhaps the question should've been phrases in such a way to steer the conversation towards compromise on the rate/exception. Some of us got there anyway, thogh. (Sorry for any typos... using phone.)
Who makes 150,000 after tax and lives on 50k a year for 25 years? Some penny-pinching unmarried childless ascetic? This just doesn't happen in the real world very much. Not sure why it's a problem that needs to be solved or why it's even relevant.
The average savings rate in the US is close to 5%, so honestly no one. At 5% savings and 5% return, for a family making 95000 a year it would take 80 years to save $5 million in assets For a family making $150,000 you could do it in 70 years.
I think this issue could be settled pretty simply by finding out how many people die every year and how many are hit by the estate tax. That will tell us just what % of people are being affected by it.
Perfect. From Page 13: How Many Farm and Small Business Decedants Pay the Tax? The more difficult question to answer is how many decedent farmers and small family business owners pay the tax. The first step in answering this question is to estimate the number of farmers and business owners (or those with farm and business assets) who die in any given year. We chose 2003 as our base year. About 2.3 million people 25 and over died in the United States in 2004.18 Some portion were farm and business owners. To estimate the number of those who died that were farm or business owners, we assume that the distribution of income tax filers roughly approximates the distribution of deaths in any given year. Or, the portion of farm individual income tax returns to total income tax returns in 2004 approximates the number farm deaths to total deaths. The same logic is used to approximate the number of business owner deaths. (Note that farmers tend to be older than other occupational groups and have somewhat higher death rates, which may slightly overstate our estimates of the share of farmer estates with tax). In 2004, there were 132.2 million individual income tax returns filed; about 2 million were classified as farm returns and 20.3 million included business income or loss. These returns represent 1.5% and 15.3% of all returns respectively. If the profile of individual income tax return filers is similar to the profile of decedents, this implies approximately 35,267 farmers and 356,245 business owners died in 2004. Recall that the estate tax return data include 1,442 taxable returns with farm assets and 9,837 taxable returns we classify as business returns. Dividing these two numbers by the estimated number of deaths for each vocation yields an taxable estate tax return rate of 4.1% for farm owner decedents and 2.8% for business owner decedents. Thus, one can conclude that most farmers and business owners are unlikely to encounter estate tax liability.
Also Page 24: Although the estate tax does contribute to the progressivity of the tax system, this progressivity is undermined, to an undetermined degree, by certain estate tax avoidance techniques. Of course, one alternative is to broaden the estate tax base by restricting some of these estate planning techniques. At the same time progressivity could be achieved by other methods. On the other hand, arguments that the estate tax is a back-up for the income escaping the capital gains tax, would not support the current high rates of the estate tax, which should be lowered to 20% or less to serve this purpose.
No one begrudges anyone their ability to provide for their children. What I have a problem with is their children getting a double-dip at the pool. Not only are the oppurtunities afforded to them spectacular in life, but they get wealth handed to them in death. I've been in alot of situations where people like that hit a sour note in me. Personal opinion, of course, but my bar isn't that high for personal judgement calls. Whether or not it's good enough to make public policy; I personally haven't ventured into that because I don't think it is. But the feeling remains. If that makes me a communist, so be it.
If I'm understanding you correctly, some of that happens now. If Texas, a state that pays in more Federal income tax money than it gets back in the form of Federal funding, direct and indirect, proclaims that it won't accept Federal dollars because of "fill in the blank," it usually simply goes to another state for their projects. Some are Blue, some are Red, and some are swing states. What is assured is that Texas taxpayers lose out on those Federal dollars, often due to some "principal" of the Governor's, or the Tea Party wing of the state GOP, that those taxpayers didn't even know they were voting for when they elected them.
Not necessarily true. Usually "unexpected" federal dollars (such as the Medicaid expansion dollars or the stimulus unemployment dollars) are attached to long term costs. For example, the federal government was going to pay for the first two years of the Medicaid expansion, but would ultimately ratchet it down to 90%, leaving Texas with the permanent financial burden of the Medicaid expansion. The long term costs for Texas outweigh the short term gains.
That's not what the resentment is for. It's for misrepresenting the significance of that wealth in relation to the average American and whining about paying taxes. These are frequently the same people that try to stick it to the poor and working classes in this country with who and what they support politically.
From that Liberal rag, The Dallas Morning News: Texas refuses to apply for millions of dollars in education funding - Jun. 1, 2010 All over the nation states rushed today to submit proposals outlining education reforms as part of the competition for federal dollars created by President Obama's Race to the Top initiative. But not Texas. State officials are resisting taking part in competing for the money because they oppose the creation of national curriculum standards, instead supporting the state's current standards. National standards would make it easy to compare performance between states, instead of each state using separate standards and tests. A press release by Governor Rick Perry notes that the state could have been eligible for up to $700 million. This is an important decision that impacts school districts in the state. The Houston Chronicle recently published an editorial against the state's decision, noting that Texas shouldn't be sitting out the race. "They seem to envision jack-booted thugs storming in, forcing our fourth-graders to ... what? pledge allegiance to the American flag before they offer their respects to the Lone Star?That kind of rhetoric echoes Perry's empty threat to secede from the U.S. and to turn down federal stimulus funds (without which Texas wouldn't have been able to balance its last budget). Unfortunately, that sort of grandstanding seems to poll well among potential voters in the Republican primary. But it's no good for Texas -- or for the U.S." http://irvingblog.dallasnews.com/archives/2010/06/texas-refuses-to-apply-for-mil.html
OK, so it was better to keep our own standards and have $700 million less for our schools? Don't think so.
Not necessarily true. You'd have to factor in the positive expectation from more insured and lower costs vs 10% of the outlay - the initial federal free ride. The long term benefit is likely to swamp the costs. Generally when you get $1 in services for .10 you are getting a good deal.
Incomplete and shortsighted i believe. One of the prime benefits of the new healthcare law is the focus on preventative care that eventually keeps people out of much more expensive emergency room care.
Very true. Some folks are "land rich" and bank account poor. What gets exaggerated are the number of people who fall into that category. It gets exaggerated by the GOP because the estate tax is one of those items their wealthy backers would like to see disappear. Having said that, I wouldn't mind seeing the floor of the estate tax raised a few million dollars, mostly to help those few that fit into that narrow spot.
Does that mean if I have 5 million dollars and I decide to buy a small company that generate oh say 200-300k net income a year, does that mean I am suddenly not as rich as before?
