Yes, and are now paying their government officials to roll back the portions of tax code that have applied for 70 years. It is not fair for the rich to get to rewrite the tax code to suit them. That is what is happening here and the tax burden will end up falling more heavily on people like ME. No kidding. Of course someone made that money. I am not arguing that the money just appeared (except when it is inherited) but since it was earned, it also must be taxed. Once the person dies, their estate should be taxed to recoup everything that the rich person got in benefits on their way to wealth. And should pay SOME of their money when they die to repay their society for the advantages it gave them. They do not get taxed as heavily as I do (based on percentage of income) and therefore deserve to be taxed on that wealth post mortem. Sure it is. After the government has taken it's fair share. We created this New Deal in order to lessen the burden on the poor and to try to level the playing field. The taxes on the rich since the '50s have dropped to nearly nothing (compared to taxation rates in the '30s) and yet we are trying to do the same things (social security, medicaid, etc.). We have to pay for those policies and the estate tax is part of paying for those policies. It is only a tax on the super wealthy who have passed away and does not affect regular Americans at all. If the super rich want to avoid paying their fair share, let them move to another country. They have the money to move.
I'd like to study the permanence of this class you talk about. Who dropped out over the decades and just how big is this class anyway? Because they are a small and privileged group you feel entitled to raid their fortunes? Hasn't inherited money already been taxed when it was earned? You are talking about after-tax income. How do you define a fair share? by a percentage of the total tax paid or as a percentage of income earned? People who work hard certainly are deserving... of what they earn... not of what someone else inherited. The victors get to write history and the lawmakers get to write the laws.
Pre New Deal would mean pre Social Security, pre Medicaire, and pre Medicaid. Something you might want to think about is what is the *right* amount that rich people should be taxed. The bulk of tax proceeds come form the middle class. In someways making the rich pay a higher precent tax does not yield that much more tax but does play well the non rich voters (a mean to a political end). This is a problem I have with the Democrats. They know that no matter what they do they will likely not get the votes of the rich and super rich. But it does play well with the rest of the voters to put the screws to the rich, under the guise of "paying their fair share". The Repiblicans do the same thing when they get in power; they go after the people who don't vote for them (like the poor via wellfare reform). The largest problem I have with the Bush tax cuts is that they were not accompanied by spending cuts. Given GWB's spending ways, he should have been increasing taxes to pay for his programs. I also agree with giddyup (a sign of the apocalypse???) that the money in people's estates has already been taxed. Why tax it again? What about the parent who have children that can not provide for themselves? They will want to leave enough money to take care of their high need children. IMO it is just not morally right for the government to step in after a death and "get their fair share".
And, NoWorries, I agree with you about Republican spending. That bitterly disappoints me. If there was a worthwhile strongly moderate Democratic aspect to the Democratic party, I might think of supporting them somewhere along the way. I like to remind people that Robin Hood stole from the rich and gave to the poor. The rich he stole from was King John (the government) and the poor were taxed out of their meager earnings by that same King John. His wealth redistribution program returned money to its rightful owners.
I do not feel "entitled to raid their fortunes" at all. The fortune has been made (in America) as a result of the economic policies of this country and the society that supported building that wealth. The estate tax does not "raid their fortunes," it repays society for all of the advantages that wealth gave the wealth holder. The tax is completely justified even if it were seen as an income tax on the recipient. However, since it is more of a gift than earned income, the 50% rate SHOULD apply, just as it does to gifts over $10K. After tax for the decedent, but pre-tax for the recipient. This money counts as income and should at least be taxed as such, but since it IS a gift (and all other gifts over $10K are taxed), it should be taxed as such. Personally, I would define it as a percentage of income earned (under an income tax) after all deductions, write offs, shelters, etc. With payroll taxes, the poor and middle classes pay a disproportionately large percentage of their income in taxes while the rich get to hire lawyers and accountants to bend and break rules to reduce the tax rate as much as possible. Personally, I would scrap the current tax code completely in favor of a flat tax with no deductions (#2 choice) or a consumptrion tax (#1 choice). But as long as we have the tax code we have, we need to keep the estate tax in place. But inheritees do not work at all for that money and as such it should be taxed as a gift. And right now the lawmakers are being bribed to reduce their tax rate at the expense of the rest of the country. As was noted in the article, the bottom 90% have seen their incomes drop 7% while the income of the top 1 percent rose by 148 percent, the income of the top 0.1 percent rose by 343 percent and the income of the top 0.01 percent rose 599 percent. The ultra rich are getting much richer and everyone else is seeing their incomes and effective tax rates skyrocket. It will only get worse if the estate tax goes away.
Yes, of course. Would you like to scrap those programs? If not then you might want to change your tune of taxing the rich. Everyone was taxed enough to pay for those programs in the '30s, but since then, the tax rates for the rich have dropped consistently while the rates for middle and lower class people have stayed flat or increased slightly. Why do ONLY the rich get their rates reduced, huh? Yes, making the rich pay a higher percentage DOES increase the bottom line, how could it not? The *right* amount would be the same effective tax rate as the rest of us. The rich do not have to pay anywhere NEAR what I do as a percentage of my income as a result of the accountants, lawyers, writeoffs, deductions, and other schemes designed to let the rich people skate while I (and the rest of the middle class) support their lifestyles. Yet one more reason to take money out of politics with publicly funded elections. Agreed, and instead he is allowing even MORE rich people to skate by doing away with the estate tax. Because it has not been taxed as income or a gift to the person receiving it. We tax incomes in this country and for better or worse, inheritance is income that should be taxed. It makes NO DIFFERENCE that it was taxed when it was earned, it has become income for someone else and should be taxed. This is where you have a SERIOUS misconception. The estate tax doesn't even kick in until the estate is OVER $3 million. Is it truly society's fault that the rich cannot raise children that cannot support themselves? $1.5 million would be enough that I would not have to work another day in my life and if some rich brat can't live on it then that is their problem and not mine. The real point is that the rich kid should be taxed on their income just like the rest of us and that includes gifts like inheritances.
Just as through educational grants and loans, welfare, medicare, medicaid, and social security, the wealth is being redistributed to its rightful owners in this country too.
One can argue about whether the estate tax is ethically right or wrong all day. Considering the current relativist climate, and the media-inspired advancing of sophistry as an acceptable form of argument, it's not likely to get anywhere. But, a question that can be answered is whether the estate tax, and the hereditary dominance of class that it engenders, is practical to social stability. It's not. In fact, it is one of the leading historical disruptors of social stability. Social stability is what enables you to drive on streets with traffic lights (maybe a good enough reason to get rid of it, right? ), ensures that your dollar will be worth roughly the same amount tomorrow as it is today (imagine what would happen to the economy in this country if all the discord and strife was coming from, say, Michigan, instead of the Middle East), and guarantees that no government agency will confiscate your goods and throw you in prison without a trial (maybe not anymore though). Social stability is what makes your life what your life is. Without it, everything will change. Right now, our society is so top-heavy in power that it may just collapse under the strain. ...and ignoring the problem by turning it into yet another abstracted argument makes it worse. Through history, NO society has ever been able to maintain stability for long in an environment created by the social effects of this degree of economic inequity. An economic gap of this size creates a proportional social gap. Think Russia, think Mexico, think Cuba, think France in the 1700's, think China in the 1920's - all these revolutions had various players with various goals, but why did they occur? Because they were fueled by thousands and sometime millions of frustrated poor people living in a society that gave them no realistic opportunities for a better life. Usually it was one powerful group trying to take power from another group that keyed the social disruption, but without the presence of the disgruntled poor these revolutions would never have happened. One of my favorite historians puts it plainly; Machiavelli wrote this around 1517. The United States has as tendency to believe it is somehow exempt from history. And maybe it will be exempt from the disruptive results of this massive economic/social gap - but it will be the first nation in the history of the world to do so. I, personally, don't think I'd be willing to take that risk - I'd rather try and prevent some of the factors that make social disruption possible in the first place. And one way to prevent these factors from gaining too much influence is the estate tax. Because, it's not just the lack of money that foments dissent in the lower classes - it's the lack of money combined with the awareness of people like Paris Hilton and George W. Bush. This is what always confuses me about conservatives - the base desire of conservatism is in maintaining society as it is, but then conservatives support policies and politicians that are the MOST disruptive to social stability. Maybe they should all be walking on bloody stumps, considering how often they shoot themselves in the foot (thanks Van Gundy!). For those who don't believe any of this is possible - do you really believe that this mass of people who are seeing their opportunities for a good life drying out and disappearing with each passing generation are just going to sit still and watch it get worse and accept it for ever and ever? That they're never going to get angry? That they're never going to do anything about it?
19th century USA was much worse than it is today. We got there to here without *revolution*. Maybe the USA is different after all, seeing how flexible our society and culture is. BTW I am not completely opposed to the majority of what you are saying. I do disagree with you on estate taxes, which the rich do manipulate as is. Doing away with estate taxes would make the Democrats appear less vindictive, which would be a very good thing.
I realize that changing the curretn tax code significantly is sheer fantasy but ... I agree with choice #1 and #2.
Maybe it is. Great Britain managed to make some massive reforms (in the form of a post-war Social Welfare program that is much more effective and comprehensive than any the U.S. has ever had) that staved off dissent in the lower classes, though British society is a bit more accepting of class distinctions than American society. But, I don't know how you vote or whether this is the sort of thing you consider a realistic problem, are you willing to risk so much on a maybe? While I can't necessarily agree that 19th century America was worse, there were some influences that would have prevented the social disruption that I (and many historians) believe could occur now. If you're speaking literally of the 19th century, then the Civil War would be the obvious influence (though I think what you mean is the turn of the century to the 20th). The World Wars tended to put a damper on local agitation, as one would assume. As subtomic pointed out earlier, there was also a landboom around the turn of the century, as well as another economic boom in the post-war and interwar periods. Also, as stated earlier, this was a time of Progressive government - the New Deal, etc.,. - when government was aware of the need for social stability and aware of how to achieve it, and was making concessions to the working class through government programs and labor laws. Great reforms were also made (in the following years) in the accessibility of upper-education to lower and working class families. Not so anymore. Many of these programs are being, or have been, compromised. Other programs are being nullified by entrenched wealth and increasing (to steal subtomic's term) "class nepotism." Though FDR and other progressive politicians of the first half of the 20th century liked to play up the idealistic aspect of these programs ("we're doing it for the people"), they were, in truth, just being practical. They realized that if you keep pillaging the same city, it's eventually going to have nothing left to steal. Now, add in the personal factor - for example, the mass media, constantly sending out images of affluence, is one factor that didn't have great influence until recently. It's now possible to be poor and to actually see what it's like to be rich. The examples we are given are usually poor examples of wealth as well (I don't think this requires much explanation). That's just one example, I'm sure you can think of more. The situation we're coming to is one where the only option for the poor in making a better life is revolution. All the paths established to allow one to go as far as possible on one's talent and abilities are getting thornier and thornier, and eventually will be covered completely if policies like Dubya's and the continuing centralization of power in the upper classes continue. This is one of the reasons why it is mandatory to keep the paths in place that allow for upward mobility - because even if a poor person is too lazy to take the path, at least he knows it's there, and that knowledge prevents him from shifting responsibility for his misery from himself to society in general (and at this point, society in general is often more to blame - even dumb poor people know that). It's vital that the situation (and popular perception of the situation) doesn't become limited to two choices: suffer or revolt. I'm certainly not trying to write a thesis here, and frankly I want to go play my guitar and smoke cigarettes. Anyone who reads all these posts, mine included, deserves a Purple Heart. All this circular arguing just plays into the calcified "left vs. right" garbage anyway. This issue is much bigger than that.
...and, just in case, I'd like to remind everyone (myself included) that none of us are going to be re-writing the tax code anytime soon. The intellectual exercises are fun and sometimes interesting, but don't make much difference. The real issue that Krugman is talking about is much more visceral and concrete than economics arguments can encapsulate. Better to just vote for someone who will change the tax code in a way that will ensure at least another half-century of stability. Either that, or move to Europe.
Get yourself a tax attorney and accountant who know how to manipulate the laws and tax code to the point that you pay around 4% or so of your income in taxes (according to Warren Buffet in an article he wrote not too long ago). Once you have that attorney and accountant, you also buy yourself near immunity from audits and prosecutions, the vast majority of which are inflicted upon middle class families who do not have the money and resultant lawyers to defend themselves. Were I that rich, I would skate on my taxes as much as possible and take everything between my tax rate and 25% of my income and place it in escrow for charitable contributions. That might come close to paying what I think is an appropriate tax rate for most people (if the income tax were sans deductions, write offs, shelters, etc.).
Get yourself a tax attorney and accountant who know how to manipulate the laws and tax code to the point that you pay around 4% or so of your income in taxes (according to Warren Buffet in an article he wrote not too long ago). Once you have that attorney and accountant, you also buy yourself near immunity from audits and prosecutions, the vast majority of which are inflicted upon middle class families who do not have the money and resultant lawyers to defend themselves. Were I that rich, I would skate on my taxes as much as possible and take everything between my tax rate and 25% of my income and place it in escrow for charitable contributions. That might come close to paying what I think is an appropriate tax rate for most people (if the income tax were sans deductions, write offs, shelters, etc.). I'd like some examples of this also. I think you severely overestimate how much a rich person can skimp on taxes. Yes, they may be able to <I>delay</i> taxes, but in the end - over a large period of time - you're going to pay your fair share.
Did you read the article? Krugman clearly states that "The distribution of income in the United States has gone right back to Gilded Age levels of inequality." The USA IS different because we took those robber barons and forced them to pay their fair share for this country. We created a society where we could have the incredible prosperity we have had for the past 55 years or so. The Republicans are now trying to roll back the clock on that prosperity and part of that roll back is the reductions in the tax rates THAT RICH PEOPLE PAY. The average American has not seen a tax reduction since the income tax was created. Rich people have seen their tax rate drop by over 75% in that time. What is right about those numbers? This whole thing is not about one specific kind of tax, it is about the systematic rollback of all taxes that affect the rich. It is about the burden of our society's costs being placed on the shoulders of those least able to bear that burden. It is about the people who are already privileged receiving even more perks, even after they have left this Earth. The estate tax is a symbol of what is wrong about how taxation works in this country. The middle class shoulders the burden while the "noblemen" rest on their laurels. The United States, even at it's most aggressive taxation level, was a far better place to be than the alternative. It is time that the rich pay their fair share too and if they don't like it, they can try to find a home country that will suit their purposes.
Look up the Warren Buffet article from about three months ago. We discussed it here on the board and he was pretty clear that he skates on his taxes because that is what the tax code allows him to do.
I reluctantly agree as someone whose wife will be having a child this tax year. Kids add so much cost to society that needs to be recouped that it is insane how much money they save you on taxes. But parents are the majority of those who write the code so you can bet that it won't change anytime soon.
