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Re-thinking the Estate Tax

Discussion in 'BBS Hangout: Debate & Discussion' started by rhester, Oct 25, 2005.

  1. GladiatoRowdy

    GladiatoRowdy Member

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    No, I am saying that the American system of government gave many advantages that helped lead to these people becoming wealthy enough to trigger the estate tax. We have a progressive income tax for a reason: rich people can afford to pay more in taxes. If you want to scrap the entire income tax in favor of a flat tax (with absolutely ZERO exemptions or deductions) or a consumption tax, then I would be on your side.

    However, scrapping the estate tax is one more load that will be added to the tax burden of the middle class or financed by debt. Neither of those outcomes is palatable to me, especially since the rich have a multitude of loopholes they can use to avoid taxation and the deficit is already at record levels.

    Unfortunately, in class warfare, the rich always seem to win.
     
  2. Invisible Fan

    Invisible Fan Member

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    There's mechanisms in place for you to divert that money and avoid paying the brunt in death taxes. If you were that wealthy, your accountant/lawyer would've provided the means for your heirs to keep a good chunk.

    With my father in bad medical condition, the greedy part of me wants the estate tax gone (before I get slammed it's not the biggest deal right now...). But... it's one of the mechanisms originally designed to equalize classes. A robber baron, who exploited cheap labor and lax regulations, should not prolong his legacy while the classes he oppressed during his existence recieve nothing in return. We live in a legacy where the honest then were just doing their thing and exploiting the system. Prolonging the cycle would be unfair to a system where anyone can supposedly reach to the top.
     
  3. bobrek

    bobrek Politics belong in the D & D

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    And all along the way, I (or my parents) paid taxes. Those publicly funded progams you described are just that - publicly funded. They use taxes to pay for those things. Taxes, which I have been paying my fair share of for the brunt of my "for example" life.

    And why are you assuming this money will go to lazy kids. In my example, I am 70 years old. In real life, my kids will be over 40 when I am in my 70s. Why shouldn't I be able to help my 40+ year old kids who have been working hard for 20 years to have a better/easier financial life than me?

    And why do you say the "heirs didn't do diddly..."? It appears you are using Paris Hilton as your "poster child" for the estate tax. Not everyone who qualifies for the estate tax is like that.
     
  4. rhester

    rhester Member

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    I am a pastor who has an opinion for everything and enjoys D&D? I try not to take my own opinions too serious so that I can enjoy my freedom of speech while I still have it. I say some things to stir the pot and some things because they really mean alot to me (check out those abortion threads). I don't know if I understand and believe everything I say but I enjoy D&D. It is a place where ideas can be expressed and so far no one gets a knock on the door from the feds.

    To solve the debt we must stop spending. That will be very painful I am afraid but it is no different for a nation than it is for a home. Think about it. If you were personally going bankrupt due to debt wouldn't a big belt tightening be in order. There would be some pain in lifestyle and living, but eventually if you spend less than you take in you can save and become prosperous. It is the American Dream.
    Let it live, let the spending stop (or slow way way down) Stop borrowing and reduce taxes accordingly. The economy will suffer for a while because the fed govt. will have to get real jobs and the handouts will have to be phased out to other solutions but eventually if you also go to sound currency you would be on the road to prosperity.

    The debt will not go away until the spending goes down- proportionately.
    We cannot possibly tax our way out of the destruction we are facing. And the govt. knows that so that is not even their plan.

    A great nation can educate its citizens, protect its shores, provide industrious opportunities for employment and find effective ways to meet the needs of the poor. We do this and everyone will be happier.

    If we stay on the course we are on we will be a crashing one day to the tune of 'Remember Rome'

    IMHO- :)
     
  5. bobrek

    bobrek Politics belong in the D & D

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    There are mechanisms in place, but those mechanisms tend to cost money. For example, you can purchase life insurance to cover the cost of any estate tax. Unfortunately you need a crystal ball to determine what you need. You also have to pay for that. Rather than being able to simply give the money to whoever I choose, I have to pay attorneys, accountants and insurance companies to help avoid that.
     
  6. Deckard

    Deckard Blade Runner
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    Ron Paul is possessed by aliens. In reality, he is the twin sister of Tom DeLay, likewise possessed.

    Be afraid... be very afraid.



    As for taxes? Just do away with all of them, right? We can keep the country safe with that deer rifle and the shotgun you use for ducks. Problems with roads? Use a horse. Doesn't need one. Need public works, like sanitation? Dig a trench in your back yard and use that. If the neighbors complain, then see if the shotgun is loaded. Elderly people and poor children need health care? To hell with them. They should have been smart and inherited wealth.



    People, I could come up with pages of stuff tax money is used for. The truth is, the wrong people are paying more taxes, and the "right" people, the wealthy and large corporations, keep getting theirs cut. The problem isn't too much taxation. The problem is the corruption of the political process by the wealthy and Corporate America. Have a war going on and record deficits? Propose a tax cut! The Republican solution to any problem.

    Too much government spending on programs passed by Democratic Congresses? Have a Federal Sunset Commission, requiring each part of the Federal government to justify it's existence every 12 years. We have one right here in Texas, proposed by Lloyd Doggett over 20 years ago, a Democrat, and passed by a Democratic Legislature. It has saved the state hundreds of millions of dollars since it was enacted. It would have saved far more if all it's recommendations had been adopted. They never are, but it helps, and it forces the bureaucracy to re-examine itself every twelve years, or sooner, if the Legislature asks it to.



    Keep D&D Civil.
     
  7. Invisible Fan

    Invisible Fan Member

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    It's true, but if you really had 10,000,000 it wouldn't hurt to pay 5 grand a year for the attorney/accountant for the last ten years in order to save you that 4 or 5 million Uncle Sam would snatch away...
     
  8. bobrek

    bobrek Politics belong in the D & D

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    If it were just 5 grand to an attorney/accountant you are correct, but you also have to purchase a fairly large insurance policy to cover the tax (at least in the "loophole" I am aware of). All in all, you save money, but you still have to pay out a substantial sum to gain that savings. It would be better to invest that sum into your business or charities or whatever rather than paying the insurance company.
     
  9. GladiatoRowdy

    GladiatoRowdy Member

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    And the estate tax is just one more in the list of taxes that must be paid.

    I assume that it will go to lazy kids because that has been my experience with every single inheritee I have ever encountered (and I encountered a LOT of those during my years as a drug abuse counselor).

    Personally, I would assume that if you had 40+ year old children who have been helping you to amass that wealth that they would already hold an equity position in the company and as such, would have already realized the increase in wealth. Even so, in your example, you would be giving over $5 million dollars to your 40+ kids, money that will allow them to have a better/easier financial life than you did.

    No, but why should ANY of those people receive a multimillion dollar tax-free windfall?

    We put a progressive income tax in place for a reason. Rich people seem to ***** about it all the time and succeed in getting provisions that only affect them repealed or reduced (capital gains tax, dividend tax, 60+% tax brackets) with regularity. Then, they accuse people of me of playing "class warfare" games while they dub their latest enemy the "death tax" in hopes of convincing the rubes that it is somehow unfair.

    Once again, if we are going to go away from the progressive income tax, I am all for it. I think a consumption tax would be a much better way to go. However, that is not what they are trying to do. They are reducing the progressive nature of our system of taxation and have largely succeeded in creating a system where the rich pay somewhere between little and nothing while the rest of us bear the burden.
     
  10. Invisible Fan

    Invisible Fan Member

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    Then I'd hire another lawyer... :D
     
  11. No Worries

    No Worries Member

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    The cost of the insurance is generally quite less than the targeted savings in FET, right?

    If a person has the kind of money that requires estate planning, the cost for setting up an estate plan (not funding) is very minimal and said person is very motivated to get it done. Also having an estate plan created for you forces you to think through all of the tough issues.
     
  12. rhester

    rhester Member

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    No, I don't think you have any idea where 'tax' money goes.
    link

    I couldn't quickly post several books, but I can recommend some reading if that link seems alien or demon possessed. I don't know much about that link either I just googled for a one page summary of the issue.

    There are some very scholarly explanations if you want to read them.
     
  13. bobrek

    bobrek Politics belong in the D & D

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    I agree with all of this. While the cost of insurance is less than the savings it is still a cost (perhaps you spend a million to save 5 million over a period of 10-20 years). If I were in that position, I'd rather do something else with that 1 million than give it to an insurance company.
     
  14. Deckard

    Deckard Blade Runner
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    rhester, seriously, you would be surprised. I want to add that I was writing my post before I saw your explanation about your view on taxes to Andy. I don't think you are the least bit crazy, and I understand where you're coming from. I just think you are wrong. :)



    Keep D&D Civil.
     
  15. rhester

    rhester Member

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    I may well be wrong (in fact my track record is tarnished), I wasn't writing with sword drawn either, just stirring up things-
    I don't trust super wealthy bankers, politicians and TV preachers.

    And I certainly respect your posts. I loved Griffin's book on the fed, I wish you would read it.
     
  16. bobrek

    bobrek Politics belong in the D & D

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    My particular "for example" story is similar to a situation of a co-worker I have worked with for 15+ years with the exception of the fact that the patriarch has not yet dropped dead and some other minor details (e.g. I am not aware of the total worth).

    They have 3 kids in their family ranging in age from 42 to 49. Every one has worked regular jobs for the brunt of their lives and their father has been busting his tail to get to where he is. They do not work for him nor have they ever received any major stipend. The father believes in hard work and will not fund "laziness".

    I know the father and he is as unassuming as a rich person could be. While they have a nice house, it is in the 200K range. They do have one nice car (perhaps 30k), and their other car is a van.

    I would consider my co-worker to be upper middle class, one brother to be middle class and the other brother to be lower middle class.

    I see no reason why the father should not be entitled to distribute the estate without paying taxes on it (that he has already paid) as he sees fit.
     
  17. Deckard

    Deckard Blade Runner
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    I will try, rhester, but I have a long list of books I need to read. I keep buying books and keep falling behind in reading. Heck, I read a lot, and frequently 2 or 3 books at a time. I still can't catch up.

    I certainly respect your posts as well, rhester. Thanks for the compliment, although I don't deserve it. You do.



    Keep D&D Civil.
     
  18. bobrek

    bobrek Politics belong in the D & D

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    www.audible.com :)

    "Read" while you work, drive, exercise...
     
  19. rhester

    rhester Member

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    You have done that.

    I've enjoyed the discussion.
     
  20. pippendagimp

    pippendagimp Member

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    Well the income tax was only initiated in 1913 - concurrently with the formation of the Federal Reserve Banking Corporation. We got along just fine for more than a century without the income tax.
     

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