President Bush has vowed to eliminate the estate tax, or as he calls it, the "death tax," because it "unfairly penalizes farms and small business owners." If you want to eliminate the tax, do it. But don't use farmers and small businesses as an excuse! Here are some facts: Large Estates Only. The estate tax only taxes an estate that has more than $650,000 in it (for family farms and businesses, that amount is doubled to $1.3 million). If a person dies with more money than this, only the portion above the $650,000 is taxed. This amount is scheduled to be gradually increased to $1 million in the next few years. The Marital Exemption. The tax does not apply at all to gifts to one's spouse. Ie, you can leave your entire estate to your spouse and not be taxed, or leave up to $650,000 to your kids, the rest to your spouse, and avoid the tax. Life Insurance. The tax does not apply to life insurance policies in most cases. The exception is a policy taken out within 3 years of death. Charity. The tax also does not apply to money that is left to charity. So if you don't have a spouse, have more than $650,000 to give away (other than life insurance), and don't want to see the government get any of it, you can give the excess away to charity. Cost.Repealing the tax is estimated to cost around $10 billion in lost revenue a year. To me, repealing the tax is a further gift from the Bush administration to the rich. There is little fiscal sanity to it. If we want to cut taxes, why not simply reduce the income tax more? There at least the benefit would be parceled out to everyone, instead of helping only the most wealthy 2% of the population. Plus, repealing the tax reduces the incentive to make charitable gifts in one's estate. Judging by the large dollar amounts necessary to incur the tax, I doubt that it leaves anyone destitute. And because the wealthy are often capable of finding tax loopholes and avoiding income taxes altogether, the estate tax is sometimes the only way to tax them at all. Anyway, that's enough of a rant for me. If anyone can think of a good reason to repeal this tax, I'd love to hear it. ------------------ [This message has been edited by SamCassell (edited March 19, 2001).]
Bravo, Sam! I couldn't agree more. However, to be fair, we must look at it from President Bush's perspective: He needs to reward the people who flim-flammed him into office in the first place! If he was as serious about tax reform as he says he is, Dubya would do something about FICA, which takes a bigger bite out of each paycheck we earn. It hurts wage-earners, especially those on the lower end of the payscale, far worse than income taxes do, and it nails us every time we get paid. Have we heard anything from Dubya about reforming FICA taxes for working Americans? Absolutabliciously not! President Bush is serious about tax reform...for the richest 1%! ------------------ "Blues is a Healer" --John Lee Hooker [This message has been edited by RocketMan Tex (edited March 19, 2001).] [This message has been edited by RocketMan Tex (edited March 19, 2001).]
FICA is the social security tax. President Bush wants to reform social security but I am not aware if he wants to lower FICA deductions. Over the years that Clinton was in office, the threshold for FICA was raised at least a couple of times, thus our FICA contributions were increased. In other words, once you reach certain amounts of pay for the year, FICA is reduced until you no longer pay FICA for the year. I imagine if Bush proposed reducing FICA, the democrats would jump all over him. ------------------
I think I can see a good reason to eliminate the Estate Tax. Basically, all the taxes & tax breaks in our society are either linked to economics or perform some social function. For example: Income & Sales Tax: These basically allow the govt to grow as the economy grows. It (theoretically) keeps the government a constant size relative to the economy. Energy & Cigarette Taxes: These help reduce consumption of these items (Energy for conservation purposes; Cigarettes for social purposes) Education, Low Income Tax Credits: Both of these help the social fabric of the society. The Estate Tax does none of these. It's just a way to take money from rich people for no reason and there's no real logic in it. It serves no social value and isn't an economic thing. It's just there to say when rich people die, the government wants some benefit. Personally, I don't believe any tax cut is necessary right now. However, if Congress does go ahead with one, I'd have no problem with a repeal of the Estate Tax because it should never have been implemented in the first place, as long as the core of the tax cuts are focused on income taxes. ------------------ http://www.swirve.com ... more fun than a barrel full of monkeys and midgets.
A relevant fact missed by RMT's regurgitation of Democratic tag lines is that you get back what you pay in FICA. You don't get back your income tax. Is it really a charitable contribution if you're only doing it to avoid paying taxes? I think a better question is why should the tax be there in the first place? ------------------ "There's a lot of things you can say about playing with Dream, but I get to say, `I played with the Dream.' That speaks for itself." --Walt Williams "****!" --Kenny Thomas
I wonder if I'm going to be more hated by conservatives or liberals on this board. I seem to agree with no one. ------------------ http://www.swirve.com ... more fun than a barrel full of monkeys and midgets.
A relevant fact missed by TheFreak's regurgitation of the classic Republican combination of brain cell constipation and verbal diarrhea is that you get back what you pay in FICA... ...as long as the system is solvent when you retire. If it isn't, you are screwed, just like the American people are with George W. Bush as "President". ------------------ "Blues is a Healer" --John Lee Hooker [This message has been edited by RocketMan Tex (edited March 19, 2001).] [This message has been edited by RocketMan Tex (edited March 19, 2001).]
I really don't see a benefit to keeping government a constant size relative to the economy. Where is the social benefit? Shouldn't the government's size be related to what we need it to do, not the size of the economy? And I don't know that taxing income at different levels (both on the basis of amount and type - like a lower rate for investment income than wage income) has that result anyway. The income tax is there, like the estate tax, because it is a relatively easy way to generate lots of tax revenue to fund the government. ------------------
I really don't see a benefit to keeping government a constant size relative to the economy. Where is the social benefit? Shouldn't the government's size be related to what we need it to do, not the size of the economy? The key is that a government's responsibilities are directly tied to the size of the country's economy. If a country has a $7 trillion economy, it's going to need a substantially larger government than a country with a $1 trillion economy. Income taxes and sales taxes work on this principle -- that they'll automatically grow to keep up with economics. The income tax is there, like the estate tax, because it is a relatively easy way to generate lots of tax revenue to fund the government. The difference is that one makes sense and the other does not. ------------------ http://www.swirve.com ... more fun than a barrel full of monkeys and midgets.
Yes. Because you are giving. To charity. That meets the dictionary definition on a contribution I think. Plus, giving to charity involves giving your own after-tax dollars as well. For instance, you've got $750,000 at death, no spouse, and $100,000 of that is going to be taxed by the estate tax. Supposing the estate tax is 55%, you would have 55,000 worth of tax and $45,000 left over afterwards on that $100 G. By donating the entire $100,000, you are in effect donating your $45,000 and also the $55,000 that the government would have taken. So it is still a gift. It is the same thing that happens with the charitable donation deduction on income tax. That also encourages donations - are you saying then that nothing is charity if you get a deduction for it? The bottom line is that charities benefit from both deductions, and would be harmed by eliminating them. ------------------
You've stated that twice, but I still don't understand why you think so. List government functions that are tied to economy. In my view, the government should provide military, infrastructure, education, some level of social welfare (health care, etc.). None of that is tied to income in my book. Just because we earned more as a country in the last few years doesn't mean that we should spend more. And vice versa, just because the economy's going through a slowdown now doesn't mean that our need for goverment will be less. I might argue the opposite. ------------------
I don't think that people understand what's going to happen if you repeal the estate tax. The justification is debatable-I accept the fact that inheritance is a COMMERCIAL transaction, and as such it should be taxed. However, I understand and respect differences of opinion in this matter. But the repercussions of repealing the estate tax would be enormous. The estate tax has encouraged charitable contributions to a very large extent. If one eliminates it now, then many very necessary organizations are going to suffer immensely. That's why Bill Gates & co have signed a petition to NOT repeal the estate tax. If you really want to look at the benefits to *society*, then its pretty clear that the estate tax needs to remain. If you're concerned with the preservation of massive inheritances for the relatively few, then by all means, favor repealing it. mark my words: economic equality is diminishin in this country, and there *will* be repercussions. You can't have an income gap that is growing as large as ours without eventual civil unrest. Greed will pay itself back in misery if we're not careful. Pure capitalism will lead to Marxism... only by moderating capitalism and giving it a heart and a safety net can one preserve a stable economic system. ------------------ Boston College - Big East -East Division Regular Season Champs Worst to First in 2001!
Would anyone here actually qualify for the benefits of an estate tax? Just curious. My wife would but she doesn't support repealing it. I know quite a few others who don't either. Warren Buffet and Bill Gates Sr. both disagree with repealing it. For me, I don't really care either way. Seems like a good way for rich people to keep their money, but they already have many, many ways of protecting it so I don't really see the big argument. Besides, you can protect that money by using living trusts and placing large amounts in the names of your family members before you die rather than moving it all at once. Seems that would save a lot of the hassles and be much more fiscally responsible. ------------------ "Oh, God. I wish I was a loofa."
RocketMan Tex Are you (as a non-republican) advocating lowering the Social Security withholdings? This seems to be against the Democratic "platform". Personally, I would like to have the ability to control my FICA and designate where it goes and how much to contribute. This runs contrary to Gore and Clinton's position. Bush campaigned on allowing "younger" workers to control part of their FICA tax (i.e. invest at least part in a 401K type of plan instead of social security) while leaving the SS benefits for "older" workers alone. ------------------
I am in favor of lowering FICA tax as part of any tax relief package. Preaching tax relief and not including FICA makes no sense to me whatsoever. The Social Security system needs to be overhauled, not just reformed, so that people my age will be able to benefit from it 30 years down the road. Privatized investment is not the answer IMHO, especially with the way the market has been performing as of late. You're right...it isn't the standard Democratic line. I'm not a standard Democrat. ------------------ "Blues is a Healer" --John Lee Hooker
Well, FICA wasn't the topic of my original post, but I'm with RMT that FICA needs to be reformed. I would go a step further and eliminate social security, or at least make it an opt-in system. Social security is a pyramid scheme where those working give their money to those who are retired. Its not a "savings account" - the first recipients of social security never paid a dime before receiving benefits. And nothing is going to be left for our generation. The problem is that the government would never allow for an opt-in system, because noone would choose to participate and the money for current benefits would dry up. The AARP has a powerful lobby, and its members vote in huge numbers. ------------------
What if we had each generation pay for their own retirement instead of the previous generation, and the divide up the cost of the upcoming retirees amongst several generations down the line so that each only has to pay about 5%. ------------------ "We messed with the Bull, and we got the horns." -- Larry Brown "quote" from AirBullard.com
Jeff: Technically my grandparents are going to be hit by the inheritance tax. Of course, I have absolutely no idea what (and if) they're doing anything to avoid it other than leaving their holdings directly to their grandchildren instead of their children. ------------------ Boston College - Big East -East Division Regular Season Champs Worst to First in 2001!
haven If your grandparents are unaware of the tax ramifications of the estate tax, I would suggest that you help them get in contact with a financial planner. As with most things of that sort, there are legitimate ways to avoid paying the tax. That is one of the "complaints" of having the estate tax. Folks can legitimally get around it, but it does cost and take preparation time. ------------------
