LOL. Some ancient philosopher (forgot his name) once said that Democracies are bound to fail because the masses will eventually learn how to vote the public Treasury dry. I used to think the Democrats fit this bill - but after 4+ years of Republican dominance, it appears I was wrong.
If someone helped earn the money they should have been payed for it sooner. The examples you mentioned with Jim Kerry and Yao Ming are both people who worked for what they have, and are payed and taxed. I don't mind people inheriting a lot of money even if they did nothing to earn it. I also feel that kind of income can be taxed by the govt. A person who receives a large income they didn't work to earn, can expect to be taxed. Just like thems the breaks if someone gets a huge chunk of money they didn't earn, thems the breaks that part of it will be taxed. Again for most folks they won't have any inheritance taxed. I'm also curious how the estate is taxed before distribution. Who files that and pays it? I thought the person who inherited the money paid on their inheritance. I guess I was wrong about that.
I would assume it is the estate's trustee or the executor of the will that is responible for filing whatever is necessary on behalf of the estate. Any tax payment comes from the estate prior to any distribution. This is my main complaint. IF you are going to tax anything, tax the heir(s) AFTER the estate is paid out.
What is the old adage? A fool and his money are soon parted. People who do estate planning do not have the above problems. In the above example with proper estate planning, both of your wife parents would get a $1.5M exemption for a total of $3M (2005 numbers). People with "I Love You" wills will only get $1.5M with the second spouse dies and are hit with growth of estate assets between the first and second to die.
i don't understand how cost basis works for everyone, but No Worries, are you saying when you die that the cost basis doesn't automatically move up as well? if both you and bill gates die and neither owes tax on LTCG b/c the cost basis was moved up, then what's the problem. that Bill Gates has more LTCG? In my example, Billy G die and I lived The point which I am sure you are getting is that there is currently a step up in basis when you die, which denies the IRS the LTCGs that are owed (which the rest of us who are still living pay). To offset this favorable tax treatment, the estate taxes (only if you are rich) will right the wrong. If we do away with estate taxes, the cost basis on estate assets should not be stepped, which would continue the LTCG deferment.
Well if only it were that easy ... Some estate assets are not probate assets. Probate assets are transfered by the will (or by the state's intestacy laws). Noprobate assets are transfered by the law (eg property titled Joint Tenacy in Common With the Right of Survivorship) and by contract (eg insurance, IRAs, retirement plan benefits). The gross estate includes both probate and nonprobate assets. The estate executor controls the probate assets. Estate taxes will need to be paid against the gross estate. The executor can pay the estate taxes from only the probate assets which he/she controls or can force (through the estate courts? or IRS?) estate taxes be paid pro-rata across the entire gross estate. Doing a pro-rata estate payment is messy, time consuming, and expensive. Also worth noting is that the estate courts are the safety net for an incompetent executor (eg one who distributes all of the assets without paying the estate taxes). A well planned estate does not have these problems.
I thought the person who inherited the money paid on their inheritance. Some taxes have inheritance estate taxes, which is an excise tax on yur right to inherit. These states collect from the person who inherits (inheritee?). Gift taxes can also work this way. If i have exceeded my $1M in lifetime gift allowance, I may require that any future giftees pay my gift tax (which are taxed on my gift tax rates). Some estate transfers may also work this way if the executor (or will) is screwed up. The estate courts may force the transferee to pay the pro-rata estate tax, if not paid by the executor. This is a last resort.
No Joke! It's like republicans just don't want the democrats to bankrupt the country, if anything that big is gonna happen the republicans should get as much credit as democrats. By the time people realize government spending is the problem.. never mind no one is listening.
Great news, no more death tax..... This is already post tax money, it should not be subject to double taxation. DD
In very general theoretical terms - can the politicians just limit spending increases to inflation and population growth. Keep everything else the same (taxes, etc.). Wouldn't real economic growth (3-4 percent a year) eventually make up the difference?
If you earn money, you have to pay taxes on it. If you win money gambling, or in the lottery, you have to pay taxes on it. But if your obscenly rich uncle dies and leaves you his fortune, that should come tax free? The fact is that taxes have to be collected. The government needs money to run. If you're trying to sell me on "We should eliminate the estate tax because it's wrong," sorry, I'm not buying. A decrease in tax revenues from one source will inevitably lead to an increase in taxes somewhere else. I'm not in favor of paying more in income taxes to offset the funds lost so that rich people's kids can keep more of daddy's money when he dies.
I agree with you that a huge part of the problem is govt. spending. One way to cut down that spending is to pay down the priniciple of on the debt. That would eliminate the interest payments that the govt. makes. That means the govt. would be spending less. The govt. would be spending less, and yet we would get the same amount of services from the govt. How can we pay down the principle of the debt? The govt. needs to start taking in more money. There are a number of ways to do that. Andy mentioned the consumption tax as one way. Erasing the portion of tax cuts benefitting the wealthy is another way.
Did your uncle pay taxes on what he earned? Heck Sam you're so generous why don't you double your earnings on your tax return. I mean if it's good for the obscenely rich uncle to get taxed twice, why not do it yourself?
This uncle didn't get taxed twice. He was taxed once. Unless he inherited the money from his uncle, in which case he was never taxed. By definition, estate taxes come after you are dead. You are no longer the one paying taxes at that point, because you no longer exist - taxes are paid by your estate. Money is "double taxed" all the time. If you own a business, that business earns income which is taxed. If you pay an employee, that employee is taxed on those same dollars. He then spends part of his money, and pays sales tax on those dollars. Wow, triple tax!
This is a HUGE red herring. ALL monies get taxed two and three times. Sales tax and property tax are both examples of taxes that affect already taxed income.
I wasn't clear enough- The problem IS govt. spending. (period) Your statement is not logical or you need to explain- paying down the debt principle can be accomplished without cutting spending if the income source was huge. But it isn't, can't be and so the principle of the debt can never be paid until spending is greatly reduced. Because we don't have enough income to keep up with the interest much less even get close to the principle. The Central Bankers do not allow you to pay on the principle when you are struggling to make your interst payments that is WHY we are talking tax increase. The only way to eliminate the interest payments is to pay the principle off. You cannot eliminate the interest that is figured on the principle until you pay off the entire debt, that is when interest goes away on the loan. The problem is our debt is so huge the interest is becoming un manageable. We are fighting for our national lives to pay the interest. We need more tax revenue to make these payments. Where else is the Govt. going to generate income to pay the interest to the Bankers. Well they can borrow it. But eventually bankers do not like to lend money to govts. because they are insolvent and can't pay the interest. What bails us out is that China buys up about 30% of Govt. treasuries a debt instrument that helps generate more liquidity to pay on our interest. It keeps the bankers hoping we will keep paying them interest. Sorry, but taking in more tax money all goes to interest. Do you realize what our interest in on 7-12 trilliion dollars of debt? I repeat taxes do not pay off the debt. OK what would pay off the debt. A huge increase in taxes coupled with a huge reduction in spending. Big numbers- Do the research, do the math. Current tax levels need to be raised to pay interest. Spending rates are over 1 trillion per year. (this is annual increase in debt- we're borrowing the money to run the entire govt.) So to get to principle we need to slash spending and quadruple taxes. Welcome to the future. I assure you spending isn't going to be cut. We will keep borrowing money. Taxes are going up. We must pay the interest. Some people would like to do away with income taxes all together, govt. services wouldn't be hurt (don't let anyone tell you different) because we borrow that money anyway. But the people who own the Federal Reserve System would have a cow because we couldn't make our interest payments to them. So all the elitist bankers would be furious. They would find some way of taking reprisal at being cheated by the American people. First they would stop lending the govt. money to run on and then we would have to decide if we want them running our country or not. For me I would just as soon take the economy away from the super wealthy that own the federal reserve banks. I would rather suffer in the short term and get out from under their tyranny.
The one you are thinking of is: "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage." --Alexander Tyler (He was actually talking about the Athenians) You made me think of another good quote too: In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other. -- Voltaire, 1764 This is the truth. The US government has to end its addiction to spending to ever get out of this mess. IMHO - we need to slash defense spending most of all. Yes, this will hurt the economy as corporations struggle to deal with the reduced government spending - but we cannot survive forever acting like it's still 1942.
We are in agreement. I'm talking about cutting out the third largest spending program our govt. has.(interest on the debt.) You don't want to seem to address the third largest expenditure our govt. has, but prefer to cut spending on things that some people actually benefit from. The interest on the debt is something that nobody benefits from, and is the third largest expenditure our govt. makes. If people are really serious about cutting down on govt. spending this should be priority one. Cutting spending is what I'm talking about. We can't cut down spending in any significant way unless we tackle the three top expenditures in our govt., defense, s.s. and health stuff(much of which doesn't come from our income taxes) and the interest on debt. I've left defense alone, because we obviously need that. You seem to want to ignore the things our govt. spends the most money on. I'm in favor of tackling those issues, and reducing that spending. Current interest payments amount to roughly 380billion dollars. Every tax dollar collected over that amount goes for more than just paying the interest on debts. Our tax dollars do not only go toward paying interest. Considering we could bring in even more tax money by repealing the tax cuts for the wealthy we could begin to make payments on the principle.
