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No Spreadsheet Needed
- Thread starter Jack.Yarn
- Start date
I agree with you that the government has overtaxed us, but I can't agree with eliminating the estate tax. Consider someone like Warren Buffett or Mark Zuckerberg. They have never paid a dime on the billions of dollars in company stock that they own, since the tax is not due until the stock is sold. So if you eliminate the estate tax, the stock would be passed onto their heirs tax free.
Furthermore, eliminating the tax would provide a legal method for someone like Buffett to never pay any income taxes in his entire life -- simply borrow money for living expenses from a bank, using the stock as collateral. On death, the estate would sell some stock, tax free since there would be no estate tax, and repay the loans.
I could agree with eliminating the estate tax for money that has already been taxed at least once, but not agree with total elimination.
There would be income and/or capital gains on the stock sale, negating this argument.
The fact that some people manage to get themselves "special treatment" to avoid other taxes in no way justifies the estate tax.
There is no, nor can there be, any *moral* justification for the estate tax, excepting an unstated "right" of the state to reach into private property and *ex*-propriate it -- as it, *take* it -- as in *steal* it. Such a tax is not based on any purported "needs of society" -- else there would be no need to wait until the victim passes -- like any user fees or consumption or income tax, it would be enabled in an ongoing fashion. No, a death tax is based not on We the People self-burdening for The Common Weal, but on a lack of respect for private property, and a greed there from, and from some unlucky lever of power being procured and pulled, to take away from someone else, "cuz they have *too*much*."
That's a few semesters of teaching Public Finance right there: when you violate the principle of private property -- or of Res Publica -- you're, eh, fucked.
That's a few semesters of teaching Public Finance right there: when you violate the principle of private property -- or of Res Publica -- you're, eh, fucked.
Most of the tax policy of the US is based upon one principle... "The government wants your money and has the power to take it". No further justification required or offered.... including "reasonableness" or "fairness".
Example.
You own stock in a company that makes a profit. The company is taxed at 35% on earnings. Those after-tax earnings are distributed to you as a dividend... which may be taxed to you at 39.6%. And if you're financially successful enough, that same "after dividend tax amount" might be taxed at 40% in your estate.
Gee... Out of $1,000 in earnings by the company (you're a shareholder/owner, don't forget), the government could end up taxing $765 away... leaving you with $235! You did the work buying the stock. You took the risk. And the government takes 76.5% of the profit.
What's reasonable or fair about any of that?
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Nope. From the NY Times:
One big advantage the current estate tax gives to wealthy heirs is in the treatment of capital gains, which are taxed at a rate of 0 percent for anyone in the 10 and 15 percent income tax brackets, 15 percent for most others, and 20 percent for anyone in the top 39.6 percent bracket. But under current rules for estates, no capital gains are paid on assets up to the exempt level, and assets over that amount pass to heirs at the current market value, shielding them from tax on any gain in prices that may have already occurred. The I.R.S. found in 2015 that stock and real estate — assets likely to appreciate — made up more than half of all estates subject to tax. Resetting the cost-basis, or value, of an inherited asset can be an important benefit.
He was talking about "sale of stock to repay loan". Those proceeds would be subject to capital gains tax.
You're talking about "stepped-up cost basis" in the estate... different topic.