Estate Tax Compromise

[Rhino]

Proponents of Estate Tax Repeal Grudgingly Accept Compromise

Wednesday, June 21, 2006

WASHINGTON — Some of the staunchest advocates of eliminating estate taxes said Wednesday they could accept, with some reservations, a compromise that stops short of complete repeal.

"It's hard to get excited about it," said Pat Toomey, president of the conservative Club for Growth. "I suppose, on balance, it's better to have this than not to have it."

The reduction under consideration, scheduled for House debate Thursday, rewrites estate tax rates in 2010 and beyond. It responds to a quirky and temporary law, part of President Bush's first tax cut, that erases estate taxes in 2010 and revives them a year later.

The chairman of the House Ways and Means Committee recommended rewriting that law by exempting $5 million of an individual's estate, and $10 million of a couple's, from taxation beginning in 2010. Rep. Bill Thomas, R-Calif., would let a surviving spouse use any unused portion of an exemption left by a deceased spouse.

Under that plan, an estate worth up to $25 million would be taxed at capital gains rates, currently 15 percent and scheduled to increase to 20 percent in 2011. Estates worth $25 million or more would be taxed at twice capital gains, currently 30 percent and increasing to 40 percent......http://www.foxnews.com/story/0,2933,200502,00.html

[Patriot Heart]

The whole thing is still such an outrage. I will never be in those categories of income or assets, but I cannot understand why some wealthy person hasn't taken this thing all the way to the Supreme Court.

[HomeschoolrsRUs]

For the comprehension impaired, could someone please explain to me why we have an "estate tax" in the first place? Haven't they already paid taxes on all that they own and possess at LEAST once? So why then are they being taxed upon their death?

I think the Emperor's clothes are starting to become see-through.

[Rhino]

The whole thing is still such an outrage. I will never be in those categories of income or assets, but I cannot understand why some wealthy person hasn't taken this thing all the way to the Supreme Court.Because they'd lose. Confiscatory taxation has become so embedded into our culture that it's considered normal now.

[Rhino]

For the comprehension impaired, could someone please explain to me why we have an "estate tax" in the first place? Haven't they already paid taxes on all that they own and possess at LEAST once?Not necessarily. Investment gains have to be 'realized' before they are taxed. However, if the investments are not rolled over or cashed in by the heirs, there is no need to tax them. Businesses are lost this way.

[HomeschoolrsRUs]

However, if the investments are not rolled over or cashed in by the heirs, there is no need to tax them.

Then why are they being taxed, especially if they are still in use/existence?

[Rhino]

Good question.

[Lazarus]

For the comprehension impaired, could someone please explain to me why we have an "estate tax" in the first place? Haven't they already paid taxes on all that they own and possess at LEAST once? So why then are they being taxed upon their death?

I think the Emperor's clothes are starting to become see-through.Because we have a government that is being controlled by people who believe that all private property is really the government's and we are only allowed to use it on a temporary basis...

The estate tax is one of the most evil institutions this government has ever burdened the people with... In truth this is the very essence of double taxation... But then this isnt any different from taxing Social Security benefits... That money ALSO has already been taxed once...

Everytime a piece of property is passed from one generation to the next, the government takes a bite... In essence, with the estate tax, a single lump sum of money, passed thru enough generations, would simply disappear into the government's bottomless, insatiable stomach...

How did we let ourselves get into this situation? And will we ever, as a nation, find the moral courage to elect honest representatives who have the guts to eliminate this abomination? As much as I hate to say it, I fear that the advent of Mr Reagan was just the last, temporary gasp for freedom in a slowly downward sliding into Socialist oblivion... Before I die I expect to see the Constitution we were handed, completely erased and replaced...

[Wyatt_Junker]

The wealthy don't fight it (and often support it) for a couple reasons.

First, they don't actually PAY it as there are scores of ways for them to get around it (as I understand things). And second, this is the real generation of greed. They don't give a crap what they leave behind.

The second point is interesting and probably true. I just never thought of it before as I have never thought that way as I am always thinking about what I can leave behind for my litter. But, Heinz, Kerry & Kennedy probably don't get constipation over tommorrow because today is all they see.

[Borgia]

For the comprehension impaired, could someone please explain to me why we have an "estate tax" in the first place? Haven't they already paid taxes on all that they own and possess at LEAST once? So why then are they being taxed upon their death?

Let's see. I am taxed once on my income. Then I am taxed again when I buy something (sales tax). But I have already paid taxes on that income!

Should we now get rid of sales taxes because they tax income that has already been taxed once? Same argument.

[Rhino]

She wasn't talking about sales tax.

[queue]

Let's see. I am taxed once on my income. Then I am taxed again when I buy something (sales tax). But I have already paid taxes on that income!

Should we now get rid of sales taxes because they tax income that has already been taxed once? Same argument.If you itemize your deductions instead of taking the standard deduction on your income taxes and you keep all of your receipts showing the sales taxes that you paid during that year, then you can deduct the amount you paid in sales taxes from your income so that it is not included in the amount that is taxed by the income tax (according to the accountant that does my income tax forms). If that accountant is correct, people are not being taxed twice on the same amount with regards to the income and sales taxes.

[Borgia]

She wasn't talking about sales tax.

She was talking about double-taxation.

[Borgia]

If you itemize your deductions instead of taking the standard deduction on your income taxes and you keep all of your receipts showing the sales taxes that you paid during that year, then you can deduct the amount you paid in sales taxes from your income so that it is not included in the amount that is taxed by the income tax (according to the accountant that does my income tax forms). If that accountant is correct, people are not being taxed twice on the same amount with regards to the income and sales taxes.

You can itemize your state income taxes OR your state sales tax. Not both. Either way, you get taxed twice (either sales or state incoem tax on top of the federal).

[queue]

Good point. Any state that has both income and sales taxes should get rid of one of them (Wyoming and Tennessee do not have state income taxes and there might be some others).

[HomeschoolrsRUs]

Let's see. I am taxed once on my income. Then I am taxed again when I buy something (sales tax). But I have already paid taxes on that income!

Should we now get rid of sales taxes because they tax income that has already been taxed once? Same argument.\

Sounds good to me!

BTW, I support the Fair Tax Plan. Americans for Fair Tax (http://www.fairtax.org/)

[Borgia]

Let's see if I can find that magic fairy dust that allows us to get rid of taxes and still magically pay for all the state and local projects. Now where did it go? :)

[HomeschoolrsRUs]

Let's see if I can find that magic fairy dust that allows us to get rid of taxes and still magically pay for all the state and local projects. Now where did it go? :)

If you find him, send him to my house wouldja?! :thumb:

Until then, please note I've never advocated getting rid of ALL taxes -- just the ones that superfluous, irrelevant, unnecessary, and really amount to penalization.

(To be honest I have advocated (in previous posts) a flex-tax plan, whereby tax payers can allocate their dollars (with the exception of defense, infrastructure, and administration maintenance) to the programs of their choice -- if the programs don't take in as much as they need to function, do away with the program.)



Can someone ELSE explain to me the purpose of the Estate Tax at it's inception?

[Rhino]

She was talking about double-taxation.
With income tax.

[Rhino]

Let's see if I can find that magic fairy dust that allows us to get rid of taxes and still magically pay for all the state and local projects. Now where did it go? :)
It was outlawed as a controlled substance.

[Rhino]

Can someone ELSE explain to me the purpose of the Estate Tax at it's inception?It was designed to tax assets that are not otherwise taxed. Appreciation and gain on investments is not taxed until that gain is rolled over or cashed out. If you invest $100, that money was already taxed as income when you earned it. But if that investment earns $50 over a period of time, that $50 is not taxed until you roll it over into another investment or cash it out. If you die before doing that, the estate tax is designed to tax that $50 upon your death. That's not a terrible thing in concept, but many assets, such as a business, have to be liquidated to pay the tax. That prevents a lot of businesses from being inherited, among other things. The tax is not inherently unfair in principle, but the implementation of it has caused some negative effects that were not intended. In some rare instances there is double taxation, the tax rate is decidedly steep in some instances and an asset cannot simply be continued in place without being taxed, sometimes into non-existance. I don't think the tax should necessarily be eliminated, but it definitely needs to be fixed.

[HomeschoolrsRUs]

Thank you Rhino! That was clear as a bell, and I understand now -- but one small question. WHY was it implemented, do you know? Why was it needed / necessary to enact?

With your information, I also agree with your assessment.

[Lazarus]

Let's see if I can find that magic fairy dust that allows us to get rid of taxes and still magically pay for all the state and local projects. Now where did it go? :)Hey... I have an idea, Borg... Lets sprinkle some of that magic fairy dust on the government and cut out about half of the waste and embezzelment... The actual amount of dollars would probably be staggering and there is no telling how much tax we can eliminate and still function at full speed... Maybe even improve things...

Yeah I like THIS plan...

[Lazarus]

...The tax is not inherently unfair in principle, but the implementation of it has caused some negative effects that were not intended...I must disagree with you on this opinion... I believe the tax is indeed unfair... Just because a piece of personal property, business, or other investment has increased in value since the originator obtained it, is no reason that it should automatically be taxed...

There is no reason to assume that the government has an inherent right to tax every single increase in a person's wealth... The constitution establishes the principle of raising taxes for the funding of the government, but We, the people, have the power to choose what mechanism that revenue is raised from... We authorize the government to raise tax revenues from earned income... We could just as easily change that mechanism to a national sales tax or a real eastate property tax... There, however, is no divine authority vested in the government that says they have the right to tax every increase in our personal wealth...

This is the problem I have with the estate tax... In essence, and in practice, it assumes that all property is held by the individual only at the sufference of the almighty federal government... We fought King George to eliminate this kind of attitude toward private property... I firmly believe the Founding Fathers would be shocked at our voluntary installment of such a tax on ourselves and our heirs...

I am for complete elimination of the estate tax...

[The_Sonarman]

The whole thing is still such an outrage. I will never be in those categories of income or assets, but I cannot understand why some wealthy person hasn't taken this thing all the way to the Supreme Court.

Because anyone who does any serious research will find a myriad of ways of completely avoiding the Estate Tax completely legally.

The "secret" is to get one's assets out of one's name and into the names of one's heirs while one is alive, at the same time retaining complete control. Ownership and Control can easily be separated. For instance, my goal is to pass away a complete pauper, while in control of vast resources, having already having passed ownership to my heirs. My passing away merely triggers the final clause which transfers ownership to them. The Estate Tax doesn't even come into play except as fallback protection for anything that I failed to notice before my demise.

There are many, many, many large estates passed on with essentially zero tax liability.

The Estate Tax is aimed at those people on the lower end of the scale. It always has been. For those willing to do a bit of work, spend a little in setup fees, etc, there's enough loopholes one could drive through with fifteen Mack Trucks abreast.

[HomeschoolrsRUs]

The Estate Tax is aimed at those people on the lower end of the scale.

Now see, THAT'S what I've thought all along. BTW, aren't MOST of the taxation policies aimed at the middle class (mid & upper) anyway? It sure seems to be those are the backs by which are being broken.

[The_Sonarman]

BTW, aren't MOST of the taxation policies aimed at the middle class (mid & upper) anyway?

The answer is "yes".

[Rhino]

I must disagree with you on this opinion... I believe the tax is indeed unfair... Just because a piece of personal property, business, or other investment has increased in value since the originator obtained it, is no reason that it should automatically be taxed...

There is no reason to assume that the government has an inherent right to tax every single increase in a person's wealth......That's why I said it's not inherently unfair in principle. That statement assumes that one agrees with the underlying principle that all forms of income should be taxed. You obviously disagree with that, and in many ways I concur, but my statement was couched in the terms that such agreement was understood. Obviously it doesn't apply if you don't agree with the underlying principle.

[Lazarus]

That's why I said it's not inherently unfair in principle. That statement assumes that one agrees with the underlying principle that all forms of income should be taxed. You obviously disagree with that, and in many ways I concur, but my statement was couched in the terms that such agreement was understood. Obviously it doesn't apply if you don't agree with the underlying principle.Agreed...... I think...
:question: :D

[Rhino]

Sorry. I had the Doublespeak Lock on, on my keyboard. :D

The principle that the underlying purpose of the estate tax is valid only applies if you agree that all income should be taxed. If you don't agree that all income should be taxed, then the estate tax is not necessarily valid at all.

[Lazarus]

...If you don't agree that all income should be taxed, then the estate tax is not necessarily valid at all.Which is precisely my position... An case I was being too subtle...;) Private property is sacred and we should think long and hard before we authorize the government to put their hands on it... Its the principle that separates us from the Communists...

[DesertFox]

Goody. I can leave my billions to my kids after all.

It only remains now to make the billions.