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Death and taxes

Generally, people don’t like the fact they pay taxes and they don’t like the fact that they will die. So, a glorious idea is to combine two of the shittiest things ever into one craptacular package:

This [estate taxes – ed] is a perfect issue for Southern progressives. Half of the super-rich families are based in or have close ties to the South. And Southern populists — a large part of the Southern electorate, who are progressive on economic issues — hate the idea of the super-rich not paying their fair share to make government work. (The fight for the estate tax was actually started by Populists as a response to the excesses of the Robber Barrons.)

Paying their fair share? And somehow when you die you should be forced to make amends for, err, all those years you were in the higher tax brackets. Give me a break. Even more ridiculous is the intro to the bit:

The essence of the American dream is that every child born should have an equal shot at success, and that every person should pay their fair share of taxes, right?

The rich don’t think so — which is why their political minions on the right are pushing to abolish the estate tax, to ensure the Paris Hiltons of the world never have to do honest work or contribute to society.

Actually, no American dream I know of includes paying taxes. And how is that someone else being rich impacts someone else’s fair equal shot at anything? Life is not a zero sum game. The Paris Hilton’s of the world don’t have to work because their predecessors took risks and worked hard. I hope some day that Junior is a spoiled little rich girl, only without the whole dirty movie thing, of course.

If Southern Progressives want issues, they should avoid the ones based on class warfare.

33 Responses to “Death and taxes”

  1. Thibodeaux Says:

    Why go along with their game of calling themselves “progressives?” They’re communists, period.

  2. Ravenwood Says:

    “The essence of the American dream is. . .that every person should pay their fair share of taxes, right?”

    Heh. So that’s what’s written on the Statue of Liberty. I think you pretty much win any tax argument as soon as someone starts in about people paying “their fair share”.

    I never understood how socking it to someone else is supposed to enrich me. And for what it’s worth, most Americans consider it their duty to pay as little taxes (legally) as they possibly can.

  3. Xrlq Says:

    Actually, no American dream I know of includes paying taxes. And how is that someone else being rich impacts someone else’s fair equal shot at anything?

    Ah, but without taxes, how could we ever implement that time-honored Jeffersonian ideal, “from each according to his ability, to each according to his need?” Even Washington’s famous motto, “workers of the world, unite!” would end up on the back burner.

  4. tgirsch Says:

    Thib:

    Yes, because everywhere across the country, I see self-described “progressives” clamoring for state control of the means of production, and a complete abolition of private property. Perhaps you should trade those hyperbol-O’s for a dictionary and/or a history book.

    Uncle:

    Like it or not, “fair” or not, estate taxes are indeed a way in which progressives can gain ground, especially if current deficit levels continue and tax increases become more likely. Anti-tax conservatives got some traction by spinning it into a “death tax” and using the rare example of the family farmer who has to pay it, but with reform to fix the latter, and a reminder that better than 99% of Americans will never pay it, and that even those who do can protect $2 million or more from such taxation, it’s hardly a losing issue. It’s a tax that almost exclusively affects the super-wealthy, and even then only after they’re no longer around to care much about it.

    And how is that someone else being rich impacts someone else’s fair equal shot at anything?

    I can’t decide if that question is stupid or naive. Do you really suppose that some kid born to a poor single mom in the ghetto has anything approaching an “equal” shot at the kind of life your kids have a shot at (never mind, say, Bill Gates’ kids)?

    But really, the thing that pisses me off about the anti-tax types is that they’re a bunch of whiny freeloaders. Especially the ones who don’t even flinch at spending $200+ billion on a failed war of choice, but whine like children at the thought of being expected to help finance it.

  5. kevin Says:

    Man, ignoring the fact that you cannot have the American draem without taxes (or do you thik the infrastructure fairly will come along and take care of it all) please explain to me how it is fair for Paris Hilton to benefit from the police, legal system, educational system – -everything that the government does to maintain civilization — without paying a dime to support any of it?

  6. SayUncle Says:

    Tom, so the poor kid’s hindered by paris hilton? It’s not spun as a death tax. It is a death tax. A tax on dying and nothing more as that is the only thing that causes it to occur.

    Kevin, I neither said nor intimated any such thing. I said that the dream doesn’t involve paying taxes. Paying taxes, however, is a significant cost for anyone pursuing said dream.

  7. Xrlq Says:

    Kevin, setting aside the fact that the odds of Paris Hilton using public education, I’d like to see the evidence behind your odd assertion that she payplease provide evidence to support your silly assertion that Paris Hilton doesn’t pay any taxes – or enough to easily cover her share of any government benefits she consumes.

  8. tgirsch Says:

    Uncle:
    so the poor kid’s hindered by paris hilton?

    Not quite so much as Paris Hilton had huge advantages that the poor kid did not. Maybe you’re operating from a vastly different definition of “equal” than the one I have. And to the extent that the wealthy often lobby against things like public schools, they often do hinder the poor kid.

    It is a death tax.

    Yeah, and a gun is a killing machine, but that doesn’t stop you from getting your panties all in a twist when people spin it that way.

    A tax on dying and nothing more as that is the only thing that causes it to occur.

    I might buy this if the tax were substantially higher than if, for example, the person were to liquidate all those assets the day before they died. If anything, it’s a wealth tax, and a way of “closing the books” on someone who has died, just as you’d have to close the books on a corporation that was dissolved.

    And in any case, I fail to see how the estate tax is much different than most other forms of taxation, which occur when money or valuable assets are transferred from one party to another. Clearly, there’s a transfer of wealth going on here, so why should we exempt inheritances in a way that we don’t exempt other such wealth transfers?

  9. tgirsch Says:

    Oh, and I should correct myself above. I referred to “the rare example of the family farmer who has to pay it,” when the anti-estate-tax example given was of family farmers having to sell the family farm to pay for it, an example which was totally fabricated.

  10. kevin Says:

    XLRQ

    Hypothetical, XLRQ, hypothetical example. In Uncle’s world, she wouldn’t have to pay any taxes, short of sales tax, because she inherited enough money to live on for the rest of several people’s lives. And you really missed the frigging point about public education. I know this might be hard for a libertarian to grasp, but Hilton benefits form other people using governmental resources. Those public educated kids keep our economy and society humming along, after all; there is no infrastructure fairy. I made that up. And I find it hard to believe that her sales taxes, whatever they may be, comes close to paying for the benefits she receives form living in the US. if you are honest with yourself, you would admit the same thing.

    Uncle

    No, you miss the point too — the American Dream DOES NOT EXIST WITHOUT TAXES. Period. End of story. Go to the Sudan and try to make a life for yourself there like you have here. And I am sorry, but your whole post is about the Evils of Taxing People, including your last post where you equate the things that make your lifestyle possible as a hindrance to, err, making your lifestyle possible. Not sure what else I should take form that other than taxes are Evil and The less People Pay the Better. And this whole post is lamenting the existance of the estate tax, so why the heck would I not think you think trust fund babies should get free rides?

  11. SayUncle Says:

    Tom, liquidating assets at cost results in no tax payments, generally. Dis man, he’s made of straw. A gun is a killing machine but it’s also an inanimate object. So, I don’t see your point. This is a tax on dying. Period.

    Kevin, yawn. I did not go on about the evils of taxing people. I said the dream is not paying fair share of taxes and this is a stupid issue. Trust fun babies get free rides? Seems to me that since the money they earned was already earned, it shouldn’t be taxed (other earnings excluded, of course). Why that would be double taxation.

  12. Xrlq Says:

    Tom:

    Yeah, and a gun is a killing machine, but that doesn’t stop you from getting your panties all in a twist when people spin it that way.

    That’s because a machine gun is a machine gun, whether it’s used to kill anyone or not. The death tax, by contrast, only kicks in when you die.

    I might buy this if the tax were substantially higher than if, for example, the person were to liquidate all those assets the day before they died.

    If the person were to liquidate all those assets the day before he died, it would be an obvious end-run around the death tax. Ergo, the gift tax – oh, wait, let me guess; you probably don’t like that name, either. OTOH, if you plan things right in advance, giving away enough of your wealth over time, you’ll owe neither gift tax nor death tax.

    If anything, it’s a wealth tax, and a way of “closing the books” on someone who has died, just as you’d have to close the books on a corporation that was dissolved.

    Except for one minor detail: when a solvent corporation is dissolved, its assets go to its former owners, not to Uncle Sam.

    Kevin:

    And you really missed the frigging point about public education. I know this might be hard for a libertarian to grasp, but Hilton benefits form other people using governmental resources.

    Really? I can see how some stupid, semi-literate boob like Paris Hilton might benefit from a system that keeps other people stupid and semi-literate, too, but I’m a bit surprised to hear a liberal arguing this tack.

  13. mike hollihan Says:

    My solution is related and simple: If you pay more in taxes then you get more votes. For example, the “average” taxpayer gets the “standard” one vote. But if you pay several times the average in taxes because you have been lucky in birth, lucky in life or a dishonest greedhead, then you get several votes. It’s only fair! If you pay more, you get more.

    People who pay no taxes or have a net rebate of taxes have no vote. If you don’t contribute then you don’t vote. This prevents the poor from robbing the public treasury to benefit themselves. That’s the politician’s job.

  14. tgirsch Says:

    Uncle:
    Tom, liquidating assets at cost results in no tax payments, generally.

    OK, so “liquidating” probably wasn’t the best word. How about “transfers to other parties.”

    A gun is a killing machine

    Good. Now I expect you to never cry foul ever again when people call them that to make a political point.

    X:
    The death tax, by contrast, only kicks in when you die.

    Technically true, sure. But you’re also not so stupid as to not recognize the spin game that’s going on here. When you call it an estate tax, people assume (correctly) that it’s something that primarily affects the wealthy; when you call it a “death tax,” you promulgate (quite intentionally, I’d argue) the incorrect assertion that it affects most who die (if not all). And why do this? Because opponents of the estate tax know that, “fair” or not, the vast majority of Americans have no problem with, and actively support, estate taxes, when they understand what they actually are (or are not). That’s why the spin to “death taxes” and nonexistent poor widdle farmers who are “ruined” by it.

    Ergo, the gift tax – oh, wait, let me guess; you probably don’t like that name, either.

    Actually, I have no problem at all with that name. And if anything, the gift tax is more punitive than the estate tax. Of course, the wealthy would love to get rid of that one, too; they just can’t find a way to trick the less-well-off into believing it somehow harms them.

    when a solvent corporation is dissolved, its assets go to its former owners, not to Uncle Sam.

    Gee, and those assets are so transferred with no taxation whatsoever? Sweet! Hey, if we were talking about eliminating the estate tax and instead taxing the inheritors of the estate with the value taxed as regular income, I’m not sure I’d have a problem with that.

    As to Paris Hilton, who pays for the airports that allow her to jet-set all over the country, from one booze-soaked gig to another? And who educates the people that work at said airports, and who control the air traffic, etc.? If you don’t think that she benefits from these aspects of our infrastructure many times more than even you or I do (never mind some person too poor to ever fly anywhere), then you’re even dumber than you often pretend to be when doing so suits your political point. 🙂

    Mike:

    I always kind of pegged you for a wanna-be plutocrat, but I never thought I’d see you admit it so openly. 🙂

  15. SayUncle Says:

    ‘How about “transfers to other parties.”’

    Those generally don’t result in income taxes either unless it’s part of a sale that contributes to income. Face it, there is no other apt comparison to taxing death.

    ‘Now I expect you to never cry foul ever again when people call them that to make a political point.’

    I cry foul at this notion that guns are the one’s doing the killing not that they’re killing machines.

  16. kevin Says:

    X
    “Really? I can see how some stupid, semi-literate boob like Paris Hilton might benefit from a system that keeps other people stupid and semi-literate, too, but I’m a bit surprised to hear a liberal arguing this tack. ”

    Wow. the intellectual heft of that argument just blows me away. I mean, how could I argue with someone who thinks that the educational system that produces the vast majority of ivy league students and most of our business, political, and technological leaders produces nothing but stupid and semi-literate people. The pure power of repeating a mindless talking point is amazing. Why hasn’t anyone thought of that before?

    And look how it discounts the entire point! Yes, yes, roads, the internet, the court system, the police and fire forces, the government sponsored research and development, the military — all useless, useless. They have no benefit to people; they are all useless boondoggles that provide no worth to anyone at all. they certainly don’t deserve to have taxes spent on them.

    The power of your intellect and argumentation have taken the scales from my eyes. Thank you, thank you, thank you! I am going to go out and join the Republican party right now! And you, sir, have an awe inspiring power. Use it wisely, sir. Use it wisely.

  17. tgirsch Says:

    Uncle:
    Face it, there is no other apt comparison to taxing death.

    See above points to Xrlq. If we’re taxing “death,” then how come everyone who dies doesn’t pay it? How come not even most do? The “income” tax doesn’t tax just a teeny tiny cross section of income under very limited circumstances. It taxes most income. If you can’t see the disingenuous ulterior motive behind labeling it a “death tax,” then maybe you were right a couple of days ago when you blogged that your brain had turned to mush. 🙂

    Look, I have problems with people (on all sides) using spin to get their way, but I have much bigger problems with people who are too dishonest to admit (or too naive to realize) that it’s going on at all.

  18. SayUncle Says:

    Tom, we tax income but not everyone pays it. Try again. Just because something affects only a few people, it doesn’t make it right.

  19. Manish Says:

    Paris Hilton…presumably most of the money she lives off of is an inheritence that is invested in Hilton stock and other assets. Generally speaking, investment income (i.e. capital gains, dividends, etc.) are taxed at a lower rate than salaried income. It also isn’t subject to Social Security or Medicare taxes. Thus, it can be argued that she doesn’t pay her fair share relative to other people. Now she is subject to property taxes and sales tax like everyone else.

    I know that you like to dodge this question SU, but the fact of the matter is that money we spend (i.e. $300 billion war) has to raised somehow. If not the death tax than how, other than grandiose dreams that politicians are going to stop spending money? Also, when are you going to take up the cause of taxation without representation? It would finally be a chance for the two of us to see eye-to-eye on a taxation issue.

  20. SayUncle Says:

    Manish, I don’t take issue with the concept of taxation. I take issue with, basically, how much of it there is and the fact that the .gov is getting nice and fat from it. It’s so big, it scares me. that said, tax on income is constitutionally valid but the tax code is so complex that people spend money to hire guys to figure out how to pay it. Simplify it. In terms of how to pay for crap, stop spending $ on crap we don’t need. Until someone is serious about cutting spending, I don’t feel the need to be serious about raising revenue.

    Taxation w/o representation? Meaning what, exactly?

  21. Xrlq Says:

    Technically true, sure. But you’re also not so stupid as to not recognize the spin game that’s going on here.

    Of course I recognize it. I also recognize, however, that in this case the “spin” is 100% accurate.

    When you call it an estate tax, people assume (correctly) that it’s something that primarily affects the wealthy;

    How so? Everyone who dies has an estate. So to does everyone who divorces or declares bankruptcy. [Technically, so does everyone who DOESN’T die, divorce or declare BK, but those are the only instances I can think of where there’s any need to separate the person from his estate.] Yet, estates are taxed only under one particular circumstance: death. So why then is it called an “estate” tax, when it’s not applied to estates generally?

    when you call it a “death tax,” you promulgate (quite intentionally, I’d argue) the incorrect assertion that it affects most who die (if not all).

    No more or less so than calling it an “estate” tax promulgates (quite intentionally, I’d argue, if I were to stoop to your level) the incorrect assertion that it affects most estates (if not all). Worse, this name assumes the average joe even knows what an “estate” is, likely an incorrect assumption. Is that why you like the name “estate tax?” Maybe we should call it the “splunge tax” instead.

    And why do this? Because opponents of the estate tax know that, “fair” or not, the vast majority of Americans have no problem with, and actively support, estate taxes, when they understand what they actually are (or are not).

    I’d like to see your evidence for that. Every poll I’ve read shows a solid majority of Americans oppose the death tax, whether you call it the death tax (which it is), the estate tax (which it sort-of is, but not really), the inheritance tax (which it also sort-of is, but also not really), or anything else.

    Actually, I have no problem at all with that name.

    Explain the difference. If the phrase “death tax” falsely implies that it’s charged to everyone who dies, how can the phrase “gift tax” not falsely imply that it’s charged to everyone who gives or receives a gift?

    And if anything, the gift tax is more punitive than the estate tax.

    How so? The rates are the same, and the principal purpose of the gift tax is to prevent people from circumventing the death tax. Of course, if the death tax really were aimed at taxing only estates, and not socking it to old rich people when they die, there’d be no need for the gift tax. Old codgers would instead be encouraged to give all their stuff away while they were alive, and the tax would only apply to those miserly S.O.B.’s who insisted on clinging to every dollar they had until the bitter end.

    Of course, the wealthy would love to get rid of that one, too; they just can’t find a way to trick the less-well-off into believing it somehow harms them.

    If by “trick” you mean “convince,” and by “somehow harms them” you mean “is unfair, and should therefore be opposed whether it affects them personally or not,” I don’t disagree. However, once the death tax is dead and buried, a strong case can be made that it makes no sense to have a gift tax, either. If old rich people can give away their fortune for free when they die, why punish the more generous ones willing to give away more of it while they’re alive?

    Gee, and those assets are so transferred with no taxation whatsoever? Sweet!

    I’m pretty sure that depends on what kind of legal entity the company was. If it was a limited partnership, an LLC or an S corporation, then yes, they would be transferred with no taxation whatsoever. If it was a C corporation, I presume the shareholders would owe tax on that, just as they would if the C corporation had paid it out in the form of a dividend. But in either case, you wouldn’t owe any tax by virtue of the fact that a company was wound up – unless you count the piddly filing fee as dissolution as a tax. [Obdisclaimer, IANATL.]

    Hey, if we were talking about eliminating the estate tax and instead taxing the inheritors of the estate with the value taxed as regular income, I’m not sure I’d have a problem with that.

    Neither would I, almost. In principle, I think it makes a lot more sense to tax inheritance as income than to tax dead people’s estates or living people’s gifts. If I were a liberal, I’d probably feel that way even more strongly, since it would give the likes of Bill Gates an incentive to leave small but substantial amounts of money to many people of modest means, rather than leave it to a few heirs who are probably filthy rich already. The only caveat (hence the “almost”) is that inheritances don’t happen on a regular basis, so taxing them as ordinary income, earned in one lump some, would have rather harsh results. As long as we tax income “progressively,” it would be pretty harsh to tax a mid-range earner who inherits a $500,000 house (and if that sounds like a lot, can I interest you in this $700,000 house instead?) as though he he were earning $500,000 every year. Of course, that’s a minor tweak, just treat inheritance as income, and then allow the heir or devisee to amortize that income over, say, a 15-year period.

    As to Paris Hilton, who pays for the airports that allow her to jet-set all over the country, from one booze-soaked gig to another?

    She does. I don’t think she flies coach.

    And who educates the people that work at said airports, and who control the air traffic, etc.? If you don’t think that she benefits from these aspects of our infrastructure many times more than even you or I do (never mind some person too poor to ever fly anywhere), then you’re even dumber than you often pretend to be when doing so suits your political point.

    And if you don’t think she already pays taxes to cover those costs in spades, death tax or no, then you’re even dumber than you pretend that I pretend to be.

  22. tgirsch Says:

    Tom, we tax income but not everyone pays it.

    Never said everyone did. “Dis man, he’s made of straw.” I did say that by far most do, a point you conveniently sidestepped.

    Just because something affects only a few people, it doesn’t make it right.

    If you’re saying “it doesn’t make it right to call it a name that leads people to assume that it’s something it’s not,” or “it doesn’t make it right to mislead people about who is and is not affected by it,” then I think we’re in agreement. Except that I’m pretty sure this isn’t what you’re saying.

    And in any case, it’s a rich argument coming from Mr. “Like You and Me, Only Better.” Just because someone is wealthy enough to hire the advisers needed to shield their wealth from taxation, and just because they’re “lucky” enough to die before they cash in (and thus have to pay those taxes) doesn’t make it “right” for them to avoid such taxation.

    In terms of how to pay for crap, stop spending $ on crap we don’t need.

    If by “crap we don’t need” you mean, for example, a quarter-trillion dollar war (which you supported, while simultaneously supporting tax cuts), that’d be a good start. Of course, most of the “crap we don’t need” that you want to cut, even if completely eliminated, would be lucky to lower the budget by 10%.

    As to the bigger fish like Social Security and Medicare, name any country that lacks these things (or similar things) in which you’d be willing to live. (At that point, it’d be tempting to put on my “conservative blowhard” hat and tell you to go there.)

    Now am I going to argue that the government isn’t bloated? No. There’s plenty we could cut from the military budget without weaking our defense; we could do Medicare for a whole lot less money while expanding coverage if we just stripped out the health-industry-friendly protectionist BS; etc. The answer is not the pie-in-the-sky “let’s just stop spending money on anything” that libertarians and supply-side Republicans seems to clamor for. Instead, it’s demanding fiscal accountability, like the GOP pretended to do in the early 90’s.

  23. SayUncle Says:

    ‘Never said everyone did. “Dis man, he’s made of straw.” I did say that by far most do, a point you conveniently sidestepped.’

    But you said ‘If we’re taxing “death,” then how come everyone who dies doesn’t pay it?’. And my response was that we call stuff an income tax though not everyone with income pays it. As xrlq said, maybe ‘you’re even dumber than you pretend that I pretend to be’ 😉

  24. tgirsch Says:

    X:
    How so? Everyone who dies has an estate.

    If you’re going to pretend that differences between legalistics definitions and colloquially-understood definitions don’t exist or aren’t meaningful, there’s really not much point in the discussion, is there? Or are you really going to argue with a straight face that the average Joe doesn’t associate the term “estate” with wealth? Then again, if you think the price of a first-class ticket (or even a charter flight) comes anywhere close to paying for the infrastructure that supports it, maybe you really are that disconnected.

    I’d like to see your evidence for that. Every poll I’ve read shows a solid majority of Americans oppose the death tax

    You clearly haven’t seen this poll:

    A majority (57 percent) of respondents in the national poll said they prefer reforming or keeping the tax as is, while only 23 percent said they favor full repeal. The poll also found that the more voters learn about the tax, the more they oppose repeal; that voters place the tax at the bottom of the list of taxes that should be cut; that they think one of the two best ways to reduce the budget deficit is to keep the tax; and that they would much rather see Congress use taxpayer money for a variety of purposes other than repealing the tax.

    And then, of course, there’s the history of the whole mess. Maybe you’re too young to remember pre-1995, when the term “death tax” was popularized by opponents of the estate tax precisely for the purpose of turning public support away from the tax. In fact, if the general populace doesn’t associate “estate” and “inheritance” with wealth, then why does Luntz continue to insist that these terms should be avoided at all costs when discussing the tax?

    Of course, you’ll be able to show polls that counter this result, but that only underscores my point, that framing matters. That said, I’ll concede that I can’t find any solid results concerning opinions on the estate tax pre-1995; it may be that rather than support, there was only mild opposition — not of the sort that would allow overturn.

    Explain the difference [between “gift tax” and “death tax”].

    Well, for one thing, the gift tax is its actual name. Not so, the “death tax.” But if you wanted to make them more accurate and call them the “Large gift tax” and the “Large estate tax,” I’d have no quarrel with this.

    Gift tax more punitive: The marginal rates may be the same, but if I’m not mistaken, the allowable deductions are much lower, making the effective rate of taxation much higher in most cases. Then again, I’m not a tax accountant, so I could be wrong about this.

    If it was a limited partnership, an LLC or an S corporation, then yes, they would be transferred with no taxation whatsoever.

    Because in that case, the taxes associated with those assets would already have been paid. If the corporation owned any unrealized assets, then tax would indeed be incurred upon realization, if I’m not mistaken, but IANATLE.

    As long as we tax income “progressively,” it would be pretty harsh to tax a mid-range earner who inherits a $500,000 house as though he he were earning $500,000 every year.

    Well, you wouldn’t. You do so once, upon the transfer of the $500,000 house. It would be no different than if you won a half million dollar house in a contest. And that problem could be easily solved by the “free market,” allowing the inheritor to take out a low-interest loan to pay the taxes, using the house itself as collateral.

    and if that sounds like a lot, can I interest you in this $700,000 house instead?

    Sheesh! I bought a home with similar square footage on more land, for a fraction of that! Those damned liberals in California just slaughtered your property tax values, while the conservatives here in Tennessee are clearly responsible for my real estate boom! 🙂

    And if you don’t think she already pays taxes to cover those costs in spades

    I frankly don’t know WHAT she pays, but I’m betting it’s not nearly what you think. Presumably, she doesn’t handle her own finances, and she’s got creative accountants finding ways to classify much of the jet-setting as somehow being “business” and thus deductible.

  25. tgirsch Says:

    Uncle:
    But you said ‘If we’re taxing “death,” then how come everyone who dies doesn’t pay it?’. And my response was that we call stuff an income tax though not everyone with income pays it.

    Ooh, selective cut and paste, my favorite! Had you read one sentence beyond my statement that you just tried to use against me, you would have seen me say “How come not even most do?” But you chose not to paste this part, because that’s where the key difference between the income tax and the estate tax lies. While most (a very large, if not overwhelming, majority) who earn income pay income tax (a fact even you won’t dispute), very few people who die pay the “death tax.” Once you leave your world of black and white and acknowledge the existence of grey, these things make a lot more sense.

    We call it an “income tax” because income is what’s being taxed. Just like a gift tax is so named because the gift is what’s being taxed. And we call it an estate tax because estates are what’s being taxed. We’re not taxing a death. What you’re trying to do here is to shift the name away from what’s being taxed (in this case, extremely large estates) to some event that triggers the tax (in this case, some rich guy buys it).

  26. Xrlq Says:

    Or are you really going to argue with a straight face that the average Joe doesn’t associate the term “estate” with wealth?

    Actually, yes, I am going to argue that. More specifically, I’m going to argue with a straight face that the average joe doesn’t know WTF an estate is, so he either won’t associate it with anything at all or, having heard of an “estate sale” at one point or another, he’ll associate it with people dying.

    Well, for one thing, the gift tax is its actual name. Not so, the “death tax.” But if you wanted to make them more accurate and call them the “Large gift tax” and the “Large estate tax,” I’d have no quarrel with this.

    How about “death of a rich guy tax,” then? And since not everyone with income pays income tax, I guess we’d better call that the “significant amount of income tax.”

    Gift tax more punitive: The marginal rates may be the same, but if I’m not mistaken, the allowable deductions are much lower, making the effective rate of taxation much higher in most cases. Then again, I’m not a tax accountant, so I could be wrong about this.

    I’m pretty sure you’re right about the fact that the deductions are much lower. However, I don’t think that means the gift tax is more punitive. After all, the lower deductions merely limit the amount of tax free gifts you can give to any one person in any one year, so it’s much easier to work around them if you plan things out in advance, split gifts between husband and wife, etc. By contrast, you only get to die once.

    Well, you wouldn’t. You do so once, upon the transfer of the $500,000 house. It would be no different than if you won a half million dollar house in a contest. And that problem could be easily solved by the “free market,” allowing the inheritor to take out a low-interest loan to pay the taxes, using the house itself as collateral.

    That would solve the problem of financing, but not the injustice of taxing someone at a higher rate solely because a large amount of income happened to come in one year. The policy reasons for taxing a person who earns $500,000/year at a higher rate are based on that person will generally expect to make another $500,000 the following year, and the year after that, etc. The person who inherits that amount once – and only once – is not like the guy whom makes $500,000 year. He’s more like a medium-high wage earner who earns an extra $500,000 over the course of his career.

    I frankly don’t know WHAT she pays, but I’m betting it’s not nearly what you think. Presumably, she doesn’t handle her own finances, and she’s got creative accountants finding ways to classify much of the jet-setting as somehow being “business” and thus deductible.

    Possibly, but she can only take that game so far before before she’ll butt up against the AMT. Besides, the taxes more closely associated with the air travel itself (maintaining the airport, control towers, etc.) are generally built into the price of the ticket, which in her case is very high. The average coach flyer may or may not pay enough of those taxes to carry his weight, but first-class frequent fliers invariably do.

  27. Manish Says:

    Taxation w/o representation? Meaning what, exactly?

    Lets end taxation on those people who don’t have the right to vote (i.e. me and other immigrants). Surely you would agree with me that given America’s history that this form of taxation is far more unfair than the death tax.

  28. SayUncle Says:

    Manish, i concur. Or cities that charge income tax on wages to people who don’t live there. Or taxing minors wages. Etc.

  29. Xrlq Says:

    Surely you would agree with me that given America’s history that this form of taxation is far more unfair than the death tax.

    Oh yes, you’re so friggin’ oppressed in this country, aren’t you? I’m sure we’re the only country in the world that doesn’t allow noncitizens to vote, but does require them to pay taxes. Even if I bought that loser of an argument, how would that make it more unfair to tax foreigners than dead people? Unless they hail from Chicago, the dead aren’t allowed to vote, either.

  30. mike hollihan Says:

    “Unless they hail from Chicago, the dead aren’t allowed to vote, either.”

    Don’t forget Memphis. At least two dead voters were found in the last special election. In a single precinct, no less!

  31. Manish Says:

    X..sheesh, touchy, touchy.

    Oh yes, you’re so friggin’ oppressed in this country, aren’t you?

    where did I say that? On the other hand, the rich do pretty well in this country.

    I’m sure we’re the only country in the world that doesn’t allow noncitizens to vote

    no, but this is the only country in the world that fought for its independence on the basis that “taxation without representation is tyranny”

    how would that make it more unfair to tax foreigners than dead people?

    the dead people voted for politicians while they were alive who instituted or perpetuated the death tax.

  32. Xrlq Says:

    no, but this is the only country in the world that fought for its independence on the basis that “taxation without representation is tyranny”

    Fair enough, but I doubt we’re the only country in the world that fought a revolution based on a stupid slogan no one really believes, anyway.

  33. Manish Says:

    stupid slogan no one really believes, anyway

    ha ha ha…support for getting rid of inheritance taxes was also pretty low until the VRWC re-christened it the “Death Tax”

Remember, I do this to entertain me, not you.

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