I think the estate tax should be adjusted, but not repealed. I think it does serve a purpose and provides revenue that isn't an excessive burden.
Unrealized capital gains constitute the bulk of the largest wealth accumulations. These unrealized gains have never been taxed and without the estate tax, they would remain untaxed forever.
Oh, no. God forbid they should be untaxed FOREVER! Why exactly should unrealized gains be taxed at the death of the original holder? You realize this is stock or property that has not been sold yet, and so there is no profit made, right? If someone holds on to it FOREVER without realizing any profit from it, it's perfectly fair for them not to be taxed on it until they do. The original investment was already taxed.
Ironically, the capital gains tax may cause some people to have to pay MORE than they would have under the estate tax. The estate tax is the best way to tax appreciated wealth.
WHAT? This argument means you have to pay BOTH!
Since appreciated wealth is only taxed by an estate tax upon inheritance or by capital gains taxes upon sale, wealth that appreciates and is passed down from generation to generation is NEVER taxed until it is sold.
I can understand the rationale where objects are concerned (art, jewels, etc.), but income from savings and investment (which are also appreciated wealth, aren't they?) are taxed yearly as income, and real estate (in those areas where it is taxed) is reassessed from time time time, to account for appreciation. The Fed'l government may not tax it, but they taxed the income that bought it, and the income that paid the local taxes on it, every year. I just think it's wrong. I think it's double dipping. Essentially, you're penalizing heirs, because their parents sweated and saved, and invested wisely. If the parents had blown it all in Vegas, or kept it under the mattress, there'd be no tax.
Well, I see your point, but the estate tax only kicks in for the wealty (I think it only applies for a million dollars or more (eta: 1.5 million)). Also the estate tax was created (in the 1890's, IIRC, a time with a huge gap between the rich and the poor) in an attempt to prevent a wealthy "aristocracy" from coming to dominate the American economy.
Depending on where you live, the house your parents bought in the 60s for under 20,000 could be worth a half million or more, today--nothing fancy--a typical house. Their wealth didn't appreciate in any way that is meaningful to them, because it would also cost the same to replace the house (that is to say, they couldn't sell a half million dollar house, and buy another ~equal house for 20K, again). Prices rose all around.
This is the house they would have sweated over for 30 or 40 years. Add in a cabin in a vacationy town, and an acre Aunt Lucy left them, all of which they've been paying (local) taxes on for the entire time they've owned it, and these might be people who'd qualify as rich. They probably budgeted, and clipped coupons, and sweated their big bills for all those years. And now we tax it again, before they can hand it over to their kid.
Anyone with enough money to worry about it, is going to get around these taxes anyhow by establishing trusts, and life estates, etc. And it didn't really prevent a wealthy aristocracy from dominating the economy anyhow, did it?
I think the estate tax should be adjusted
There's certainly room to ask whether the trigger for the estate tax is set at the best level. But repeal? I have lots of problems with the idea that certain people should spend their lives on Easy Street because their great...[x whatever]...grandparents did well. I thought the American way was to work hard and get ahead. The idea that you make it because your ancestors were successful in time immemorial smacks too much of a hereditary nobility.
I also think capital gains tax is wrong.
I don't know how I'll fund Universal healthcare in my imaginary world, but there ya go. I don't actually have to be reasoned or consistent, because I'm just nattering on a posting board.
Dude, I want my parents' money. Okay, by the time they die (which will never happen, nosirree) I hope to have plenty of my own, but inheritance has always been a default assumption of western culture, hasn't it? I've inherited from their genes, their minds, their hearts. I figure their pockets can reasonably be mine too.
It doesn't mean I've made it. It just means I'll have it.
Hey -- if I inherit from another country, how would the taxing work?
(Cashmere, I think all this "FEAR ME" crap is a side effect of the Fifth Disease)
Not to revel in your pain, but Fifth Disease. Cracks. Me. Up.
Also, poor you.
I don't actually have to be reasoned or consistent, because I'm just nattering on a posting board.
Do you feel any compulsion to be reasoned or consistent in F2F discussions?
