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Debating the Inheritance Tax

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You are reading page 3 of Debating the Inheritance Tax. If you want to start from the beginning Go to First Page.

The sales tax is the same for everyone but the amount that people pay as a percentage of income towards sales taxes is different. It's also not related to how much someone has to spend. Lets say you have two families, one makes $1000/month and the other makes $5000/month. If both families spend $500 on school clothes then they'll both pay about $50 in sales tax. Which for the lower income family represents 5% of their income, and for the higher income family is only 1% of their income.

Your property taxes pay for far more than schools, but in general I don't think schools are solely for the benefit of parents of children in those schools. There are few things as vital to a well-functioning society as education. If you're a patient in the hospital, you don't think whether or not your nurse knows basic math has a direct effect on you?

So do you think the percentage of salex tax one pays should be based on one's income also? That would really, really, really make the tax code complicated.

At least $8K ofthat almost 10K goes to the schools.

I am not opposed to helping finance school operations, or pave the roads or make sure 911 is available. However, it is not fairly paid for the way it is. Actually, at my age I am more interested in making sure the 911 services are available that just about anything else.

In WA we have a limit of 1% per year increase that is allowed for tax asssessment...however, that only applies to the entire budget....hence the 28% increase invaluation of our acreage which cannot be sold unless the entire property and house is sold, and also 3 acres we have that are vacant cannot be sold or developed.

Sales in our development have been nonexistent for at least 6 years....at least 4 homes have been on the market for months or even a year in one case with no interested buyers, furthering our disgust that the county thinks our acres are worth 28% more than the last several years, when there were also no sales made.

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If you inherit 10 million dollars form you family. say an uncle. You will end up paying an inheritance tax on that money which is blatantly unfair. That money was already taxed once when it was earned by the original owner. Paying again is double taxation.

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Nope - for one thing, you will only pay tax on the amount over the exclusion, which is now in the neighborhood of $5 million.

And for another, the person who was taxed on those earnings is dead and so, obviously, can't be taxed again. What's unfair is the insistence that dropping out of a wealthy uterus entitles one to a tax free, unearned windfall.

If a person is wealthy enough to leave an estate larger than $5million, then s/he can afford the kind of estate planning that would avoid the inheritance tax.

Or does personal responsibility no longer apply above a certain net worth?

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So do you think the percentage of salex tax one pays should be based on one's income also? That would really, really, really make the tax code complicated.

Actually I'm all for the basic structure of flat tax proposals from various conservative groups, with the exception that they shouldn't drastically increase the deficit, which is what many of them do.

At least $8K ofthat almost 10K goes to the schools.

I am not opposed to helping finance school operations, or pave the roads or make sure 911 is available. However, it is not fairly paid for the way it is. Actually, at my age I am more interested in making sure the 911 services are available that just about anything else.

In WA we have a limit of 1% per year increase that is allowed for tax asssessment...however, that only applies to the entire budget....hence the 28% increase invaluation of our acreage which cannot be sold unless the entire property and house is sold, and also 3 acres we have that are vacant cannot be sold or developed.

Sales in our development have been nonexistent for at least 6 years....at least 4 homes have been on the market for months or even a year in one case with no interested buyers, furthering our disgust that the county thinks our acres are worth 28% more than the last several years, when there were also no sales made.

Typically school spending accounts for about half of property tax funds, to use Spokane county as an example they spend 50% of personal property taxes on schools. I get that for you ensuring 911 services are a bigger priority than schools, but at the same time there are others who also pay property taxes who consider schools a bigger priority than 911, yet they are also contributing to the 911 services so I'm not sure why you should be able to avoid paying into schools yet others should continue paying into 911 services. We could probably come up with some complicated way of calculating exactly how much someone benefits from various funded services and adjust their taxes accordingly, although the cost of administering that would likely outweigh any savings you might see.

As a general complaint, I would agree that general overspending on schools would be valid, but that's not the case on Washington which has the 5th worst teacher to student ratios in the entire country.

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If you inherit 10 million dollars form you family. say an uncle. You will end up paying an inheritance tax on that money which is blatantly unfair. That money was already taxed once when it was earned by the original owner. Paying again is double taxation.

That doesn't make any sense. If someone who's income includes inheritance, then they are taxed once by the federal government, not twice. As income is spent by the person who obtained it, it becomes income for someone else and taxed again, that's how it works. If we were take all the revenue from every transaction a specific dollar will be involved in, and say it can only be taxed once, then all that revenue would have to be concentrated into a single tax, which would have to be massive.

Generally, we tax based on income because it's a good indicator of someone obtaining money (since that's what income means) and therefore has money to contribute to federal tax revenue. We try to avoid taxing income that is more essential and target less essential income. How is coming into a $10 million dollar inheritance essential income? If someone that fortunate shouldn't have to pay taxes on that, who should pay the revenue that isn't generated as a result?

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Actually I'm all for the basic structure of flat tax proposals from various conservative groups, with the exception that they shouldn't drastically increase the deficit, which is what many of them do.

Typically school spending accounts for about half of property tax funds, to use Spokane county as an example they spend 50% of personal property taxes on schools. I get that for you ensuring 911 services are a bigger priority than schools, but at the same time there are others who also pay property taxes who consider schools a bigger priority than 911, yet they are also contributing to the 911 services so I'm not sure why you should be able to avoid paying into schools yet others should continue paying into 911 services. We could probably come up with some complicated way of calculating exactly how much someone benefits from various funded services and adjust their taxes accordingly, although the cost of administering that would likely outweigh any savings you might see.

As a general complaint, I would agree that general overspending on schools would be valid, but that's not the case on Washington which has the 5th worst teacher to student ratios in the entire country.

I stated quite clearly that I don't mind heping finance the schools, but not to the amount that we do and certainly not based on our property value, which I also pointed out has been increased by 28% based on nothing.

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Taxes are good for modifying behavior. As Heron noted, someone rich enough to be affected by the estate tax can simply avoid it with trusts and other estate planning. For examples look to the Kennedy, Vanderbilt, and other established wealthy lineages. Most Americans won't be affected at all.

The only ones affected are successful family businesses and farms that exceed the exemption level and must be dismantled or sold to corporations to pay the tax bill. I don't know why those folks must be punished. Perhaps someone here has insight on that policy.

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Taxes are good for modifying behavior. As Heron noted, someone rich enough to be affected by the estate tax can simply avoid it with trusts and other estate planning. For examples look to the Kennedy, Vanderbilt, and other established wealthy lineages. Most Americans won't be affected at all.

The only ones affected are successful family businesses and farms that exceed the exemption level and must be dismantled or sold to corporations to pay the tax bill. I don't know why those folks must be punished. Perhaps someone here has insight on that policy.

If there was any evidence at all that even a single farm has been sold to pay estate taxes then we'd still be left with wondering why someone would knowingly leave a business to their family with so much financial liability that it's no longer viable. But luckily it's just a myth.

http://www.cbpp.org//archiveSite/estatetaxmyths.pdf

Estate Tax Myths

Talk of Lost Farms Reflects Muddle of Estate Tax Debate - NYTimes.com

If that tax revenue shouldn't come from estate taxes, where should it come from? Are you offering to pay it instead?

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I stated quite clearly that I don't mind heping finance the schools, but not to the amount that we do and certainly not based on our property value, which I also pointed out has been increased by 28% based on nothing.

While property tax assessments are often inflated, it really makes no difference as long as it's generally an across-the-board inflation. If a city decides it's going to multiply it's assessed value of all properties by 10, it will then be able to divide the tax rate by 10 to come up with the same revenue, in other words it's doesn't affect how much you pay in total.

I could see arguing about the rate you and everyone else pays based on overspending of those funds, but I'm not really sure how school funding can be seen as excessive when your talking about the 5th largest class sizes in the country. Would you prefer Washington to have the worst student:teacher ratios in the country?

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While property tax assessments are often inflated, it really makes no difference as long as it's generally an across-the-board inflation. If a city decides it's going to multiply it's assessed value of all properties by 10, it will then be able to divide the tax rate by 10 to come up with the same revenue, in other words it's doesn't affect how much you pay in total.

I could see arguing about the rate you and everyone else pays based on overspending of those funds, but I'm not really sure how school funding can be seen as excessive when your talking about the 5th largest class sizes in the country. Would you prefer Washington to have the worst student:teacher ratios in the country?

In WA the state property tax can only be increased by1% per year. but that isn't done property by property, it applies to the over all budgetl. So that $50K extra we are getting taxes on over last year's amount is an increase of 28%. In order for ours to go up by 28%, a whole bunch of others had to go down by a bunch too. And as I said our acres are not worth $10K more than last year. In fact, I would say quite the opposite, since over the past several years, not one of the 3-4 houses that have been on the market (some more than once)have had buyers or even lookers.

In WA, the lottery voted in long before we ever moved here, was supposed to fund the schools. And as usual the legislature diverted funds to go elsewhere. So I am not on the bandwagon of throwing money at a problem that is not totally caused by a lack of funding. When I see kids out of school all the time because of half-days for a variety of reasons, it really doesn't matter what the kid-teacher ratio, because they aren't in school anyway.

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Taxes are good for modifying behavior. As Heron noted, someone rich enough to be affected by the estate tax can simply avoid it with trusts and other estate planning. For examples look to the Kennedy, Vanderbilt, and other established wealthy lineages. Most Americans won't be affected at all.

The only ones affected are successful family businesses and farms that exceed the exemption level and must be dismantled or sold to corporations to pay the tax bill. I don't know why those folks must be punished. Perhaps someone here has insight on that policy.

Well, what's stopping them from estate planning? It's not like the estate tax is a big dark secret and one would assume that anyone who is capable of running a business/farm worth more than $5million could forsee the potential hit.

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If there was any evidence at all that even a single farm has been sold to pay estate taxes then we'd still be left with wondering why someone would knowingly leave a business to their family with so much financial liability that it's no longer viable. But luckily it's just a myth.

Curiously, the CBO had no problem finding examples where farms and family businesses did not enough liquid assets to cover the tax. Maybe that is because they get to look at actual tax returns.

http://www.cbo.gov/sites/default/files/07-06-estatetax.pdf

In 2000, about 8 percent (or 138) of the estates of

farmers who left enough assets to owe estate taxes faced a

tax payment that exceeded their liquid assets, compared

with about 5 percent of all estates that owed taxes. For

estates claiming the QFOBI deduction, the corresponding

figure was about 34 percent (or 164 estates). Those

numbers are upper bounds, however, because the definition

of liquid assets used on estate tax returns excludes

some money held in trusts, which could also be used to

pay estate taxes.

The estate tax is estimated to raise about $225 B over the next ten years. That's about $23 B per year. The 2015 Federal budget is $3.8 T. It's just arguing over 6/10 of a percent of what's needed to fund the government.

I know the estate tax is a darling for Progressives since it's taking from rich who, in their minds, obviously deserve it. To me, it's taking money from people who neglected to plan properly. Their families pay for their failure to plan.

If it were up to me, I'd implement the FairTax to replace the income tax and estate tax.

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