Taxation and exemption policy

[Koga No Goshi]

Why not go to Africa and explain to a skinsack filled with bones how miserable your life is because that useless tramp Paris Hilton can drink champagne at breakfeast each and every day. You live in one of the most prosperous countries in the world with an excellent standard of living. Of course there are problems but these are luxory-problems at most.

Why so Sour-R-us

I am affiliated with a lot of social work efforts, yes Africa is a major problem but my area of expertise is Native American issues right here within our borders, where conditions are frequently very much third world. This is where you don't get it Fragony. America's not about we're corrupt and have probelms but we're good enough. America is about this can be better and progress is possible and there's always room for improvement to make a better path for the next generation. We didn't get to where we are by saying this is good enough... if we did, we'd still have black sharecroppers and segregated schools and tenement ghettoes and people losing fingers and arms in factories.

[Banquo's Ghost]

If you define old money as like, going back to the Tudors, no, we don't have old money. But we have our own version of it, we have people with the last name Rockefeller who are still filthy, insane, can't get rid of it if they wanted to rich. We have people with the last name Bush with family ties going back to English royalty who remain rich, not apparently out of any particular family lineage of talent or intelligence, but just because they seem to have always had wealth and been plugged into the power system of our country.

The Tudors were johnny-come-lately arriviste usurpers and very bad for business.

The estate tax, in my view, is absolutely more than fair. Snip lengthy explanation.

Thank you for your well-thought out and constructive analysis. Clearly, I don't agree, but you make a solid and consistent case.

I take it however, as you have not addressed the point in your response, that the idea of private stewardship does not figure in an American sense? To be clear, I refer to the conservation of architectural, artistic and environmental assets accrued over centuries and handed down through families that discharge the duty of caring for them at personal expense.

You would prefer that the state owns and maintains these assets for the benefit of all citizens, am I right?

[Koga No Goshi]

I take it however, as you have not addressed the point in your response, that the idea of private stewardship does not figure in an American sense? To be clear, I refer to the conservation of architectural, artistic and environmental assets accrued over centuries and handed down through families that discharge the duty of caring for them at personal expense.

You would prefer that the state owns and maintains these assets for the benefit of all citizens, am I right?

I think I am a bit confused, perhaps because we have so fewer really old things in America. Are you talking about things along the lines of, declaring something a historical treasure?

Regarding estate tax, you said you disagree. I'm just curious what exactly your view on it is. Any money passed along upon death of its owner should be tax free? Or something more complicated? Bear in mind that in the U.S., I believe at the moment, estate tax doesn't hit any estate passing along less than 2 million in assets. And that level might very well be raised sooner or later because depending on where you live, one house and a decent amount in retirement money might come up to near 2 mil. I wouldn't be surprised to see it raised to 3 or 4 mil sometime soon, and that would be fine with me. But the idea of passing along 10, 20, 50 million to your kids and they pay no tax on it, I don't agree with. If I go out and earn $100,000 I pay tax on every penny. It should be at LEAST the same case if someone is being handed it for free.

[Xiahou]

Goodness, no. I should hope to be rich one day, but that's well in the future. It's got more to do with having a tax code I can actually understand.

Our current tax system is little different from any system of political patronage. Does your representative owe you favors? Get a tax credit or an earmark for your business. Do they need to pander and buy votes? Give tax credits to the poor and middle-class. The system just begs to be abused. The moment you start carving out special tax rules for interest groups, the whole system gets corrupted.

[Seamus Fermanagh]

I Bear in mind that in the U.S., I believe at the moment, estate tax doesn't hit any estate passing along less than 2 million in assets. And that level might very well be raised sooner or later because depending on where you live, one house and a decent amount in retirement money might come up to near 2 mil. I wouldn't be surprised to see it raised to 3 or 4 mil sometime soon, and that would be fine with me. But the idea of passing along 10, 20, 50 million to your kids and they pay no tax on it, I don't agree with. If I go out and earn $100,000 I pay tax on every penny. It should be at LEAST the same case if someone is being handed it for free.

Estate transfer at death is a privilege granted by the state and not a right. The state is presumed to have a "sovereign" right to all property owned by its citizens. This is the concept that underlies the legal doctrine of eminent domain as well (Source: Kaplan Financial. (2006). The Fraternal Training Program Graduate I Course: Estate Planning, 7th ed. DF Institute, Inc.: Dearborn, MI.)

Current law (EGTRRA - 2001) provides for an estate tax exemption of $2M per decedent. This will rise to $3.5M in 2009. In 2010, the exemption will be limitless and the estate tax will be effectively non-existent. This law "sunsets" on 31 December 2010, returning us to the old $1M per decedent limit.

It seems unlikely (given the overall growth in wealth) that Congress will let it lapse and return to the old limit. However, it also seems unlikely --given the usefulness of this source of revenue to the federal coffers -- that they will allow the "unlimited exemption" we'll enjoy next year to continue.


***Personally, I loath the whole idea of an estate tax. Those monies have ALREADY BEEN TAXED once (Income, Cap Gaines, etc.). Estate taxes are a second tax on the same monies.

I would much prefer a system where all income, personal property, estate and other taxes were discarded in favor of a consumption (sales) tax. The closer we are to pay as you go, the better off we will be. And, should you consider such an approach "regressive," just remind yourself how quickly the all-too-often politically ignorant would be in demanding better and more fiscally responsive government if they were actually paying for it. As it is, the goal is to transfer money from high earners to those who are low earners. It's so screwed up that its not even a proper wealth redistribution effort (which I don't believe in but that would at least be more "honest.").

[Koga No Goshi]

I would much prefer a system where all income, personal property, estate and other taxes were discarded in favor of a consumption (sales) tax. The closer we are to pay as you go, the better off we will be. And, should you consider such an approach "regressive," just remind yourself how quickly the all-too-often politically ignorant would be in demanding better and more fiscally responsive government if they were actually paying for it. As it is, the goal is to transfer money from high earners to those who are low earners. It's so screwed up that its not even a proper wealth redistribution effort (which I don't believe in but that would at least be more "honest.").

Translation, again, poor and working middle class people pay tax on almost everything they spend money on, the rich pay tax on only a small portion of what they spend money on. I'm waiting to hear a tax proposal from the rich which doesn't follow this basic formula.

When you're dead, you're dead. You're not being hurt by taxes on stuff flowing out of your estate once you're dead. The fact that the kids of rich people would "like" to get the full mil instead of "only" 750,000 is insufficient reason to cancel the estate tax in my mind, especially given that all proposed tax alternatives involve taxes which affect only those who spend money on day to day living necessities and eliminating taxes on all the ways rich people get richer and stay richer.

[drone]

Translation, again, poor and working middle class people pay tax on almost everything they spend money on, the rich pay tax on only a small portion of what they spend money on. I'm waiting to hear a tax proposal from the rich which doesn't follow this basic formula.

When you're dead, you're dead. You're not being hurt by taxes on stuff flowing out of your estate once you're dead. The fact that the kids of rich people would "like" to get the full mil instead of "only" 750,000 is insufficient reason to cancel the estate tax in my mind, especially given that all proposed tax alternatives involve taxes which affect only those who spend money on day to day living necessities and eliminating taxes on all the ways rich people get richer and stay richer.

One thing I'm not sure you are taking into account is assessed estate value. This has had a horrible effect around here, as well as on farmers throughout the country. Example: Old man with 100 acres of family farmland dies. Not rich by any means, possibly even getting by farm season to season. The assessed value of the land (due to proximity to city) exceeds the exemption by a significant amount, descendants can't pay the tax and have to sell to developers to cover the cost. So instead of farmland and trees, you get McMansions, townhomes, and traffic. The estate is not just liquid cash and assets.

[Koga No Goshi]

One thing I'm not sure you are taking into account is assessed estate value. This has had a horrible effect around here, as well as on farmers throughout the country. Example: Old man with 100 acres of family farmland dies. Not rich by any means, possibly even getting by farm season to season. The assessed value of the land (due to proximity to city) exceeds the exemption by a significant amount, descendants can't pay the tax and have to sell to developers to cover the cost. So instead of farmland and trees, you get McMansions, townhomes, and traffic. The estate is not just liquid cash and assets.

I would agree with reforms. Already people get $500,000 exemptions for their primary residence... meaning if you're living with mom, or you don't have a house, and mom dies and gives you the house, you can move into that house (or keep living there) as your primary residence and you aren't liable to pay taxes for any of the value of receiving that house up to 500,000 dollars. I would very much be in support of moves to help farmers and family farms stay farming. Flat anything when it comes to policy and especially tax policy, tends to create a lot of problems. That's part of why even though there's a lot of appeal to the idea of a flat tax, it would screw a lot of things up in practice.

[Crazed Rabbit]

Poverty IS relative.

No, it isn't. Poverty is being unable to feed and clothe/shelter your family.

The people who serve in the armed forces fall into two groups; the truly patriotic (from many backgrounds) who probably constitute a significantly small minority, and then the poor.

Wrong again.

Already people get $500,000 exemptions for their primary residence..

Which means little when the farmland is worth several million.

I think the Reagan tax brackets and tax structure is b.s. It favored the rich.

Because the rich paid, by a great deal especially, a much higher percentage of their income in taxes.

Even now, the top one percent of people in the USA pay 40% of the taxes.

But, we can't afford better public education. We can't afford healthcare. No no, that is too expensive.

No, socialist healthcare is stupid.

And more money to education has no causative relationship with improved performance.

Tell me, why are democrats so dead-set against school vouchers? Would it take power from your puppets, the school unions?

CR

[Koga No Goshi]

No, it isn't. Poverty is being unable to feed and clothe/shelter your family.

Oh, I forgot CR's subjective personal definition. The government establishes other standards which don't agree with you. I'm sorry, we can't take a poll on how everyone defines poverty before using the word in a discussion.

Which means little when the farmland is worth several million.

Already addressed. Though a defense of overturning the estate tax because of concern for farmers is a brand new one I've never heard before.

Because the rich paid, by a great deal especially, a much higher percentage of their income in taxes.

Even now, the top one percent of people in the USA pay 40% of the taxes.

The rich, a great deal of them, have a much higher percentage of their income as money not needed to support basic necessities, healthcare, or decent quality of life. I've already stated that the top 10% or so of the U.S. controls about 90% of the resources and wealth. So where do you think taxes should come from? Only the poor and working class?

No, socialist healthcare is stupid.

That was very informative.

And more money to education has no causative relationship with improved performance.

Sure it does, see the amounts spent per child in Europe and compare it to ours. Incidentally Palin disagrees with you that schools don't need more funding, if you watched the debate.

Tell me, why are democrats so dead-set against school vouchers? Would it take power from your puppets, the school unions?
CR

What the heck are you talking about? I'm sorry, I'm not receiving any funds from school unions to go out and stump for them. That was out of left field as far as I am concerned. No, it's because society as a whole benefits from an educated, WELL educated, population. It is an investment into our population that pays for itself over the long run. What do you keep hearing over and over again as some of the reasons jobs leave the U.S.? We're not competitive. Some of it is economics, and wages, and regulations and tax incentives, but some of it also is the fact that many more students in other countries are specializing in, and excelling in, things like software, sciences, math, etc. Math being taken as one example, there have been a lot of studies about how one of the major problems with math aptitude in the U.S. is the dearth of qualified teachers, because people with a good understanding of technical sciences can do and make so much more money outside of the teaching field, and because many of the people who wind up teaching lack the skills to actually be good teachers. Saying that everyone should be on their own, which is what a private school tax voucher would do, would mean even more overcrowded, underfunded ghetto schools where all the poor and middle class kids go, and a few elite privately funded academies for the rich. Is this a positive direction for the next generation?

[Crazed Rabbit]

Oh, I forgot CR's subjective personal definition. The government establishes other standards which don't agree with you. I'm sorry, we can't take a poll on how everyone defines poverty before using the word in a discussion.

Well you should try to in the future.

Already addressed. Though a defense of overturning the estate tax because of concern for farmers is a brand new one I've never heard before.

Glad I could inform you. But the idea that the government owns your property and only grants you access is inherently tyrannical. Some rich kid with a trust fund doesn't make me any worse off. But the dems seem to hate them.

The rich, a great deal of them, have a much higher percentage of their income as money not needed to support basic necessities, healthcare, or decent quality of life. I've already stated that the top 10% or so of the U.S. controls about 90% of the resources and wealth. So where do you think taxes should come from? Only the poor and working class?

Again, the idea that we should tax people because they can afford it is tyrannical; it assumes the government has more say over your property than you do.

It is hard to understand how democrats can be so very angry when others are given breaks. Bush gave everyone tax breaks, but I guess they don't want themselves to benefit so much as they want others to suffer.

That was very informative.

Good.

Sure it does, see the amounts spent per child in Europe and compare it to ours.

How about you look at studies of the US? Poring money in and assuming that will help is the stupidest solution.

Incidentally Palin disagrees with you that schools don't need more funding, if you watched the debate.

Yes.

What the heck are you talking about?
...
Saying that everyone should be on their own, which is what a private school tax voucher would do, would mean even more overcrowded, underfunded ghetto schools where all the poor and middle class kids go, and a few elite privately funded academies for the rich. Is this a positive direction for the next generation?

Vouchers give students a chance to go to better schools. But that conflicts with the democratic platform, and so must be prevented!

CR

[Koga No Goshi]

Well you should try to in the future.

I will do.

Glad I could inform you. But the idea that the government owns your property and only grants you access is inherently tyrannical. Some rich kid with a trust fund doesn't make me any worse off. But the dems seem to hate them.

You are a libertarian who believes in no tax at all then? Because I don't see how this argument would apply to estate tax and not to every other kind of tax. Again, I say, why should you be taxed less on money coming to you free from someone else, than if you earned an equivalent amount of money yourself?

Again, the idea that we should tax people because they can afford it is tyrannical; it assumes the government has more say over your property than you do.

This is getting really dumb CR. Who do you tax, the people who can't afford it?

It is hard to understand how democrats can be so very angry when others are given breaks. Bush gave everyone tax breaks, but I guess they don't want themselves to benefit so much as they want others to suffer.

Wait, there are no well off Democrats? You guys spend every other Fox news cycle calling us elitists. Make up your mind, are we hordes of poor people "jealous" of breaks given to the rich, or are we the rich elitists?

How about you look at studies of the US? Poring money in and assuming that will help is the stupidest solution.

When was the last major funding increase for public education? No Child Left Behind cut funding and was a poorly implemented, underfunded project from the beginning. But it made everyone feel better because now schools get less funding as a punishment for "underperforming."

Vouchers give students a chance to go to better schools. But that conflicts with the democratic platform, and so must be prevented!
CR

You make absolutely no sense. I'd love to see how your brain works sometimes, it must look like a melted box of skittles. We just got through talking about improving schools so that people have a chance to go to better schools-- everyone, not just the rich who are ALREADY GOING TO BETTER SCHOOLS! And now you say the Democrats are dogmatically against people going to better schools. Again, make up your mind.

[Banquo's Ghost]

I think I am a bit confused, perhaps because we have so fewer really old things in America. Are you talking about things along the lines of, declaring something a historical treasure?

Regarding estate tax, you said you disagree. I'm just curious what exactly your view on it is. Any money passed along upon death of its owner should be tax free? Or something more complicated? Bear in mind that in the U.S., I believe at the moment, estate tax doesn't hit any estate passing along less than 2 million in assets. And that level might very well be raised sooner or later because depending on where you live, one house and a decent amount in retirement money might come up to near 2 mil. I wouldn't be surprised to see it raised to 3 or 4 mil sometime soon, and that would be fine with me. But the idea of passing along 10, 20, 50 million to your kids and they pay no tax on it, I don't agree with. If I go out and earn $100,000 I pay tax on every penny. It should be at LEAST the same case if someone is being handed it for free.

I promise I will respond to this Koga, but for now I have to fly to London. I'll give your post the consideration it deserves later tonight or on the morrow.

[Husar]

Poverty is just as relative as wealth.
In rich countries you are poor if you cannot buy your stuff, rich if you can afford more than the average(which is also relative).
In poor countries you are poor when you are sick, average when you can make your banana-leaf clothing so that it keeps you healthy and rich if you have a cow, so yeah, I'd say it's all relative.

[Koga No Goshi]

It is most definitely relative. That hasn't been disputed by anyone that I can see. Thing is.. I do actually get involved (not as heavily as I'd like, time and money of course are always issues, and needing to keep a dayjob) with poverty issues, mostly as stated somewhere around here with Native Americans here and in Canada (a lot of tribes straddle the border or even cross it) and also try to give to out of the country causes as well when I can. But when you have THAT discussion, you'd be surprised-- I mean, look at Oprah. Or even Angelina. Okay, controversial topics. I don't want to get into someone's personal spiel about how they hate them because of x y and z 15 years ago. But the point I am making is, they take heat, ALL THE TIME, about why are they doing all this work for "foreign countries" and not helping "Americans." That is a very common criticism of them that I hear from your typical in-line-at-the-grocery-store soccer/hockey mom type.

But then, in a discussion of social and economic inequality problems in the U.S., everyone needs to shut up because we can find someone living in a mud hut in the third world, who makes the poorest Americans look rich.

The point IS taken. But it just seems like this is a slip-and-slide, you get it no matter which side of the argument you come down on, way to basically just say "no one should have to care about poverty issues because they're relative." It sounds like a cop-out.

[Seamus Fermanagh]

Koga:

While I am not the most expert person in the use of the English language, I do not believe that I required "translation." Not the friendliest way to disagree old chap....


You seem (I may be mis-interpreting you, if so, I mean no offense) to view the possession of "wealth" as some form of unfair advantage. I do not.

Somebody at some time EARNED that wealth, paying taxes on it under the system of taxation then extent. In my world view, that means the wealth thus generated is THEIRS to do with as they please. I therefore disagree with the concept of an estate tax in its entirety.

As a Catholic and a Knight, I do believe it is the PERSONAL responsibility of each individual to be charitable and to help others who are less fortunate, but I do NOT agree with utilizing government's power to enforce such wealth transfer. In this, I suspect that John Locke and I would be very much in accord.

Since government is uniquely positioned to provide certain services -- first responders, interstate transit infrastructure, national defense -- some means of funding these vital services must be provided. I would actually prefer that each person be charged, per capita, a small "maintenance" fee and that actual services needed then be charged as needed to those individuals using them. This would probably (almost certainly) prove unworkable, however.

Failing that, I believe a national sales tax coupled with a "prebate" to all citizens in a monthly amount designed to make typical expenditures for food and medicine "untaxed" (a.k.a. "The Fair Tax") is the best alternative.

I believe that a progressive income tax is actually the WORST possible choice. If your goal is to promote growth, you are punishing that segment of the economy that generates most growth. If your goal is to redistribute wealth, you are not going after "wealth" but simply making it harder for someone currently not wealthy to become so -- the "wealth" is carefully not generating "income" and the tax dodges are in full operation. If you want to tax wealth, then do so and have a cap number past which all monies etc. are taken away and given to others. At least that would accomplish the wealth redistribution objective.


As noted in my earlier post, history sides with your view of the estate tax. Historically, the state has total rights to all real and personal property unless it chooses not to exercise those rights. It is the state's choice to allow you to transfer some of your wealth at death to others, but it has the right to reclaim all of it. Essentially, you are only -- by law and custom -- guaranteed the lifetime usage thereof. Can't say I much like this, but facts are facts.

[Strike For The South]

Seamus you are a knight?

[ICantSpellDawg]

Seamus you are a knight?

Knights of Columbus.

[Strike For The South]

Knights of Columbus.

that hurt

[KukriKhan]

that hurt

Not much, though. Only $145 Million given to charity, and 69 million volunteer manhours in '07.

:)~ <----obligatory tongue-in-cheek

Their ranks dwindle a bit, but Standard & Poors think they're pretty solid.

Despite the KoC's stellar record, tax 'em all, sez I. The best can handle it, without complaint.

[Koga No Goshi]

Koga:

While I am not the most expert person in the use of the English language, I do not believe that I required "translation." Not the friendliest way to disagree old chap....

Yeah, thanks. A lot of that goes around.

You seem (I may be mis-interpreting you, if so, I mean no offense) to view the possession of "wealth" as some form of unfair advantage. I do not.

No. I view the possession of considerable wealth, while simultaneously crying that you deserve the largest tax breaks and should shoulder proportionately less of the tax burden than people who struggle for basic living or to buy a house, as offensive. And I view inherited wealth as even further off the deep end of the argument that people "earn their wealth." If you inherit $20 million in the United States it is not my view you should pay less tax on it than if you earned the same amount through your own work, yet that is precisely what the wealthy propose should be the case.

Somebody at some time EARNED that wealth, paying taxes on it under the system of taxation then extent. In my world view, that means the wealth thus generated is THEIRS to do with as they please. I therefore disagree with the concept of an estate tax in its entirety.

The problem with this argument is, it doesn't stop at estate tax. If this view were adopted by the state then there is no real right to tax anything at all. We'd be talking about a libertarian system where there is no tax and you pay on an individual basis for any service you use, or road you drive on. Because taxing the wealth people earn is wrong. Since we do not have a country that adopts this view I consider it a separate argument, I consider it unseparable from a topic of should there be ANY form of income tax at all.

As a Catholic and a Knight, I do believe it is the PERSONAL responsibility of each individual to be charitable and to help others who are less fortunate, but I do NOT agree with utilizing government's power to enforce such wealth transfer. In this, I suspect that John Locke and I would be very much in accord.

In the U.S. we pay less tax than Europeans do while simultaneously contributing less per capita to charitable causes than Europeans do. So while your belief about personal responsibility is admirable, it has not and would not work in the U.S.

Since government is uniquely positioned to provide certain services -- first responders, interstate transit infrastructure, national defense -- some means of funding these vital services must be provided. I would actually prefer that each person be charged, per capita, a small "maintenance" fee and that actual services needed then be charged as needed to those individuals using them. This would probably (almost certainly) prove unworkable, however.

I don't understand, a per capita maintenance fee sounds like a tax, but then you said charge each individual using those services? Again, we're talking about libertarianism which I consider a much bigger and separate topic from estate tax specifically.

Failing that, I believe a national sales tax coupled with a "prebate" to all citizens in a monthly amount designed to make typical expenditures for food and medicine "untaxed" (a.k.a. "The Fair Tax") is the best alternative.

Well I don't really know how many times I can say it. Poor and working class people spend much more of their income on things that would be hit by a sales tax- in fact nearly all middle class income would be sales taxed and only a small percentage of a rich person's income would be taxed at all. If we simply did away with income tax in the U.S. and operated only on sales tax, an awful lot of rich people would be paying an ungodly low percentage of the taxes, compared to their total worth. I do not believe that the poor and the working middle class deserve to shoulder proportionately more of the tax burden--- how is it that what they earn through their often more difficult work is somehow not protected by the sort of sacred aura of "they earned it" that rich people always want to assign to their wealth? Now, if you are talking about taxing EVERYTHING THAT PASSES HANDS, including stocks, purchase of corporations, homes, property, land, mutual funds, etc. etc., then okay. But I think that would not be the typical well off American's idea of what they mean when they talk about a fair tax system. They don't want capital gains tax, and I'm sure they'd be unhappy if we said okay we're switching to a sales tax, and everything will be sales taxed including stocks and investments. It is just replacing taxes rich people already pay in some form or another with a sales tax.

I believe that a progressive income tax is actually the WORST possible choice. If your goal is to promote growth, you are punishing that segment of the economy that generates most growth. If your goal is to redistribute wealth, you are not going after "wealth" but simply making it harder for someone currently not wealthy to become so -- the "wealth" is carefully not generating "income" and the tax dodges are in full operation. If you want to tax wealth, then do so and have a cap number past which all monies etc. are taken away and given to others. At least that would accomplish the wealth redistribution objective.

Yet somehow, the U.S. has a graduated income tax and is infamous for sudden fits of tremendous growth. Sometimes with bad consequences, but not because of taxes.

As noted in my earlier post, history sides with your view of the estate tax. Historically, the state has total rights to all real and personal property unless it chooses not to exercise those rights. It is the state's choice to allow you to transfer some of your wealth at death to others, but it has the right to reclaim all of it. Essentially, you are only -- by law and custom -- guaranteed the lifetime usage thereof. Can't say I much like this, but facts are facts.

I think money coming to someone through inheritance is free money. I think complaining and making a big fuss that you get "only" three-fourths of the multimillions coming to you is very petty, and I think pretensions that people are indignant that money from "hard work" is being taxed is pretty poor form considering that it is money they never worked for at all.

[Strike For The South]

Not much, though. Only $145 Million given to charity, and 69 million volunteer manhours in '07.

:)~ <----obligatory tongue-in-cheek

Their ranks dwindle a bit, but Standard & Poors think they're pretty solid.

Despite the KoC's stellar record, tax 'em all, sez I. The best can handle it, without complaint.

http://vids.myspace.com/index.cfm?fu...deoID=18963304

[Banquo's Ghost]

Unsurprisingly, things have moved on, so please forgive the step back in time, but I did promise to respond to Koga's post.

I think I am a bit confused, perhaps because we have so fewer really old things in America. Are you talking about things along the lines of, declaring something a historical treasure?

In a manner of speaking, yes. Many ancient houses for example, are still in private hands. These houses are part of the heritage of the country and in many cases are made available for visits by the general public. Now, the system is complex and there are many grants available to the landowner from the state for maintenance and such, but these assets are still taxed at the death of the owner and transfer to his heir. Within, there are often art treasures that would (and do) cost the state a great deal of money to acquire on the open market - again, often made available for the general public.

This is the idea of stewardship, which has infused the great families of Europe for generations - that we hold these assets in trust for one's children and the wider good. (This is not to say of course, that such stewardship is at the mercy of the tiny of brain and withered of moral, for plenty has been gambled and drunk away in its time. But the principle remains).

I suspect that you would feel that this has little place in the modern world, and that all such assets should be the property of the state. This is the unannounced view of many governments, which tax so heavily on inheritance that there is little choice left but to barter away goods to the state and go quietly to live in a semi-detached in Dorking.

Regarding estate tax, you said you disagree. I'm just curious what exactly your view on it is. Any money passed along upon death of its owner should be tax free? Or something more complicated? Bear in mind that in the U.S., I believe at the moment, estate tax doesn't hit any estate passing along less than 2 million in assets. And that level might very well be raised sooner or later because depending on where you live, one house and a decent amount in retirement money might come up to near 2 mil. I wouldn't be surprised to see it raised to 3 or 4 mil sometime soon, and that would be fine with me. But the idea of passing along 10, 20, 50 million to your kids and they pay no tax on it, I don't agree with. If I go out and earn $100,000 I pay tax on every penny. It should be at LEAST the same case if someone is being handed it for free.

My views on estate tax (or inheritance tax) are, unsurprisingly, in line with Seamus'. Indeed, my instinctive position is entirely in line with his arguments, save that I do not have quite his faith in the charity of man. (Probably because like so much of my one time faith, my membership of the Knights of St Columbanus is a distant memory ). Therefore I would be found arguing for a progressive income tax, as I feel that sales taxes are effectively flat rate taxes, and consequently penalise those on lower incomes disproportionately. I have no issue with paying a percentage of the monies I earn, no matter how great, for the benefits the state brings to enable me to earn that money. I would in fact, be quite happy to pay a higher percentage to enable my estate workers to be exempt - and in fact do, by paying them more than the market would bear (which is Seamus' advocated solution, of course).

Rather than repeat his reasoning, I will note that my forebears' assets have been taxed several times over in the earning and I rather object to the notion that they should be taxed again merely for transfer. Unlike the moneylenders of the world, I cannot move my houses and estates to the Caribbean or Liechtenstein. We are tied to the land, for land is our soul. I personally believe in contributing what I should to the greater weal of my countries, but I have little choice than to deploy those assets that are moveable to tax efficient environments, otherwise my heir will be forced to sell a great portion of their inheritance. Aside from assorted confiscations by choleric monarchs unimpressed with our political stances, the family has always managed to maintain and improve its position from generation to generation.

My father was able to utilise this wealth, not only to maintain quite a number of people in their work, but to allow investment in a company that I set up to deliver training and support to unemployed refugees in the United Kingdom. This continues in other hands - the hands of a couple of fellows with great talent but no start-up money. I have also managed to earn a reasonable living on my own through the written word and occasional service to ensure I never needed to draw money for living.

The point being, that if capital for investment and employment is to be available, it has to come from somewhere. One might argue that it should be entirely from "democratic" shareholder-run banks, but they often prove very much less philanthropic than one might hope. One might argue that it should come from the government, but they are rarely wise investors. How else then, might the entrepreneurs of this generation gain access to capital to build from scratch each and every generation? For one assumes that the end-point belief behind your advocacy of estate tax would be that no-one should be able to pass on wealth.

The enormous tax burden (planned for and covered, thanks for asking ) arising from my father's passing means that I have a lot less for new investment. We'll get over it, but it's tiresome.

[Koga No Goshi]

I'm glad SOMEBODY else recognized that a flat sales tax disproprotionately burdens the poor. I get distinctly irritated when people go on a lot about how the rich earned their money and thus shouldn't pay tax on so much of it, but that same argument somehow falls mute when it comes to the money that lower income and working middle class people earn. They would be paying tax on nearly everything if all taxes were replaced by a sales tax, and simply, that isn't fair at all when our societies support so many thousands or millions of people who have millions of times more money than they will need for decent living.

Another consideration about the "wealth = earned = tax is not fair" argument, is that massive wealth created by say, a corporation, or a series of corporations, owned by an individual, which makes him very wealthy-- that's not money he made by himself. That's money he made by amassing and organizing the work of hundreds, thousands of people. Those people took hourly wages or salaries and probably their big ambition in life was to own a house or maybe have a slightly better house than their parents did, or afford college for their children. So, when it comes to taxes to pay for things like public education, or public healthcare, or whatever the case might be based upon the country in question, I do feel that the richest people do have a special obligation to pay their fair proportionate share of their disposable income to support those systems. Were it not for the people available, literate and trained to work for them at sometimes quite low wages (I can't speak for European countries, but this is certainly true for the U.S.) a single individual making 10, 20, 50 million in a year simply isn't possible. The only tradeoff I would consider just if we did a substantial change in the tax structure which greatly relieved tax burdens off the wealthiest people and entities, would be mandatory pay structures to ensure at least a dignified living off the lowest wage. I know that some countries, such as Sweden, already have this. But no one in the United States is covering all their bills with a $5/hour job, unless they are living at home and not buying anything. They will almost certainly never own a house just off their work income. And while yes we can talk about school and education and people pulling themselves up to get better jobs, economies are always pyramid distributions. The lower the pay, the greater number of people working for that level of pay. That's how it works, so the idea that everyone could just put themselves through night school and go get a six figure job is make believe. (At the time of writing this I can't pull up your profile so I do not know which country you live in, but it might be useful to point out that in the U.S., virtually everything is pay-for-it-yourself, short of extraordinary circumstances. There are scholarships for college of course, but the dominant reality for most people is loans which have to be paid back with interest. And the #1 cause of bankruptcy in our country is medical bills.) And, an increasingly smaller number of American companies offer health insurance or retirement plans as part of job benefits. (I am certain this will get considerably worse once our financial crisis has fully kicked in, but it's been on the decline for quite awhile.)

Regarding the estate.... it sounds like you inherited a castle, or manor or something? I really couldn't quite get a fix on what exactly it was that you inherited, but it sounds like a big production if you have a work staff and such to maintain it and work on it. I honestly cannot give you an answer about estate tax in reference to those kinds of situations in Europe because there really is not anything quite like that here in the U.S., unless there are some privately owned skyscrapers or something. But chances are people wealthy enough to privately own a skyscraper have absolutely no problem passing along enough money to cover taxes upon their death--- honestly though, it' svery doubtful that there are any that are privately owned in that sense. More likely they are turned over to the ownership of a "corporation" (and a corporation can be owned by just 1 person) which of course is its own legal entity in the United States and thus will never "die" and pay estate tax on itself. My guess is that even if we had manors and castles and estates and such in private ownership, that is the way they would be passed down. There are many financial loohpoles in the American tax system, and I think that's something that perhaps got glossed over as well. People moving property and assets into trusts, corporations, or in the case of the very wealthy, "non profit foundations" and such, is a way to avoid any sort of estate tax on your property passed along in perpetuity. Those entities have to file tax returns but the individuals who "own" the property would not have to pay tax on anything except whatever profit or money was flowing to them individually from the trust or corporation on a yearly basis, as normal income.

It's a very interesting question, but I simply can't give an answer for it in reference to the American estate tax, because there isn't a true parallel here, and there are aforementioned ways of passing along property and avoiding estate tax. Basically what people do is "trick" the system so that, on paper, they are poor or under the estate tax threshold upon their death, by signing away property or putting it in trusts or LLC's or corporations. There are stubborn old people who refuse to do this and then abruptly die, but I would say out of the rich, we're talking a minority. Anyone wealthy enough to use a lawyer's services or even to have a "family lawyer" and/or financial planner is heavily advised to do this estate planning before old age and sickness or death become immediate concerns, to minimize or even nullify their estate tax liability. So, everything is not as it seems, and it's not like any bit of property passed along in the U.S. gets slapped with a vicious estate tax. This I believe is one of the things, indirectly, Obama mentioned in the debates when he talked about tax loopholes and how in America effectively some of the lowest tax rates are paid despite tax rates on paper. There are ways to bundle up your property in other legal entities and packages so that you do not have direct, personal ownership when tax time comes due.

[Banquo's Ghost]

Another consideration about the "wealth = earned = tax is not fair" argument, is that massive wealth created by say, a corporation, or a series of corporations, owned by an individual, which makes him very wealthy-- that's not money he made by himself. That's money he made by amassing and organizing the work of hundreds, thousands of people.

That's an odd stance, if I may say so. So even the cleaning supervisor, who merely arranges the rota for the workers, does not deserve any wage - or at least, any higher wage to account for their higher responsibility? Their facilitation of a successful cleaning, ensuring that the ordinary cleaners are rewarded by another job and thus continued pay, is not worth any extra?

That rather sounds like Soviet communism. I know you have a point in there, perhaps about comparative reward, but on the face of it the argument seems one of enforced equality.

So, when it comes to taxes to pay for things like public education, or public healthcare, or whatever the case might be based upon the country in question, I do feel that the richest people do have a special obligation to pay their fair proportionate share of their disposable income to support those systems.

Much more reasonable, and here I would tend towards agreement. Depending on the social model (and from my reading, the United States have a problem here, being generally inclined in practice towards a social democratic model of state provision, but philosophically considering this "socialism" and railing against it politically, ensuring a bastardised system that fails to work at all) taxation for the public good - and to provide healthy, well educated people to work and grow the economy - is one of the few wise investments the state can make. Rich people, on a progressive scale, do pay more in flat terms, but not in proportional terms unless there is a banding. So in real terms, more rich people means more actual money to distribute. Equally, a fair system of taxation means that more of the rich are likely to pay the tax, rather than find ways to avoid it (avoidance costs money, so one would rather pay the fair tax than blood-sucking lawyers and accountants - no offense to present company ).

(At the time of writing this I can't pull up your profile so I do not know which country you live in, ...

I am a citizen of the Republic of Ireland and live between there, the United Kingdom, France and occasionally Russia.

I really couldn't quite get a fix on what exactly it was that you inherited, but it sounds like a big production if you have a work staff and such to maintain it and work on it.

Don't worry, that's just me being obtuse to avoid too much personal information.

I honestly cannot give you an answer about estate tax in reference to those kinds of situatiIt's a very interesting question, but I simply can't give an answer for it in reference to the American estate tax, because there isn't a true parallel here, and there are aforementioned ways of passing along property and avoiding estate tax. Basically what people do is "trick" the system so that, on paper, they are poor or under the estate tax threshold upon their death, by signing away property or putting it in trusts or LLC's or corporations. There are stubborn old people who refuse to do this and then abruptly die, but I would say out of the rich, we're talking a minority. Anyone wealthy enough to use a lawyer's services or even to have a "family lawyer" and/or financial planner is heavily advised to do this estate planning before old age and sickness or death become immediate concerns, to minimize or even nullify their estate tax liability. So, everything is not as it seems, and it's not like any bit of property passed along in the U.S. gets slapped with a vicious estate tax. This I believe is one of the things, indirectly, Obama mentioned in the debates when he talked about tax loopholes and how in America effectively some of the lowest tax rates are paid despite tax rates on paper. There are ways to bundle up your property in other legal entities and packages so that you do not have direct, personal ownership when tax time comes due.

I was actually after your philosophy on the matter, which you have eloquently illustrated, thank you. You appear to be a thoughtful proponent of American social democracy, which is a hard beast to pin down since you all use the wrong words for political thought (ie your liberals aren't and your conservatives most certainly don't!)

I think that my rejoinders were more about the issue of tax avoidance brought on by excessive and illiberal (my version of English meaning ) taxation policy. As you note above, a great deal of effort is put into avoiding tax and this is disproportionately successful for wealthy people with the means to move money. Inheritance tax is one of those that is remarkably easy to avoid for the wealthy (without fixed assets) yet is relied upon by politicians to maintain the fiction that those wealthy are in fact, being soaked.

Thank you for an intriguing discussion.

[Louis VI the Fat]

Aside from assorted confiscations by choleric monarchs unimpressed with our political stances

I'm afraid I must insist you add '...and Revolutionary fervour on the continent'.

[Banquo's Ghost]

I'm afraid I must insist you add '...and Revolutionary fervour on the continent'.

As redistributive policies go, that was the unkindest cut of all.

[Koga No Goshi]

That's an odd stance, if I may say so. So even the cleaning supervisor, who merely arranges the rota for the workers, does not deserve any wage - or at least, any higher wage to account for their higher responsibility? Their facilitation of a successful cleaning, ensuring that the ordinary cleaners are rewarded by another job and thus continued pay, is not worth any extra?

Oh no, I didn't say any such thing. What I'm saying is no one makes $50 million in a year all by themselves, unless they win a lottery or invent some computer program in their bedroom and sell the rights to it or something really unusual. Any corporation will have a number of employees; of those, some will be quite low paid, some will have no benefits. I'm speaking in the U.S. of course. So I think any employer is benefitting from a system of public schools, emergency rooms, take your pick of whatever social services tax revenue helps fund. I'm not saying they should be taxed till they make no profit at all, I'm just saying that the idea that the richer someone is, the more they deserve not to pay as much tax as people lower on the scale, doesn't make any sense to me. Someone with several corporations making a ton of money a year is benefitting MORE, even if indirectly, from things tax money pays for, than a single individual working for a wage is.

That rather sounds like Soviet communism. I know you have a point in there, perhaps about comparative reward, but on the face of it the argument seems one of enforced equality.

No, that's about as far away from what I was saying as possible, though it's a common comparison that is made when people defend taxes on the wealthy. What I'm saying is that wealthy people owe at least as much of a fair share into the tax system as poorer people, and in many cases, their wealth is possible because of some of the things taxes help to pay for. Let's take private healthcare and social security as examples in the United States. How many people would work an hourly wage job with no medical insurance and no retirement plan if we fully de-socialized healthcare and turned social security into a voluntary only private investment system? I think U.S. employers actually get away with paying a lot less than perhaps they should be in many cases precisely because they can tell employees "that's not my problem, go to the ER if you can't afford healthcare." In fact, Wal Mart got in trouble for doing exactly this, and encouraging its workers to apply for welfare to supplement their income.

Much more reasonable, and here I would tend towards agreement. Depending on the social model (and from my reading, the United States have a problem here, being generally inclined in practice towards a social democratic model of state provision, but philosophically considering this "socialism" and railing against it politically, ensuring a bastardised system that fails to work at all) taxation for the public good - and to provide healthy, well educated people to work and grow the economy - is one of the few wise investments the state can make. Rich people, on a progressive scale, do pay more in flat terms, but not in proportional terms unless there is a banding. So in real terms, more rich people means more actual money to distribute. Equally, a fair system of taxation means that more of the rich are likely to pay the tax, rather than find ways to avoid it (avoidance costs money, so one would rather pay the fair tax than blood-sucking lawyers and accountants - no offense to present company ).

Yes. The reason I put in the little "reminder" about quite how much is NOT covered in the U.S., is because I know that in a lot of Europe people do not routinely go bankrupt over things like poor health or a bout with cancer, and lose their house over it. It's very common in the U.S. It is in fact the #1 cause of financial wipeout for an American family. So yes it is a problem as you say, and the system for as much as many wealthy Americans would like to make it out like everything is just milk and honey for the poor what with all the "entitlement programs" and "high taxes", it's hardly the case in practice with all the tax loopholes and the horrendous state of may of our social services, combined with such a low minimum wage and the decreasing availability of job benefits like health insurance. Our "entitlement programs" and "taxes" are certainly nothing like Europe.

I was actually after your philosophy on the matter, which you have eloquently illustrated, thank you. You appear to be a thoughtful proponent of American social democracy, which is a hard beast to pin down since you all use the wrong words for political thought (ie your liberals aren't and your conservatives most certainly don't!)

I think that my rejoinders were more about the issue of tax avoidance brought on by excessive and illiberal (my version of English meaning ) taxation policy. As you note above, a great deal of effort is put into avoiding tax and this is disproportionately successful for wealthy people with the means to move money. Inheritance tax is one of those that is remarkably easy to avoid for the wealthy (without fixed assets) yet is relied upon by politicians to maintain the fiction that those wealthy are in fact, being soaked.

Thank you for an intriguing discussion.

Thank you too.

[Redleg]

Oh no, I didn't say any such thing. What I'm saying is no one makes $50 million in a year all by themselves, unless they win a lottery or invent some computer program in their bedroom and sell the rights to it or something really unusual. Any corporation will have a number of employees; of those, some will be quite low paid, some will have no benefits. I'm speaking in the U.S. of course. So I think any employer is benefitting from a system of public schools, emergency rooms, take your pick of whatever social services tax revenue helps fund. I'm not saying they should be taxed till they make no profit at all, I'm just saying that the idea that the richer someone is, the more they deserve not to pay as much tax as people lower on the scale, doesn't make any sense to me. Someone with several corporations making a ton of money a year is benefitting MORE, even if indirectly, from things tax money pays for, than a single individual working for a wage is.

So your arguement is that politicians have established an inheriently unfair tax structure that benefits the rich over the poor? Is this from an income tax perspective only? or are you including the other taxes that are paid not only by the poor and middleclass tax payers, but yes even those with a bit more money, be it private ownership of property or corporate ownership.

Now there is some validity to an inheriently unfair income tax structure that this country has established, being that the ability to write off certain aspects of income has always grated me because it completely complicates the tax code, that the successful middleclass ends up with paying more then they should because they do not often have the ability to tax advantage of these regulations in the tax code.

However what grates me more is the fact that property taxes - which is the primary base of income for cities and even some states is adjust to help corporations more then private property owners. All done in the name of intincing business into the area. Or the fact that sports groups get bonds and benefits out of the public coffers to keep them in the town. Last I hear the NFL is full of corporate or private owners.

So go into more detail, but then the scale of payments by the rich far exceeds the payments of others, so to claim that they should pay more seems a little weak on the surface when one only talks in generalities.

No, that's about as far away from what I was saying as possible, though it's a common comparison that is made when people defend taxes on the wealthy. What I'm saying is that wealthy people owe at least as much of a fair share into the tax system as poorer people, and in many cases, their wealth is possible because of some of the things taxes help to pay for. Let's take private healthcare and social security as examples in the United States. How many people would work an hourly wage job with no medical insurance and no retirement plan if we fully de-socialized healthcare and turned social security into a voluntary only private investment system? I think U.S. employers actually get away with paying a lot less than perhaps they should be in many cases precisely because they can tell employees "that's not my problem, go to the ER if you can't afford healthcare." In fact, Wal Mart got in trouble for doing exactly this, and encouraging its workers to apply for welfare to supplement their income.

Careful now - attempting to state rich get more benefit from public structures is a poor arguement. Property taxes in cities and counties is what pays for the benefits that your are primarily talking about and from looking at tax structures - property owners pay much more in taxes then none property owners, corporations with commerical property structured without political benefits often pay a greater share then many would image.

Yes. The reason I put in the little "reminder" about quite how much is NOT covered in the U.S., is because I know that in a lot of Europe people do not routinely go bankrupt over things like poor health or a bout with cancer, and lose their house over it. It's very common in the U.S. It is in fact the #1 cause of financial wipeout for an American family. So yes it is a problem as you say, and the system for as much as many wealthy Americans would like to make it out like everything is just milk and honey for the poor what with all the "entitlement programs" and "high taxes", it's hardly the case in practice with all the tax loopholes and the horrendous state of may of our social services, combined with such a low minimum wage and the decreasing availability of job benefits like health insurance. Our "entitlement programs" and "taxes" are certainly nothing like Europe.

Last I heard it was the loss of income associated with the loss of health. So saying its from just poor health seems a bit misleading to me.

[Koga No Goshi]

However what grates me more is the fact that property taxes - which is the primary base of income for cities and even some states is adjust to help corporations more then private property owners. All done in the name of intincing business into the area. Or the fact that sports groups get bonds and benefits out of the public coffers to keep them in the town. Last I hear the NFL is full of corporate or private owners.

So go into more detail, but then the scale of payments by the rich far exceeds the payments of others, so to claim that they should pay more seems a little weak on the surface when one only talks in generalities.

Well it comes down to no matter what you do aren't you just pushing the beans around on the table? Companies ALREADY complain about business tax being too high. So, you cut property tax and replace it with business taxes, and businesses say they will take their marbles and go home, or open in other countries. You leave business taxes the same and cut property taxes, and schools close left and right. The fact is that we need taxes, no one likes to be the one paying them, and everyone thinks their end of the tax burden isn't fair. Whenever I see anything right of center talking abou tax reform, it always ultimately comes down to vastly decreasing taxes and not replacing them with anything else, or replacing them with things that will hit only lower classes and won't generate as much revenue anyway. And while the idea of "cut spending!" is very populist and appealing, there is simply no way to make any of the tax systems I've seen proposed by wealthy people and the ideological right work, without cutting things that people don't think of as wasteful spending, such as education and social security and police and fire. There are things we can cut yes but, as with McCain's tax policies, what we can cut without really sabotaging ourselves never adds up to as much as rich people want to cut in taxes.

I didn't say the rich should pay more than they do now, but I do think thare are a gazillion loopholes and ways to minimize tax liability that are not options for lower income people. I think that if we closed a lot of these loopholes we would suddenly find ourselves dealing with a surplus again. Because I do not think it is a wily minority of the very wealthy finding tax loopholes. I think it's the stubborn or unwise minority of wealthy who are not using them. And I do think that everthing from white collar crime penalties vs. blue collar crime penalties, to conviction rates, to lobbying power in government, to influence in local government (such as the Malibu homeowners getting together and shoving through a law so that the state of California has to cover their homes with taxmoney when they burn down every so often, since insurance companies aren't stupid enough to cover them affordably) to reaping the "end reward fruit" of what tax dollars pay for, all benefit the wealthy. (For example, no personal liability on the wealthy when the corporations they own default on pension plans, yet those same wealthy people still don't believe the cap on social security tax should be raised. They don't want to take any financial responsibility either way, they seem to think these sorts of problems should just fall to individuals even if they helped create said problems for people who otherwise thought they were doing the responsible thing and sought a job with a pension plan, etc.)

Careful now - attempting to state rich get more benefit from public structures is a poor arguement. Property taxes in cities and counties is what pays for the benefits that your are primarily talking about and from looking at tax structures - property owners pay much more in taxes then none property owners, corporations with commerical property structured without political benefits often pay a greater share then many would image.

In states where property tax is high often the tradeoff is that sales tax is lower. California is kind of an exception; both rates are somewhat high. But Oregon as an example, has very low sales tax and higher property tax. And businesses presumably benefit because they can sell things cheaper and more of the market can buy more things. Switch that around, high sales tax and low property tax, then more people can afford to buy houses, but rich people also can afford to tie up their money in property investments and such, but it costs a little more to buy things in the store. It's a tradeoff, and I fail to see where the wealthy are hurt in either scenario honestly.

Last I heard it was the loss of income associated with the loss of health. So saying its from just poor health seems a bit misleading to me.

Of course. But that's kind of a distinction without meaning or vice-versa, isn't it? The fact that most Americans cannot afford to take a month off work for chemo (and a lot of pepole might need more than a month depending on whatever their medical condition is) without defaulting on their mortgage is a reality. I don't see how it would be any more an individual's fault for getting sick.... I mean, I guess I am not sure what you are saying. Are you saying that if someone gets seriously sick then they deserve to lose their house even more? I don't see how that serves society.