@McGentrix,
McGentrix wrote:Because usually inheritance is in the form of physical possessions and not cash. That can create an undue burden upon the survivors of then selling assets to cover the tax and that exchange is also taxed as income. Survivors should not be burdened by such things in my opinion. It's tough enough dealing with an estate without the added bureaucracy of govt getting involved.
This is a problem with the taxation of gifts of dubious liquidity, not with inheritance tax. I agree that taxation of gifts of dubious liquidity is wrong but this doesn't indict all inheritance tax.
If you win a one-on-one game of basketball against Michael Jordan as a prize and are taxed on it I think this is a tough tax to justify, given that though this event indubitably has some value it's not a very liquid value and in this case winning a prize like that can be a tax burden that you can't reasonably pay. I disagree with these situations but it isn't because inheritance tax is wrong, it is because the valuations the IRS is using is wrong.
For example, recently a painting/sculpture (Canyon, by Robert Rauschenberg) was valued by the IRS at $65 million, with a $29 million tax bill. However it is illegal to sell it as it contains a bald-eagle in the sculpture.
This is clearly not a just valuation by the IRS, but the fact that the art was part of a collection worth over a billion dollars that these individuals inherited does not make the tax bill wrong, the fact that the tax bill is an arbitrary valuation that the taxed can't reasonably realize is what makes it wrong.
Quote:As an example, I have a friend whose father has spent his entire adult life collecting civil war memorabilia. His collection is valued at well over 25 million dollars and when he passes, that collection will be passed down to his son, my friend, who will then have to pay taxes on it. He does not have the money to pay that tax and why should he? His father paid taxes on the collection as he purchased the pieces.
I hear you. This is a tough problem where the value is decreased by the sentimental value. I think that there should be a way that these kinds of gifts are not taxed unless they are sold but determining what is such a gift of largely sentimental value or not is going to be a hard one (many are surely sentimental about their houses).
I think that one way to fix all these kinds of situations is to tax only the realization of the value but even then this is hard to determine as keeping art or a house is in one way to realize this value.
Anyway, my point is that this is an understandably undesirable situation but not inherently because it's an inheritance tax.
Quote:Why should that collection be taxed merely because it passed from father to son?
The question that I think is missing from these arguments is almost always whether we need more or less taxes. Your argument should not be whether this should or should not be taxed but whether we need more or less taxes. And if you claim less you should know where you are taking it from (not just foreign aid, that is a rounding error. You need to pick the social program or military project you are gutting).
I argue for taxes about where they are now, and not raising them, because I think the US military budgets should be cannibalized before taxes are raised. I do not think we need to spend that much money killing people around the world and would prefer to spend less there than raise taxes.
Now you seem to want less taxes in general, so make the case for them. Where you are going to cut spending, where revenue is going to come from etc because that is the reasonable answer to why anything should be taxed, whether it is gift from father to son or salary from employer to employee.
The point of taxes is the societal benefit that the civic platform it pays for represents. The arguments should be about the nature of the civic we construct and not the ideological nature of taxation.
