A MODEST PROPOSAL

For a few reasons.

First, they are taxed more in order to prevent the creation of a 'noble' class based upon money. By breaking up the 'old money' stranglehold, our society is kept away from the stratification that led to problems in Europe.

Second, estates this large have far surpassed any reasonable question of standards of living. The inheritors are no worse off if they inherit 5 million instead of ten million; they are still disproportionally wealthy compared to everyone else on the planet, by a long shot.

Third, because without a society of hard-working individuals the deceased would never have been able to amass so much wealth. They owe that money to the society which allowed them to reach the point they reached.

Cycloptichorn

This seems to be a philosophical difference...

I believe that if a person works hard their whole lives and amasses a fortune for the descendents, the government has no claim on that money just because the person died.

They owe that money to society? Please.

I'm going to start a new thread to talk about this more, McG; see there for my response.

Cycloptichorn

The number of estates that the estate tax effects is so small, it's hardly even worth talking about.

Somewhere between 1% and 2% of estates are large enough to encur any tax.

Again, the tax is on the part of the money OVER the current $2,000,000 limit. $4,000,000 for a couple, and $4,000,000 if they had an AB Trust.

All of an estate left to a spouse, regardless of it's size, has no estate tax.

Also, the rationale for the tax on the amount over the limit is that it's tax being paid on unrealized capital gains.

In addition, the estate tax is figured and paid BEFORE any heirs receive their inheritance. It's not as if individuals are all having to figure the tax they owe. That is taken care of by the lawyers, accountants, and executor...btw, if you feel sorry for the executor having to do all this work, they can, if they desire, take a really big cut off the top of the estate, and a percentage of income earned by the estate during probate, for the work they have to do. That fee is taxable as income however.

One thing to consider though, bringing to mind the middle class....a $2,000,000 left to one person is quite a different matter than the same estate left to 5 or 6 people.

In other words, if you are truly wealthy, you have been giving maximum cash gifts to your heirs every year, decreasing your estate with no tax to them, and by the time of death, no one is living on the street.

For those inheriting truly large estates, dealing with other matters are probably more pressing than tax owed on an estate that has been well managed.

As was said, if I ended up with 9 million, or 14 million, it's not going to make an difference. When the numbers get that large, there's hardly anyone in your boat.

"It is better to keep your mouth closed and let people think you are a fool than to open it nad remove all doubt." --- Mark Twain

People don't become super rich through hard work. Again, taxing those who benefit the most from the infrastructure has been an accepted principle for over 6,000 years.

They don't? Then how do they get super rich? I'd like to know so I can be rich without the work.

That's easy. You are born into a family with money.

I know that the common response to this is the 'most money is new money, blah blah..' argument; but the estate tax is designed exactly to keep old money families from holding back giant estates in perpetuity.

Cycloptichorn

Many of them are living in tax-free zones like Switzerland maybe or are residents there.

Can you give me some examples?

How 'bout this whore?

Cycloptichorn

She might have questionable ethics and a narcissistic way of living, but she seems to enjoy doing the things she does. A lot
Besides, didn't I read somewhere miss Hilton has her own clothing line and or perfume on the market? If that is so, she's earning a decent living on her own...

Naj.

Funny you should use the Hilton fortune as an example:



http://www.hiltonfoundation.org/main.asp?id=38&side=1

more from Wikipedia:


Barron Hilton later challenged the will and won ($335,000,000), yet the Hilton Prize still gives out 1.5 million dollars a year to charities. All done without the help of government.

I do think that Barron was greedy protesting his dads will, and you won't get a fight from me debating the waste of breath his granddaughter is, but I think it goes to show that not all old money stays old money and much of it already does do good in society.

Paris Hilton rocks! As did Conrad. He understood my philosophy just fine, JP. I could never agree with Cycloptichorn's or Roxxxanne's naive grasp of wealth accumulation... my thinking probably is more in line with yours and McG's. I've spent plenty of time on both sides of the employee/employer fence and can tell you it takes twice the work and 10 times the mental stamina on the latter. The risks are every bit as daunting as the potential rewards are rewarding. Here in the States; we all get to choose which path to pursue.

My death tax philosophy turns 180 degrees from that of my life-tax philosophy for good reason. I believe very strongly in individual opportunity. Opportunity is all I've enjoyed, and all I feel I owe, should I succeed.

As I explained earlier, money that gets spent is money that benefits us all. Free-flowing money is the lifeline of opportunity. I don't give a rat's a$$ about those who are poor and choose to do nothing about it. Those who can do nothing about it; are worthy of my concern (mostly, folks living in other countries, IMO).

Taxes are a necessary evil, for obvious reasons. They should, by design, avoid stifling opportunity at all costs. I for one would much rather pay a larger chunk of my burden when I'm dead, wouldn't you? If they're going to get the money anyway, and they are, why not postpone much of the collection until it can no longer inhibit your opportunity to produce more?

I'm currently struggling badly with doubling the size of my business. I nearly didn't do it this year at all. A higher tax burden would have prevented not only my personal gain; but would also have prevented the creation of a dozen good jobs (averaged out of about 32 employees). Uncle Sam wins in this situation, by a long shot, by not preventing me from expanding. A smaller tax burden would have all but guaranteed not only this advancement; but reduced the likely period of time before my next step.

Putting the burden on those who produce reduces production, jobs and the overall greater opportunity for everyone. The laws of supply and demand mandate; when there are more jobs than people; wages go up... which in turn means more people have an opportunity to create jobs and so on and so forth. Others, who have no desire to take such risks; still have more money to spend on the production of others (think Henry Ford). The net societal good that can be derived by stepping off the neck of the producer is endless.

Contrarily; when you stand on the neck of the producer; the net effect isn't just a reduction of his personal pie... but a reduction in the available pie for everyone. This is as counterproductive as it is shortsighted. It is essentially eating your planting seed.

While a death tax can and has been described as punishment for success; the fact that the money will be collected in some fashion, regardless, pretty much nullifies that description. I think of it more as a way to postpone payment... allowing the earner the opportunity to earn more before it's time to pay the piper.

A fun exercise: Pretend you lived in a society that taxed you not at all until you were dead. Imagine the extra money you'd have and what you could do with it. Not a bad trade off, eh? The problem is; few would have estates worth taxing by the time their demise arrived. Solution; add a sales tax to the equation that contemplated the additional spending that would no doubt take place in efforts to avoid the stiffer (than sales tax) death taxes. Now you have a society who's tax structure rewards both production and consumption. A true capitalist's dream, no?

Now examine the effect on the lower, middle and high income earners: Since you only need so many cars, beds and meals, the sales tax tends to favor the rich, right? Not so if you factor in the much stiffer death-tax-punishment for not paying the sales tax.

Poor: Huge rewards in opportunity while protection for the poor is built in as they are never subject to a death-tax at all. One can't tax that which doesn't exist.

Middle Class: Huge rewards in terms of opportunity while shouldering a similar burden percentage to what they do today.

Rich: Huge rewards in terms of opportunity in exchange for paying a larger portion to tax out of the much larger fortune they're likely to generate under the improved set of rules. I've never seen a brinks truck in a funeral parade anyway.

The only folks that may feel they're getting the stick are the parasitical rich who'd seek to retain fortunes they themselves didn't earn. Even they, however, would likely receive greater amounts of unearned gains at a much earlier age in their parents attempts to avoid the death taxes. This results in a far greater opportunity to produce themselves, with all the same advantages of rich kids today. For those who choose not to produce with their early inheritances, the result is still the same: more consumption, with sales tax paid, and the inevitable economic boost that accompanies said consumption.

Really, who loses?

All that notwithstanding, there is some merit in Cyclops and Roxy's viewpoints. Great wealth does offer too many opportunities to side-step morality and unfairly encumber the poor- in the long hall. Think monopoly. Without some form of re-distribution, or at least incentive to spread the wealth, society really does run the risk of becoming a two-tiered class system with the many being owned by the few. Look around the world.

The Macro version of my argument extrapolates the strategy to offer individual opportunity to all of mankind. Greed is a powerful incentive... and a fair system that offers people a fair pursuit of their own best interest is the best deterrent from extremism I can think of. While it's true; globalization ships jobs overseas; proper management of the tax system could and likely would persuade the recipient countries of same to adapt to our philosophies, if only to gain or retain a bigger piece of our pie.

The end-game becomes greater individual opportunity for all of the world's citizens... which inevitably results in greater opportunity for us all. I for one would love to have another 4 Billion potential visitors to the tourist towns I operate in. I'd wager my kingdom my suppliers, purveyors, their employees and mine would pretty much all love it as well. The wigit maker up the block as well as the butcher, the baker, the candlestick maker would probably be happy with such a development too.

Immigration, globalization and reduced taxation are a capitalist's best friend. Said capitalist; is everyone's best friend (Save the political parasites that prevent such progress, whatever their intentions). A good job of fettering, could in my opinion, easily (if not expediently) bring such changes about.

Just thinking aloud. Sorry if I babbled too long…

Stratification is a natural process as it occurs in nature. In humans it comes inthe form of family, occupation, interests and one's station in life one falls into. The family side tries to create a dynastic reign whether in business or in politics. The occupations have unions and professional bodies such as the AMA, the American Medical Association, corporations, etc. Those of similar interests voluntarily become members of Greenpeace, PETA (People for the Ethical Treatment of Animals). Those who thru misfortune either contract a disease or have an accident join organisations that tries to alleviate those conditions. The whole process is complex. Democracy could easily fall victim to the stratification as can be evidenced by the arguments by those who argue for inheritance, the family side of human stratification.

For as interesting as the issue of estate taxes and taxes in general may be, i'd point out two things--the first is that Cyclo started a thread on the topic of estate taxes, in which all forms of taxation are begin discussed.

The second is to point out that i have been referring to economic equity, not equality. To quote something i posted earlier: