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Death and Taxes
This article originally appeared in The Daily Capitalist.
I've been meaning to write a major piece on the inheritance/estate/death tax for quite a while, but until then I wish to share some brief thoughts on it since the topic is front and center in the current tax debate in Congress.
First some background. The inheritance/estate/death tax came into being in modern times by the Brits in order to break up the large landed estates held by the leftover royalty. They really hated these families who had gathered huge estates from as far back as feudal times. The socialist Labor Party made class warfare a foundation of their party. After the nobles were hit, then anyone with money was their target in their goal of socialist leveling.
That great regressive president, Woodrow Wilson had such a tax passed in the US in 1916. Wilson was a "Progressive" and basically believed in social engineering. The concept behind the law had nothing to do with feudal estates, but more with class warfare, the enmity that demagogues stir up against the "rich" among needy voters.
The ostensible reason that Wilson had for the law was that "concentrated wealth" in his version of what capitalism should be was bad for America. There is no evidence, empirically or theoretically, that "concentrated wealth" is harmful to the economy. You hear this argument anew with people like Bill Gates, Sr. who has no clue what he is talking about. But he sure "feels" strongly about it.
In other words, they say, without the tax financial power is concentrated in the hands of the rich whose interests are obviously adverse to "society's" interests. Somehow they will use that financial power to gain economic and political advantage. What a crock. If that were the case then, every successful institution should be stripped of wealth in order to protect society from their harmful effects.
The other reason is, they wish to control the way you raise your children as part of a social experiment. Such inherited wealth is bad for your kids because they won't work hard. Instead, the State has a duty to step in and stop you from making decisions that they believe are socially harmful -- to your kids. And we can't have that.
The real reason for the tax is class enmity. It is an ancient view of wealth that equates entrepreneurial success with theft. Which it was in pre-capitalistic societies through feudal and royal privilege and government-created monopolies. Today in free market1 capitalist societies, wealth is created through the entrepreneurial process. Businesses don't steal your money, they earn it. But old ideas, like stubborn bacteria, are hard to kill.
Today there is another idea floating around and that "we can't afford" to "cut" the estate tax and give "the rich money." In other words they are saying it's OK to tax the "rich" because "we" (i.e., the government) need it. Which is another way of saying that "we have wasted the taxpayers' money because of our foolish and wasteful spending and don't care where we get the money as long as we get it. Screw the rich." As I heard on a news report the other night, politicians have been using the argument that we need this money to balance the budget for the past 50 years and they haven't been fiscally responsible yet.
One last thought. If you think about the theory of taxation, almost all major taxes are based on some economic event: earning money, selling something at a profit, paying dividends or interest. So when has death become an economic event? It isn't and that's why it doesn't make any economic sense (assuming any tax makes economic sense). You work a lifetime to build a business and you've become successful and wealthy. You have been paying taxes on earnings, profits, and gains over the years and now they want to take a big chunk of your wealth just because you died. It's just theft. How is that morally justifiable?
1I'm not talking about current forms of crony capitalism such as exist in our financial markets which has resulted from government interference and manipulation. Free market capitalism is something else entirely.
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This discussion is telling...and reflects why the Estate Tax still exists. As usual, its the perfect combination of a political event dealing with highly charged emotions, varying degrees of education / understanding on the matter, money and everyone's varying version of 'fair', 'right' and 'just'. The discussion is a microcosim perfectly reflecting the larger situation the entire country is in............govt suffering a death by a thousand cuts through lobbying on every little minute area of our lives, exception on exception on execption....there are multiple exeptions on the 3rd exception....The Entire Structure exists because there is ABSOLUTELY NO ACCOUNTABILITY FOR ANYTHING at the end of the day. We spend and legislate ourselves into complete stupidity and finally are left arguing over two things.....the estate tax and how to come up with a way to figure out the BCS standings once and for all.
The estate tax is a distraction while the rest burns....it gets emotional and allows people to point a finger somewhere, anywhere. People that can make the actual decisions about this issue in govt will each take their one 'truth' and build a mountain of bullshit around it to gather support....and around and around we go.
perhaps a stimulus funded time machine that can collect taxes w/interest several generations forward could be an answer to our debt.
Two word rebuttal: Paris Hilton.
Next!
She is the perfect example of why one should not worry about aristocracies.... No matter how much money one makes, there will be a generation that will blow it.
bravo. that is all that needs to be said.
You can make wealth distribution work any way you want. Some of the scenarios however involve direct distribution through individual action. We take it.
This will lead to all manner of nastiness. Perhaps another way might be better.
The debate about the morality of taxes is simple surface chatter. No one ever questions the paradigm that it is the best option to organize society based on chasing bits of paper that there never seem to be enough of. As long as human life is dependent on this game of musical chairs, then corruption, coercion, immorality, and pain will be the consequences.
This is right on idealistically. However so many of the rich today ARE crooks. They didn't earn their money through the "entrepreneurial process," they earned through the crooked wall street casino. As it stands today there must be 8 or 9 total crooks for every one honest successful entrepreneur.
"they earned through the crooked wall street casino. As it stands today there must be 8 or 9 total crooks for every one honest successful entrepreneur."
Possibly...but this is what we (OK speaking for myself...I) have always said...there was no risk of failure...the government was backstopping it all!
That is not a free market...and no one has gone to jail for the crime of the century.
Capitalism is...rewarding the good/profitable and punishing (brutally) the bad/unprofitable.
Somehow this all equating to the wealthy being bad by extension of what DC & Washington did (thus meaning a higher tax basis on inheritance) is beyond me.
There is no connection...prosecute those who did bad!...but they won't, they can't, because they are culpable in the crime.
Zero criminal prosecutions over two years says all there needs to be said. I look forward to the little lambs thrown over the garden wall as they make their escape through the back gate...LOL.
As soon as they can fix a know-nothing dirt bag coming into the Congress the Senate or the Presidency a complete intellectual midget & pauper and then leave a millionaire, then they can try and convince me of their sense of equality, justice or moral superiority.
I won't hold my breath.
Anyone with a sizeable estate that hasn't done his homework in how to distribute most of it tax free, doesn't deserve his estate.
And how many of those at the top of the pyramid do you think haven't found unnumbered methods to do so?
All but the tiniest few i would bet.
Dynasty trusts, offshore havens, insurance trusts, private foundations. More and more loopholes for the very wealthy to perpetuate their black hole wealth accumulation and retention strategies.
I'm sure they enjoy a good laugh over those who buy into their nonsense, at least those they don't have to pay to serve their interests.
Yea and those are the ones we should be sticking it to, not the average person that actually gets fucked by this tax.
I never realized how many uber-wealthy were spending their time on zerohedge.
Actually it's really those whom they have successfully won over to their belief system.
It really is quite amazing. The author finds the very concept of extreme concentration of wealth as 'not a problem'. It's like arguing with fundamentalists...they are impervious to logic and facts.
There is no evidence, empirically or theoretically, that "concentrated wealth" is harmful to the economy.
That is such a blatant lie that it boggles the mind!!!
As if people (and corporations) with boatloads of money do not bribe (sorry, "lobby") administration, congress and regulators to establish laws that massively favor themselves and other already large corporations.
What a massive farse that statement is, whether you agree with these taxes or not.
I will certainly agree that IF a society is established such that wealth gives its owners ZERO artificial or legislative advantage whatsoever... then this kind of tax is unjust. However, in the USSA today, 99.9999% of the super rich are super rich because they have artifical advantages legislated by government. Most of the super rich today have not produced anything whatsoever their entire lives.
I'll go further. Anyone who is very rich entirely because they are extraordinarily productive... they should be taxed at 0%, and be given endless awards for being extraordinary human beings who benefit all of mankind. Today, probably few if anyone exists like this (beyond a few million dollars of wealth).
Let's be honest... ALL taxes are theft.
It used to be that a very few taxes were not exactly theft. Like back when 100% of gasoline taxes were spent to build and repair roads. But the days when any tax was semi-legitimate is long, long gone.
So many who have posted here that they see nothing wrong with the estate tax obviously have been well indocrinated by the Progressive mantra throughout their school years. Thankfully, I was well educated before the big PC, anti-capitalist, anti Constitution propaganda was infused through teachers, textbooks, Hollywood and the MSM, starting with the marxists like Jane Fonda, Bill Ayres, and all of Obama's mentors. When the Marxism is so insidiously incremental, you will never see the end game coming until you wake up one morning in a FEMA camp, stripped of everything, just because you PISSED SOMEONE OFF who has more juice than you.
I agree the death tax is theft, and just the latest insult to injury. The US government is on a tear to find ways to transfer wealth assets from the boomers to the state to pay for their misbegotten policies.
So far: Debase the currency and capital controls to rob their life savings, strip medicare and pull the plug on their ventilators with one hand so they can grab their estates with the other and (next) strip Social Security.
Confiscating private pensions (401Ks) is right around the corner.
There is no doubt that imposing the estate tax as a means of periodic redistribution of wealth has as its core thesis the need to prevent the problem that eventually occurs, and which we are experiencing now, where the "haves" have ever more, and "buy" the governement to insure that particular state of affairs continues. This is all nice, and you can then talk about how wonderful these wealthy are, and how they need to be incentivized to invest, so we all have crumbs, er ah jobs, but the truth is once they get it, they have no real interest in investing in it in a way that, for instance, guarantees jobs, and decent schools and a decent way of life for middle class America, the key to the stability of our regime.
So count me as a socialist, and my target is the very biggest of estates - if you want to pay homage to those who plead for the entrepreneur, the family farm, etc. by all means, make the "deduction" $10 million. But don't tell me how great it is to live in America where the rich own everything, including what passes for our political system.
Dont be a fool: ask yourself who this notion of getting rid of the estate tax benefits, follow the money, and compare your situation with, for instance, the Mars family, who are busily funding this effort to derail the estate tax. Who does it benefit - you or them?
Ditto. But reading the posts here makes me wonder how the Greatest Generation lived through the grand theft of a 91% marginal rate (during the Eisenhower years) and still had money left over to build a national highway system, send men to the moon and rebuild Europe.
Obviously, we'd be a whole lot better off if we let the uber-wealthy keep "their" money. I mean, isn't it obvious that as the marginal rate dropped from 91% to 28%, and the estate tax almost disappeared, that our economy got so much better than it was in the 1950's? And just look at how much better all of us regular folk have it these days compared to then.
But then that's the problem with socialists and democrats. They only think with their feelings and ignore all imperical evidence.
You guys have been brainwashed by the rich.
It's times like this I come to realize just how difficult any form of communication is.
The amazing thing about the insane marginal tax rates was that it led to the well-paid declining raises for compensation in other forms. Rather than an extra $10K a year, of which the "rich guy" would keep $1K, folks used to ask for things like company drivers and housekeeping services and stuff like that.
The company was essentially encouraged to help maintain a middle-class.
Doesn't seem so horrible to me.
Behind every great fortune is a great crime. They steal it. We let them. The least they can do is return some when they're done with it.
You guys who bitch and moan about "taxes being theft" are mentally stuck in adolescence. You never made it past the realization that you are born into a society not of your making and must adhere to its rules, fight it or leave it. No matter which option you choose, you're going to end up paying taxes to someone sooner or later, whether it be a government revenue agent in a suit or a local warlord sticking an AK-47 in your face and demanding half of what you have.
You [guys] (patriots) who [bitch and moan] (rationally question) about "taxes being theft" [are mentally stuck in adolescence] (are refusing your shackles). You [never] (clearly) made it past the realization that you are [born into a society] (to subjugate yourself to narcissistic human beings) not of your making and must adhere to [its rules] (their mercurial whims), [fight it or leave it] (well done). No matter which option you choose, you're [going] (not going) to [end up paying taxes to someone sooner or later] (make the world entirely the way you picture it should be), whether it be a government revenue agent [in a suit] (voluntarily quitting an unproductive job) or a local warlord [sticking an AK-47 in your face] (getting prosecuted for interfering with capitalism) and demanding [half] (none) of what you have.
world's what you make of it... bitchez.
politcal theft, pathetic....they will spend it for someone else more wisely than you....
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The guv takes your money and uses it against the people. Theft plain and simple. Wrap it up in a philosophical argument if you will...doesn't matter. Its theft we're all used to. Revolution is the only way out.
tax this.
Wall Street’s Pentagon Papers: Biggest Financial Scam In World History
$12.3 TRILLION in taxpayers’ money.
by David DeGraw
http://www.globalresearch.ca/index.php?context=va&aid=22291
Error is in the premise that "money" is your property in the first place. It's printed by the Federal Reserve and owned by the government, as far as I understand it. You get to use it for awhile because you live/work here.
You can own plenty of things, but "money" isn't one of them.
The Estate Tax is Just More of THE CHANGE:
http://www.youtube.com/watch?v=9b7RmJJP5uM
Agree. What happens if junior is Caligula? Some of these families have enough money to start their own MWD programs.
As a practical matter very little revenue is raised from the estate tax anyway (~60B$/decade) as the large estates have methods to avoid it completely via foundations and trusts so it affects mostly unsophisticated small businesses and family farms. Certainly, its won't solve the governments profligate spending problems or make a meaningful dent in the deficit. The government already has plenty of revenues (roughly constant when averaged over economic cycles of 19% of GDP over the last three decades), yet the expansion of government and centralized power and planners continues unabated. The government needs to get back to its only legitimate function of national defense (greatly reduced in budget) and enforcement of rule of law. Its hard to imagine this should require more than 19% of GDP in revenues in fees. This tax is all about envy and class warfare and "progressives" sense of morality and their desire to impose this on all others. Its a distraction from important issues such as the erosion of freedom and privacy as exemplified by the "patriot acct" and the "dept of homeland security" and the unwarrented interference of the Federal Reserve in the economy.
The premise of this article is correct, yet I would extend it to all taxation and not just the estate tax. People have this delusional belief that they have a right to other people's property and they will stop at absolutely nothing to ensure that they get it. Let's examine how the government steals (yes, it steals) people's property. You get essentially a bill that says you have to pay X amount or they steal it right from your paycheck, and if you refuse to pay this bill they'll send you another warning. If you ignore this, they take you to court where you are guilty until proven innocent. Then, if you refuse to go to court, they will come for you at your house. If you just want to be left alone on your own property without causing any harm whatsoever to another human being, they will beat you with a club, taser you, and maybe even shoot you if you are ardent enough in defending yourself. Then you will be thrown in a cage.
And why does all this happen? It happens because you worked, you made money, and you want to keep that money and use it as you see fit; you did not commit aggression against other people, yet these idiots think they have a right to stick a gun in your face just to steal from you. Nothing different than a common robbery/extortion act except one has a badge.
See, Econophile, your articles get bashed by all the clowns on this form who don't realize the government is the main problem, that they are the parasite. "Banksters!!!Oh noes!! Damn banksters!" They're too stupid to understand that the trade cycle is caused by the government, because the government is what allowed banks to do what ever the hell they wanted without fear of a bank run and thus a check on credit expansion. Then the market corrects this problem, and these same idiots don't realize the government allowed the banks to exist, the market would have them all broke with more competent people buying up their assets. It's easier to close your eyes to reality and pretend it isn't there I guess.
Amen, Bro!
" in free market1 capitalist societies, wealth is created through the entrepreneurial process."
OK first you have to show me this?
This country is neither.
That's not how real wealth is created, look at BP revenues for a year. That is real wealth, real wealth is gained by connections. Corrupt laws for corrupt corporations, a license to steal.
No sir, billion dollar bastards should be shot, then taxed. They gained the most through this corruption, and should pay for the bill.
Real wealth is passed via power and influence. Millions are peanuts.
I'd give a 10 to 20 million cut off that would be no more than could be lost on a summer cocaine spree.
Real wealth supports whole famlies of multi year cocaine orgies, without getting dented.
somewhere here is a baby and bathwater.
the monetary system is original theft from which
all estates are derived. so to tax them is theft,
to not tax them is theft. when do we start bailing
out private estates? or did we already cover that
material?
"when do we start bailing
out private estates? or did we already cover that
material?"
They were the first in line back in 08-???...apparently some around here think it's a swell-golly-gee-idea too.
As only the state has the power to confiscate property at the point of a gun, some seem to think what's really needed is ever increasing power & money going to the state.
Fantastic, brilliant...give these people a job in a bureaucracy somewhere...they'd be perfect for it.
i'm persuaded the first thing is end the fed
and that hangs off it. new currency, treasury notes
created. then continuous live coverage of all meetings
and deliberations of the treasury, freely broadcast within
the nation. elimination of all taxes. government funded
by interest on loans , end all foreign occupations.
creation of a robust diplomatic core that actually has
an interest in cooperation and mutual benefit as a result
of that cooperation. redduction in growth as it is mostly
required by the ponzi financial system and its impossible
future demands. we need a holistic comprehension of
life and our place in it before we go about destroying and
wasting all the resources in sight. everyone becomes a
student, again. something like this is inevitable. imo
Agreed...the Fed has to go...our forefathers were right.
More thoughts...
With it, fractional reserve banking...the people cannot be held liable for the decisions of a bank manager, president or their proxy.
Hedonics is on my list...painting a laptop green adds no intrinsic value to it's function. It's purely an accounting gimmick to add inflation.
With the exception of some important defensible bases (Diego Garcia among them) we close our military bases around the world. The Europeans & Asians have socialism...let them eat cake and pay for it as well.
I can think of no reason why a welfare recipient should have a taxpayer paid cell phone stuck in their ear. Likewise, if you happen to be a ward of the state (welfare recipient) we have drug laws here...you will subject to drug testing just like someone applying for a job. If you are caught with illegal drugs in your system it's a five year ban from public assistance. It goes without saying anyone here illegaly is disqualified. We can't afford it anymore. Deal with it.
Homeland Security Dept...gone. It's redundant, useless and impinges on our freedom to the degree of becoming terrorism itself.
Energy Dept...again useless. It was created to make us energy independent...it failed...goodbye.
Dept. of Education...of all the federal agencies this is the worst. Someone in Washington issuing edicts to 50 states how they will teach children. Local school districts stay as is and are answerable to the local population. Unfortunately, DC district stays under federal domain.
Dept. of Agriculture has more employees than there are farmers.It is a necessity, however, in my view. It stays but unassociated departments (see cell phones above) get axed...the inspectors stay but the bureaucracy decreases by half...ethanol subsidies, of course, are a failed footnote of history.
This one really sucks...Social Security (the incredible ponzi foisted on America)...will be means tested. If you have a million dollars in liquid assets you don't get your money back...sorry. Thank FDR, Johnson and their heirs...the middle class has snapped, it's tapped out. Going forward, below a certain age (well below mine of 51 I would imagine) there will be no tax held out for Social Security for younger workers. Likewise, no employer tax will be put into it. It has to end...it's unsustainable...there are nothing but IOU's in it...it will have to be a slow breakaway instead of a clean break...it's just a fact of reverse social engineering ;-)
My initial thoughts...anyones free to debate them or add.
Don't forget to scrap the DoD and replace it with a few guys in a bunker controlling warheads, drones, satellites and submarines.
No boots on the ground anywhere, no bases anywhere.
Just fund a few guys in a bunker with remote controls.
I don't know about other industries but the estate tax is a HUGE boon to big ag companies. When the patriarch of a family farm dies, the family must come up with a HUGE sum of money to keep the farm. Some are sophisticated enough to hold machinery and land in a corporation and transfer the corporation down the family line.
Sadly, many are not that sophisticated and so the farms must be sold to pay the taxes. The farms are then scooped up by the big ag corporations. Many lament the demise of the family farm, but few realize the government takes an active role in stealing farms from the little guy to give to the big ag corporations that can afford to make political contributions.
Simple: raise the deduction to $10 million. Also, stop agrisubsidies for corporations who farm. Duh. There, I just (a) raised revenue, (b) cut expenses, and (c) preserved family farms.
Next?
+10million
Gee, I wonder which of these idea-less script-reading shills junked you...
As Free Radical made clear in a previous post, all taxation is theft, and the granting of licenses to commit it -- i.e., actually electing people confiscate the proceeds of social cooperation -- is the most personally corrupting and socially destructive power in the world. And not to see it is to be blind to virtually all that ails mankind:
http://www.businessweek.com/smallbiz/content/dec2010/sb20101216_471796.htm
"The number of people who must worry about estate taxes, already tiny, would shrink to less than 0.2 percent of the population, estimates Richard Behrendt, senior estate planner at Robert W. Baird & Co. In 2009, when the exemption was $3.5 million, 14,713 people had fortunes large enough to file taxable estate returns, according to the IRS. Just 4,296 of those people had estates of $5 million or larger. Compare that with the 2.47 million Americans who died in 2008, according to the most recent data from the Centers for Disease Control and Prevention."
This isn't enough of a base for a class war..
Isn't it amazing that Joe Sixpack will come to the defense of the wealthiest 0.2% in America, if the issue is presented to him as a tax on death? Wake up, Joe! It's not death that's being taxed, it's a tiny number of the very largest estates in the country. The "small family farmer" argument has always been a smokescreen, unless you define "small" as over $10 million ($5 million deduction each to husband and wife).
And don't think for a minute that the wealthiest 0.2% among us will pay anything like 35% on their estate in excess of the deductible. Estate planning is a trough that lawyers feed at. By the time the recently deceased has made use of the lifetime gift tax (raised by this legislation to $5 million from $1 million), and various trust strategies, a huge chunk of these estates will escape taxation altogether. One wealth strategist (http://www.nytimes.com/2010/12/18/your-money/taxes/18wealth.html) claimed he could goose the $5 million exemption to $50 million, using "a sale to an intentionally defective grantor-retained annuity trust," which I will happily leave to others to decode.
A little more inflation down the road and that HUGE 10 million deduction will start to look small again. Ask those that got screwed by the alternative income tax. Besides, where I come from ,10 million is a typical and viable farm size.
Agreed, but why can't the 10M farmer hire an estate attorney to take care of the estate tax issue?
Unless one refuses to use an attorney for esate planning, or the attorney one used was malpractice, there should be no or minimal estate taxes for anyone.