Rich people and taxes

[Feltan]

Originally Posted by Dr. Pfleschbach

I think Feltan has already made up his mind about the "truthiness" related to this subject.

Maybe. I am not going to argue with that report; however, I have emperical evidence to the contrary. I have personally witnessed people having to sell farms and small businesses to meet tax obligations. Perhaps, I am just in some small minority, or perhaps the authors of that report (you know how those reports get made) have made their conclusions fit their own agenda.

Regards,
Feltan

[gojujay]

Originally Posted by Philistine

The whole federal income tax system is progressive--so the issue of "the more you make, the higher the rate" isn't any different than the system has been.

I have issues with the progressive tax in the first place.

Originally Posted by Philistine

The Estate Tax's (pre-2001 change) highest marginal rate was 55%. This after a $1,000,000 exclusion--Most reforms (as opposed to repeal) proposals on the Estate Tax suggest a $2,000,000 exclusion.

This rate is substantially lower than the highest marginal rate on ordinary income through the 1970's, and only slightly higher than most of the 1980's. (50% through 1986).

What were the deductions and shelters for income during that time period as compared to today's rates? It's kinda' before my time, but I remember my aunts and uncles talking about "tax shelter" businesses, that were designed to lose money in order to avoid Federal tax.

Originally Posted by Philistine

I can really see very little argument from a "fairness" perspective as to why inheritences should be exempt from taxation at all (currently they technically are--it is the estate which pays the taxes, not the beneficiary--though it has much the same effect).

If people want to quibble about the rates--that's fair. But I hardly consider them confiscatory in relation to other taxes--current and historical. YMMV.

--Philistine

I beg to quibble

[gojujay]

Originally Posted by jeff

The victim is everyone else besides the few families benefiting from the rewritten tax laws. Fair or unfair, which we can argue over, that was the tax law status quo ante. By ending that tax upon themselves, those individuals have increased the tax burden and/or deficit that the rest of us will have to pay.

I disagree. They are forcing the elected politicians to make tough choices about the budget and what's really important.

Originally Posted by jeff

That they did it in a dishonest manner - with a brilliant PR campaign to make it look as if family farmers and middle class were victims of the estate tax - is a non-financial consequence. Do you think it is ever good for special interests to get legislation passed for their benefit under guise of it being something else? I don't think that's good government or public policy.

I agree to the call for transparency. I cannot agree with the intellectual dishonesty in the rationalizing of the Estate Tax. I agree with Lochinvar, that any inheiritance could be taxed as income for the heirs and could support such a proposal.

Considering the different taxes - ...snip...Or, at least some of us are.[/quote]I think I chastised Inq for a similar argument about using tax policy to influence desired behavior. It works, but I don't particularly like it. Been reading to much of the Austrian School lately...

Originally Posted by jeff

Actually, I think the estate tax justification can be answered in simpler terms. As lochinvar just said "it could be argued that inheritance is, in fact, income to the heirs and should be taxed as such.". That's pretty much my position, and I see no reason to claim that this is a "grand scheme to make everyone equal". Sorry, Bayou Bum, it's not about that: it's about the ability to have a class of individuals exempt from paying taxes, as you and I must do.

I didn't read the whole post before responding

[gojujay]

Originally Posted by jeff

Thanks for the point. The reason that all this comes up is that the advocates for eliminating the estate tax, including Bush, frequently claimed that estate taxes lost family farms. When asked to give examples they ducked the question. Do we call this "lie" or merely "mislead"?

Just couldn't let it go, could 'ya?

[gojujay]

Originally Posted by Dr. Pfleschbach

Which supports my argument that the estate tax is really not much of a threat to anyone's fortunes. It is a political football used to score emotional points with constituencies. Both Right and Left wave this red herring when they feel the need to distract people from real monetary policy issues. It's a handy tool for both sides.

Which is a good reason for them not to fix the problem.

[Dr. Pfleschbach]

Originally Posted by gojujay

Which is a good reason for them not to fix the problem.

Maybe it's not really a problem.

[jeff]

Originally Posted by Feltan

I have personally witnessed people having to sell farms and small businesses to meet tax obligations.

Lots of people in many lines of business have gotten in trouble and had to liquidate assets because they didn't or couldn't pay taxes - but what we're talking about here is farms being broken up because of estate taxes. The Bush Admin claimed it was an epidemic and couldn't find any when asked to show 'em

[jeff]

Originally Posted by gojujay

What were the deductions and shelters for income during that time period as compared to today's rates? It's kinda' before my time, but I remember my aunts and uncles talking about "tax shelter" businesses, that were designed to lose money in order to avoid Federal tax.

Marginal rates were 91% for highest brackets during WW II, went to 70% until the big drop in Reagan years, and lower since - now in mid 30% range. Very clearly rates are nowhere near historical highs.

Fancy schemes to lose money to generate tax losses were (technically) made illegal, but they live on in spirit, with other tricks to beat the tax laws. Look at the trouble KPMG is in now (what was it, a $450M fine?) for abusive shelters.

Note: Quoting a post that quoted somebody else seems to be working differently now; you get a single QUOTE ... /QUOTE stanza.

[Feltan]

Originally Posted by jeff

Lots of people in many lines of business have gotten in trouble and had to liquidate assets because they didn't or couldn't pay taxes - but what we're talking about here is farms being broken up because of estate taxes. The Bush Admin claimed it was an epidemic and couldn't find any when asked to show 'em

See! They should have asked me!


Regards,
Feltan

[jeff]

Originally Posted by gojujay

I disagree. They are forcing the elected politicians to make tough choices about the budget and what's really important.

Whoooeeee! Jeff pulls himself off the floor and climbs back into his chair so he can type. So, tell me about these tough choices you see politicians making to keep the lower tax revenues from increasing the deficits. Call me; I'll be out in the garden with a beer.

Originally Posted by gojujay

I agree to the call for transparency. I cannot agree with the intellectual dishonesty in the rationalizing of the Estate Tax. I agree with Lochinvar, that any inheiritance could be taxed as income for the heirs and could support such a proposal.

Not sure how to parse the 2nd sentence above: you don't agree with the proposition that there was dishonesty, or you can't support such dishonesty? If we agree with lochinvar that estate tax is simply income for the heirs, then we're all in agreement.

Originally Posted by gojujayConsidering the different taxes - [I

...snip...[/i]Or, at least some of us are. I think I chastised Inq for a similar argument about using tax policy to influence desired behavior. It works, but I don't particularly like it. Been reading to much of the Austrian School lately...

Don't blame me - the only Austrian School I've heard of trains Lippizaner stallions!

Originally Posted by gojujay

I didn't read the whole post before responding

And it's just too darned much hassle to go back and edit out - I kapeeesh!

[jeff]

Originally Posted by gojujay

Just couldn't let it go, could 'ya?

I can resist anything, except for temptation...

(a slow easy pitch coming right over the plate - it's a sin not to wack it out of the park!)

[jeff]

Originally Posted by Feltan

See! They should have asked me!


Regards,
Feltan

They certainly should have! Were they really federal estate-tax or were they other tax problems - tax in arrears, for instance. If you're the one person who found unicorns it's worth knowing about

[Feltan]

Originally Posted by jeff

They certainly should have! Were they really federal estate-tax or were they other tax problems - tax in arrears, for instance. If you're the one person who found unicorns it's worth knowing about

The farm sale was an estate issue...that I know for sure. It was a relative of good friend. The two businesses...I don't recall if both were, but I seem to remember one was an estate issue. I was asked to purchase all three on seperate occasions -- the only reason I know about it.

Regards,
Feltan

[gojujay]

Originally Posted by jeff

Whoooeeee! Jeff pulls himself off the floor and climbs back into his chair so he can type. So, tell me about these tough choices you see politicians making to keep the lower tax revenues from increasing the deficits. Call me; I'll be out in the garden with a beer.

Should've put the rolleyes thingy after the post. It was meant to be sarcastic

Originally Posted by jeff

Not sure how to parse the 2nd sentence above: you don't agree with the proposition that there was dishonesty, or you can't support such dishonesty? If we agree with lochinvar that estate tax is simply income for the heirs, then we're all in agreement.

I can't support the arguments I've heard for the Estate Tax in it's current form. I think they are simply attempts to rationalize a "how do you like it" attitude towards the "rich." What's right, is right.

Originally Posted by jeff

Don't blame me - the only Austrian School I've heard of trains Lippizaner stallions!

Reference to economic school of thought. Go Hayek!!

Originally Posted by jeff

And it's just too darned much hassle to go back and edit out - I kapeeesh!

Note to Craig; What's up with this, "1. You have included 6 images in your message. You are limited to using 4 images so please go back and correct the problem and then continue again.

Images include use of smilies, the vB code [img] tag and HTML <img> tags. The use of these is all subject to them being enabled by the administrator?" I was limited to only one "blah" in my witty rejoinder to jeff's last comment. :angry ,oh, danm

[jessicasimpson]

Originally Posted by jeff

Marginal rates were 91% for highest brackets during WW II, went to 70% until the big drop in Reagan years, and lower since - now in mid 30% range. Very clearly rates are nowhere near historical highs.

Fancy schemes to lose money to generate tax losses were (technically) made illegal, but they live on in spirit, with other tricks to beat the tax laws. Look at the trouble KPMG is in now (what was it, a $450M fine?) for abusive shelters.

Note: Quoting a post that quoted somebody else seems to be working differently now; you get a single QUOTE ... /QUOTE stanza.

A little dusty on history, but wasn't the greatest economic growth in the US when the Marginal Tax rate was so high?

[Inquartata]

Originally Posted by jeff

The victim is everyone else besides the few families benefiting from the rewritten tax laws.

You are assuming, as many politicians do, that taxation is a zero-sum game: if we cannot get a certain amount of revenue from A, we must get it from B.

How about getting it from neither, and reducing government spending instead?

If "the wealthy" pay less, it does not follow that everyone else MUST pay more.

Do you think it is ever good for special interests to get legislation passed for their benefit under guise of it being something else? I don't think that's good government or public policy.

Don Quixoté, Senor Windmill; Senor Windmill, Don Quixoté. Gentlemen, you may lay on at will.

Don't we want to motivate people to work, too? Were the rich going to do something else with their money?

Oh, I think we can look to the "ennobling effect of productive labor" to accomplish that. Or maybe hunger.

(advocates for the rich argue against tax on luxury items, saying that these expenses create jobs; they also argue against capital gains taxes, claiming this increases investment. If they neither spend nor invest it, what else do you think they plan to do with it?

How did you get from that to "not investing it"?

It may be desirable to prevent creation of a hereditary class of the rich, so we're willing to tax their legacies.

Meh, I think that ship has sailed already. ( Luxury class all the way, of course. )

"it could be argued that inheritance is, in fact, income to the heirs and should be taxed as such."

Let's apply this logic everywhere, then

I borrow $20 from my friend. Hey, it's income: tax me. When I pay him back, it's income to him. Tax him too! Brilliant! Add a few more steps and that $20 will have made its way into the government's coffers in its entirety...

[Inquartata]

Originally Posted by jeff

Thanks for the point. The reason that all this comes up is that the advocates for eliminating the estate tax, including Bush, frequently claimed that estate taxes lost family farms. When asked to give examples they ducked the question. Do we call this "lie" or merely "mislead"?

I don't know, I'm not really conversant with the issue. Hopefully I'm a long way from having to consider the prospect of paying estate taxes.

[Inquartata]

Originally Posted by jeff

we also double tax via sales tax,

Do we? Have I missed the enaction of a VAT or something?

Oh---you mean that we are taxed on our income and then again when we buy stuff. OK. But the distinction is that these are two different types of transactions. The sales tax is not a second tax on income, as taxes on dividends are.

The point here is that estate tax is primarily, numerically, relevant to the rich, and relief of that tax is relief for that sector.

Nevertheless, large segments of the population receive income from dividends and capital gains, and to increase the tax rates merely to make the rich pay more is also going to make everyone else pay more. Are you arguing that it's OK to raise taxes some on all or many taxpayers in order to raise them a lot on certain taxpayers?

You dropped the "primary" part of my statement. Many of us have some dividend income, but only a very few of us live off of it; eliminating taxes here benefits in a meaningful way only those.

Your definition of "meaningful" may not be mine. In fact, it almost certainly isn't. I suspect that having to pay higher tax rates on my dividend, interest and capital gains income would make for more significant pain to me than it would to Bill Gates. He is not likely to have to postpone retirement because his income is down from $100 million to $90 million this year. I might well have to do so. It is at the margins that small dings are the more significant.

I don't see any need for invoking some sort of class warfare rhetoric. That adds nothing to our discussion.

But it's fun anyway. Kept Marx chuckling for years.

Harrison who?

Harrison Bergeron, the eponymous hero ( or antihero ) of quite a famous story by Kurt Vonnegut. ( You really should try to read something more than computer manuals, HMO handbooks and The Economist. Literature is not the enemy!

Anyway, Harrison was born genetically superior to most of his fellows. Stronger, faster, smarter, more artistic. Alas, the society into which he was born had decided that natural advantages such as these were unfair to others not as prodigiously endowed, and had passed laws to curtail them. Those with above-average strength had weights and chains locked to their limbs or sandbags to their backs. Those with above-average intelligence were forced to wear a device which sent periodic bursts of random noise into their ears, to disrupt their ability to concentrate their superior mental acuity. Good eyesight was regressed to the mean by anticorrective glasses. And so forth. This was all done under the auspices of the Handicapper-General...

You get the idea: equality of outcome, not of opportunity. Mandatory sameness...and the loss of the potential of all those who had greater-than-average abilities of any sort.

Are you claiming that there remain confiscatory tax rates anywhere in US tax law?

As Mr. Grainger said, "How did you arrive at that hypothethith?" I used the word "disproportionate", not "confiscatory".

I am saying that there is no merit in