Is the Estate Tax Fair?
Topic of Debate
We just published an article on the logic of the estate tax, which we suggest for your reading. It is our theory that a great majority of Americans would view (and vote) estate taxes unfair if they applied to all. However, they only apply to estates of $1 million or more, and so relative bias comes to play. The deal reached by President Obama with Congressional Republicans proposes the estate tax exemption threshold be raised to wealth of $5 million. What is your opinion on the taxable threshold?
At a 55% rate, how do you feel about the prospect of paying estate taxes on your wealth, which you likely worked hard to establish and to maintain through your life? We expect most of us intend to leave a legacy to our heirs, for their better lives. Is the new 35% proposed estate tax rate fair, or do you think there should be no estate tax whatsoever, as in 2010? Perhaps you feel like I do that these taxes should not apply to immediate family, or at a lower rate than 55% if so (perhaps a tiered rate based on family relationship). Please let your voice be heard, as we are curious about the general view on this topic:
Is the Estate Tax Fair?
DEBATE TOPIC ARCHIVE
Article should interest investors in: H&R Block (NYSE: HRB), Intuit (Nasdaq: INTU), Jackson Hewitt Tax Services (NYSE: JTX), NYSE: BAC, NYSE: GS, NYSE: AIG, NYSE: WFC, NYSE: MS, NYSE: C, NYSE: BID, NYSE: JWN, NYSE: TIF, NYSE: ZLC, Nasdaq: NILE, NYSE: BMJ, NYSE: MOV, NYSE: BC, NYSE: LVS, NYSE: MGM, Nasdaq: WYNN, NYSE: MTN, Nasdaq: MATW, NYSE: HI, NYSE: PPD, NYSE: MCG, NYSE: MCO, NYSE: TD, NYSE: PNC, AMEX: GLE, NYSE: BCS, NYSE: GLD, NYSE: XLE, NYSE: XLF, NYSE: BJV, NYSE: SZI, NYSE: BPD, NYSE: IEL, NYSE: PBN, NYSE: CGW, NYSE: LVL, NYSE: FRI, NYSE: PBP, NYSE: RSU, NYSE: RMM, NYSE: REA, NYSE: RFL, NYSE: RHM, NYSE: RTG, NYSE: RSW, NYSE: RMS, NYSE: REC, Nasdaq: PDOWX, Nasdaq: XDPOX, Nasdaq: XDPDX, Nasdaq: NDUAX, Nasdaq: NDUBX, Nasdaq: IDJAX, Nasdaq: NJCRX, Nasdaq: UDPIX, Nasdaq: UDPSX, Nasdaq: UWPIX, Nasdaq: RYLDX, Nasdaq: RYIDX, Nasdaq: RYCWX, Nasdaq: ONEQ, Nasdaq: QCLN, Nasdaq: QQEW, Nasdaq: QQXT, Nasdaq: QTEC, Nasdaq: NASDX, Nasdaq: NDXKX, Nasdaq: POTCX, Nasdaq: DXQSX, Nasdaq: DXQLX, Nasdaq: FNCMX, Nasdaq: INQAX, Nasdaq: MOTAX, Nasdaq: XQQQX, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, Nasdaq: SERAX, Nasdaq: SERBX, Nasdaq: SERCX, Nasdaq: SERNX, Nasdaq: FEUFX, Nasdaq: FEEEX, Nasdaq: FAEAX, Nasdaq: FBEAX, Nasdaq: FIEUX, Nasdaq: FECAX, Nasdaq: IERAX, Nasdaq: XRNEX, Nasdaq: PBEUX, Nasdaq: UEPIX, Nasdaq: UEPSX, Nasdaq: PEUGX, Nasdaq: RYAEX, NYSE: CEE, NYSE: RNE, NYSE: PEF, NYSE: GUR, NYSE: EPV, NYSE: VEA, NYSE: DFE, NYSE: DEB, NYSE: IEV, Nasdaq: ANEFX, Nasdaq: CNGAX, Nasdaq: HNEAX.
Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.
Labels: Debate Topics, Politics, Taxes
posted by The Greek | 1:15 PM
9 Comments:
Too many trust fund kidsnot contributing meaninfully to society as it is. Hard work builds character. If you have 2 arms and legs, your sight, hearing and full mental abilities, consider yourself gifted. I say you take the 55% and put it in a trust fund for children born with disabilities. That might force us to reconsider our country's health and education services.
No at any level the estate tax is not fair. Why should any American have to give more money to their government when they die. They have paid taxes all their lives accumulated wealth and should be able to pass it on however they wish without the government haveing their hands out!
On the one hand, inheritance is a form of economic monarchism. And there is no guarantee the recipients will use the money in an efficient manner that will benefit society. And the society provided the foundation on which the wealth was accumulated.
On the other hand, it's their money that they earned and they should be able to do what they want with it.
I would choose whatever provides the greatest multi-generational utilitarian benefit ...which is probably some level of tax, but I have no idea how much is optimal.
Hows that for a long answer stating, "I don't know." :)
All taxes have pluses and minuses, but the govt. needs money from somewhere. Here's my ranking of "most fair" to "least fair" taxes.
1. User Fees - Like fees for a passport are the most fair taxes. U want the service, u pay the tax
2. Tariffs - increasing the prices for particular goods, oil in particular, seem like a good way for the govt. to collect revenues.
3. Consumption/Sales Tax - Consumption is a matter of choice. The more one consumes, the more one is taxed seems fair to me.
4. Property Tax - the biggest problem with property taxes is that they are paid every year.
5. Payroll Tax - As long as it's for specific programs like SS or UI, this tax works for me.
6. Hidden taxes collected by utilities and phone companies - I hate this BS cause it's hidden.
7. Estate Tax - transfering wealth between generations is fine, but that wealth transfer would not be possible w/o a good, stable govt. I'm ok with it being taxed at a reasonable level, but 55% is ridiculous.
8. Income Tax - why do we penalize people for making money?
9. Cap gains & Dividend Tax - why do we penalize people for investing in the USA?
One final comment ...an estate tax is really a tax on the recipient(s) who get more or less depending on the tax rate ...the benefactor is dead.
A House in California can easily cost one million dollars. The biggest asset of most people is their home. Say your Parents work all their life and pay taxes and you inherit this home. In many cases if not most then you would have to sell the home to pay the taxes. One million dollars is a low threshold and 55% is absurd. How about 4 million at 35%?
Jim,
Thank you for pointing that out, regarding the tax on the recipient. We talked about this in the article, Estate Tax Logic, and we discussed a tiered tax rate based on relation to the deceased in order to preserve some capital for families while still taxing the income earned by the recipient, especially in cases of non-relation.
Greek
Anonymous,
Thank you for your note on the real estate asset that often makes up a majority of an estate, and the then need to sell perhaps a family property at a tax rate of 55% (often a rushed sale as it must take place in 9 months time). Again we discussed this in Estate Tax Logic. Comments to this debate should come after both articles have been read and assessed.
Greek
The unearned wealth that was never taxed before we had income taxes in the early 1900's, and this has been handed down generationally untaxed for hundreds of years. Look, I'm not looking to tax the middle class family who wants to give their $500K home to their children. Just trying to keep more of the earned income in the hands of the people who punch the clock 40 hours a week and earn their income versus the trust fund kids snorting cocaine on their unearned income from Grand Daddy in the form of dividends and capital gains. Cut the Ordinary Income Tax by the same proportionate amount you raise the estate tax.
Post a Comment
<< Home