My Estate Tax Proposal: Shoot it down if you wish!

Quote from TRNT : It is dec 20, you have $50K in profit. You also have two accounts each ne has lost $50K. Being in crontrol, you cash in one of the losses this year and cash in the second one Jan 1. This way you are unlikely o be in the re any given year.

this is true.. but let's take houses for example. As prices sink, would you enjoy holding onto a home for an extra amount of time, while the asset depreciates in value? You make an extra mortgage payment and now you're sold it for less than you would've say a month prior.

Quote : As I said I quoted and IRS rule that implied differently.

Unless you can show me differently I'm 99% positive this is exactly how it works.

Quote : Investing is not working. added risk comes with added expectation of return. Gov need not subsidize cost of risk especially that some risks could be bad for the society. IMO, people should have a real job and on the side do investing knowing the risk.

well it's not working anymore. Back in the 90's then again in the early 2000's people could throw money at anything and get a big return. We saw this happen especially during the .com bubble. Now it's just not the simple anymore because the market has become to global and unpredictable. They make it very difficult for the little guy b/c big investors in groups can shift positions' value at will.

This is the comparison I make to people.. if you hoard your money into a savings account right now you're not even gaining enough interest to cover cost of living changes. In actuality you're losing money. Bottom line is that you need to find a reliable safe way to make 2% (or so) per year just to keep your money worth as much as it is today.

Quote from Danman114 : The problem is the parent pays 30% of that 100 k in taxes, then the offspring pays 30%. It's taxed twice.

All money gets taxed over and over again every time it changes hands. The only way that your example would be different or unfair is if the child did 100% of the work but the parent got the money. The tax law shouldn't be designed to fix such unfair business structures!

Quote from tunguska : All money gets taxed over and over again every time it changes hands. The only way that your example would be different or unfair is if the child did 100% of the work but the parent got the money. The tax law shouldn't be designed to fix such unfair business structures!

Money gets taxed currently when it's exchanged for goods or services.

Your exchange of labor for money. TAXED. Your purchase of a good. TAXED.

What we are discussin isn't an exchange of goods or services for money. It's a reallocation of money that was taxed as income to the desired recepient upon death. No reason for the government to get involved in the affairs between a parent and child like this.

Sorry for your loss.

I would eliminate the estate tax. A person's life savings is accumulated after tax. A person's bank account has already been taxed when it was income. Property has already been taxed. Life insurance benefits should not be taxed. One does not plan for the spouse, kids, dependents AND the federal government. After all, we pay the premiums with post-tax dollars.

I think it's absurd that Obama is OK with a 55% estate tax. In other words, more than half of your life savings (on which you've already paid tax), life insurance, etc. would go to the federal government instead of your dependents. Yes, you can do some estate planning, but that's costly and easy to make mistakes with. I think it's unconscionable to have a "death tax," which is all this is. What a slap in the face to a grieving family. "Sorry for the loss of your mother, but we'll take more than half of your mom's stuff as part of your 'fair share'."

Sorry for your loss and I can understand the complications of dealing with the estate.

To be real, the government is going to collect one way or the other, but it is unfair if estate taxes takes a big bite out of middle-class folks.

I would personally prefer to have the exemption limits raised significantly and basis stepped up. States should also increase these limits and match federal - if they impose estate taxes. (another discussion) Exemptions should be raised on a periodic basis to compensate for inflation.

Like many of the folks here have said, the money has already been taxed in various ways, and it shouldn't be taxed again. Heirs should be able to get the money free and clear.

Quote from TRNT : It is interesting that you complain about my attributing something to you that you do not believe and then you say this: "In other words, just pay more and more until when? Your gut is satisfied? LOL!" Indeed LOL. At any rate, they are all paying less than their fair share. About time to make them pay their fair share.

And "fair share", again, is...what?

You didn't provide a measure or a limit, hence, it is reasonable to conclude that you have no objective way of determining what "fair share" might be. Hence, you're relying on instinct or your gut to tell when something is "fair".

So, what is "fair share"?

Inheritance should be treated like a gift, since that's basically what it is.

Quote from DJPlayer : They purposely cap those losses low so you can't truly benefit from the loss.

It's a loss. Why should one benefit from it?

Quote from highfloydelity : It's a loss. Why should one benefit from it?

if you make money from employment they tax in scaling manner.

If you lose your job, thus loss of income.. you get unemployment for up to 99 months.

if you make money from investments they tax you in a middle area, that Obama wants to treat more like income. They're looking at especially treating a dividend more like this.

If you lose your investment and (aka what the government wants to treat like income) you get nothing.

thus the reason it's taxed in at a much lower rate, so wonder why millionaires have a lower total tax, it's pretty simple. A majority of their income comes from risk a risk where no parachute is in place (unlike a standard paycheck). Yet at the same time, nobody wants the sale of their home (which is a capital gain) taxed at all. That's a little IRS loophole written in to protect only the middle class with minimum gains on the sale of their primary residence. The middle class doesn't want to high capital gains on their savings either (another loophole written in to protect middle class earners).

Do you have any idea how many losses can be written off on your taxes? I mean lord.. they even let you write off interest on homes etc.. But not true losses on investments? Regardless bottom line is capital gains should be taxed very very lightly because it's a risk and not guaranteed. The notion of treating it even close to income makes no sense. If you treat it like income, you must give adequate help for losses.

Quote from DJPlayer : Regardless bottom line is capital gains should be taxed very very lightly because it's a risk and not guaranteed.

My job (income) is not guaranteed either. My company can fire me at any moment they wish, for no reason whatsoever.

No one is forcing these people to risk their money. They know fully well that they could lose it any day. If you don't want the risk/reward then put your money into a CD.

Quote from highfloydelity : My job (income) is not guaranteed either. My company can fire me at any moment they wish, for no reason whatsoever. No one is forcing these people to risk their money. They know fully well that they could lose it any day. If you don't want the risk/reward then put your money into a CD.

so if they fire you, you cannot collect unemployment? You can even write off the expenses of looking for another job on your tax return!! even the paper used to print your resume, the gas to travel, the phone calls made etc.. IRS Pub 529.

Quote from DJPlayer : so if they fire you, you cannot collect unemployment? You can even write off the expenses of looking for another job on your tax return!! even the paper used to print your resume.

It depends on the reason for firing. But what's your point? Are people that invest excluded from unemployment benefits? Are they excluded from itemized deductions? No.

It's simple. If they lose money from the market then they don't pay taxes since there's no income. Then they can go on welfare (because they invested their life savings like a normal human being) and live the high life! Yea!

Quote from highfloydelity : It depends on the reason for firing. But what's your point? Are people that invest excluded from unemployment benefits? Are they excluded from itemized deductions? No. It's simple. If they lose money from the market then they don't pay taxes since there's no income. Then they can go on welfare (because they invested their life savings like a normal human being) and live the high life! Yea!

fire is do to your own negligence.. If they don't need to because the company doesn't wish to spend money on you.. you're going to get unemployment.

If I earn a million dollars and loss a million dollars in the stock market .. why do I pay max taxes on the million I earned at work.. why don't I qualify for government assistance. Bottom line yet again.. if you want to treat capital gains more like "regular income" you best give all the benefits that regular income will net you.

oh and if you invest in a CD currently you will actually lose money. CD yields currently are less than the increased yearly cost of living. So your money will actually depreciate in value.

Quote from Radeck : your proposal is certainly much better than what we have today, especially the deferred tax payment, which does indeed force many to sell the farm or small business instead of operating it, employing others, and providing for the family.

This is such an overblown talking point with little substance or truth to it. The vast majority of family farms have enough deductions to pay little or no estate tax. Further, with inexpensive remedial tax planning, a simple life insurance trust (trust purchases life insurance to statisfy tax liability) can prevent of any liquidity issues. Moreover, the tax code allows for delayed payments, again to prevent liquidity issues.

http://www.cbpp.org/cms/index.cfm...3#_ftnref3

Quote : It is useless against the uber-rich billionaires who can afford an army of lawyers and accountants to shield their wealth from such taxes, so it only ends up hurting the small business and farm owners.

This is completely untrue. Unless they give away those $$ to charity or dispose of that wealth while they are alive--there is no way to shield wealth from estate taxes. You can avoid PROBATE, but not Estate Tax. Probate is just the court process--and trusts achieve that. But out-of-probate assets are subject to estate tax.

Quote : moreover, I consider it the most immoral and abhorrent tax in the entire tax code. It taxes money and wealth that has ALREADY BEEN TAXED via income tax, capital gains tax, etc. Whatever land, farm, equipment, business, etc that was purchased and built, it was purchased with money that at one point or another was already taxed.

Every time money changes hands, it may be subject to tax.

Quote : It is immoral to tax people's income, some at close to 50% (when all federal, state and local taxes and "fees" are added up), and then after they die, tax ANOTHER 55% on what was left just because they died and want to pass their belonging on to their children, as humanity has done for thousands of years. A study commissioned by Wyoming Senator John Barrasso discovered that 526,421 family farms– about 25% of all farms in America – would be in serious jeopardy. [senate.gov] According to a statement just released by Sen. Barrasso:

Here are some stats from 2011: http://www.taxpolicycenter.org/nu...ocTypeID=7

The average tax rate on estate tax retursn in 2011 peaked at 16% for estates over 20MM. Estates around $5MM ended up with only 7%.

What that senator failed to include in that nice website full of pretty pictures is the impact of estate tax exemptions. This wipes out most of those "impacted" by the estate tax.

Frankly, i'd be comfortable with a 3.5-5MM exemption and a 35% rate. 50% is a little high, i'd treat it the same as the highest income tax level. I'd also continue the various means already helping to alleviate any liquidity concerns.