[Huge thank you to Ian Welsh for sending this post along. I've always wondered why people were so mean to Paris Hilton as to think that she ought to pay taxes...especially when all those pesky maidservants want a higher minimum wage. How gauche! Thank goodness those Senate Republicans are there to tell them to talk to the hand! (Okay, so Paris Hilton may not actually treat her staff that way -- it's not like I know her and we partay or anything, but the Senate Republicans sure do think that folks working minimum wage jobs can keep feeding their families on dirt poor wages. Nothing says "we're for family values" like forcing people to work three jobs to make ends meet. Classy.) Ian regularly blogs at The Agonist, and is worth a read and a good conversation over a beer or four. -- CHS]
So we’re back to estate tax repeal time again. Because, in the US, the rich aren’t rich enough…
From Income Inequality in the United States, 1913-1998, Pikketty and Saez) 
As things stand right now here’s the breakdown (from the tax policy center):
To summarize:
- The top 1% pays 94.8% of all estate taxes.
- The top 1/2 a percent pays 86.5% of all estate taxes
- The top .1% pays 51.3% of all estate taxes
Most people will never be effected by the Estate Tax. Ever. But you will be effected if it’s repealed.
The general estimate of the cost of repeal is a trillion dollars a decade. A hundred billion a year. The government is already bleeding money, in both deficit and substantial debt. Any tax repeal – whether estate, or capital gains, or corporate taxes, wille eventually have to be made up (yes, the creditors will eventually want their money back.) Estate tax repeal will be paid for at some point, by the middle class. And by your children.
TANSTAAFL – There ain’t no such thing as a free lunch. If you want a tax cut now, you pay for it later – with interest. If the rich want a tax cut now, the middle class will pay for it later, with interest.
But I want to say something more about the estate tax.
There is no fairer tax. If it were up to me, it wouldn’t just be reinstated to it’s full 1999 level, it’d be increased to tax even more from the richest DEAD PEOPLE.
That’s right – dead people. By all means, let’s call it the death tax.
I don’t know about you, but I don’t expect to take it with me. I don’t think my money goes with me wherever it is I go when my heart stops beating. I don’t think I need money after I’m dead.
And I don’t think my heirs need more than a few million dollar head start over everyone else. Sure, if I ever have kids, I’d want to give them a head start, but I don’t deceive myself that they did anything to, like, deserve it, other than with the "lucky sperm contest".
Taxation is a zero sum game. You can take the money from dead people – who don’t need it or you can take it from living people who do need it.
You can tax it from the kids of the rich, who did nothing to deserve it and who can probably make it on a few million from Daddy and Mummy; or you can tax it from people who actually earned it by the sweat of their own brow.
Oh, and those stories about people losing their family farms to the estate tax? Myth – no one has ever been able to find even one.
The estate tax, the death tax, is about letting people have more money when they’re alive, and only taxing it when they’re dead.
And that, to me, makes it better than every other tax in existence.
So forget estate tax repeal – let’s turn it around and increase the estate tax. Because dead people don’t need money, and living people do, and no matter how much rich people love their kids they didn’t do anything for the money, and a head start of a few million is enough for anyone.
[Yeah...but Paris clearly needs more bling. Whatevah. --CHS]
(Fabu partay photograph found at Jump Cuts. Nothing says money like a half-naked heiress and some guy in a mesh shirt and camo speedo thingy. Or not. Is that Pauly Shore?!? Isn’t his 15 minutes over yet?)
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!!!!!!
This picture just cracks me up every time I look at it. Mwee heee…
Fitz on. Fitz anyway. Fitz to you…
When I hear the “tax someone twice” nonsense, I want to scream. It’s not a tax on the person who died – it’s a tax on the living person who has just received a hefty piece of income. They haven’t paid ANY taxes on it at all!
Let’s not forget the role of inherited wealth in the downfall of European influence.
The British ruling class got lazy and stupid and the French aristocracy died a horrible death.
The Repiglicans want to take us there.
Christy, left you a real quick post at 8:07 on the last thread. Nothing major.
Peterr — sent you an e-mail.
The picture is priceless!
I still haven’t figured out why so many Republicans worry about this tax when the closest they will ever come to the wealth required to pay it is the Paris Hilton-induced wet dream they have each night.
Peterr,
“When I hear the “tax someone twice” nonsense, I want to scream. It’s not a tax on the person who died – it’s a tax on the living person who has just received a hefty piece of income. They haven’t paid ANY taxes on it at all!”
Just to expand on that. If Joe Smith bought $10,000 worth of Microsoft stock 20 years ago which is now worth $1M and then dies, no capitol gains tax was ever paid on the profit. So “taxed twice”? Not.
…when the closest they will ever come to the wealth required to pay it is the Paris Hilton-induced wet dream they have each night.
Well now there, in all its pathetic glory, it is. Kind of brings to mind ol’ Young King Tut.
I think the simplest way to equate the “estate tax” with real life is to tell people. If you won the lottery, YOU would be taxed. These people complaining about the “estate tax” won the genetic lottery and they don’t want to pay taxes.
Why let the richest of the rich get away without paying taxes on free money? It is a tax that YOU would have to pay?
Enough with the “Free ride Republicans” we should ALL have to help the nation while it is fighting Islamic terrorists.
-GSD
Eewwwwwwwwwwwww (on the pic). Nasty.
If I’m clear on this, Person A dies, his estate sells his portfolio, they must pay cap gains, yes? What is the estate tax rate? Is that in addition to the cap gains or instead of? Would the repeal mean they would pay no taxes on stuff you or I would have to?
Just found a good article -
http://www.findarticles.com/p/….._n16350894
War with Implacable Foes: What All Statesmen and Generals Need to Know by Brig.Gen. Huba Wass de Czege
So what does it say that this issue is such a high priority for the Republicans now, when they’re in danger of losing at least one house of Congress next near?
Ending involvement in Iraq? – no
Fixing the Gulf? – no
Funding Medicare? – no
Balancing the budget? – no
Fixing the trade deficit? – no
Dealing with energy/global warming? – no
Taking up the one issue with the greatest positive financial impact for very wealthy families? – Bingo!
And wingnuts continue to pledge their fealty. Whatever else, at least we can go to the poorhouse laughing.
I think Jane is much more sexy than Paris. If that isn’t a sexist thing to say?
Christy @ 8:18
back at you
I think that the problem is people are not getting the message that the estate tax doesn’t affect them. When this is reported on the TV news, they never mention the fact that only the top 1% has to even pay these taxes. If people only get their info from MSM, they won’t understand these things. The sound bytes from congress only say the republican talking points in favor of the repeal.
On the “losing the family farm” canard thingy.
My wife’s family are north Alabama dairy farmers. Huge operation, started from scratch by a great grandfather long ago. Still in family hands (my wife’s cousins actually run things now).
The business part is a frigging CORPORATION. Like, uh, hel-LO, if you’re too fucking STOOOOPID or cavalier to tend to standard asset management and protection, you deserve whatever tax bite you encounter.
rat bastahd says
June 23rd, 2006 at 8:25 am
If I understand the system correctly (which is arguable), I’ll have to pay capital gains taxes on the stocks and bonds I inherited from my mother last winter. But because her estate is below the threshold, estate tax doesn’t come into the picture. Taxed once, yes?
Personal opinion: if you have enough estate to leave millions to your children, put it into a trust so they can’t get more than just interest income for ten or so years. That way they learn about money before they get to spend all of it.
Cathy – you are exactly right on this. I’m not sure I remember an article or report that really outlined who would actually pay this tax.
rat bastahd @ 8:25
No, when person A dies, the estate does not automatically sell the portfolio. The inheritors receive in via a transfer. The first chuck is tax free, and everything above a certain point is then taxed at the estate tax rate.
To pay this tax, the inheritors might choose to sell some of the estate, but that’s their choice. That’s when any selling comes in.
Isn’t this all just political posturing on both sides of the aisle?
Anyone can avoid estate taxes by setting up a variety of “trusts” and “gifts.”
The Right gets to blather on about “cutting your taxes” and the left gets to scream “the rich are getting richer.”
It’s all nonsense when you think about it.
lina 21 -
Exactly.
Ian Welsh…
Is it possible to do a piece on just how NAFTA and CAFTA and the Bush tax cuts have affected our economy? And specifically the the men and woman laborers that actually make this country function economically. And perhaps how the DLC figures into all this?
With the working poor of this country just barely making ends meet, in this ‘wonderful’ economy that Bush touts unceasingly, we can all take comfort and pleasure with the fact, reported in yesterday’s NYT, that Ralph Reed, is not hurting. The former Christian Coalition leader and darling of the right-wing, had $5.3 million directed to him by Jack Abramoff. If Mr. Reed had any class, or a smidgen of shame, which he obviously doesn’t, he would withdraw as a candidate for Lt. Governor from Georgia.
And thanks to you, Mr. Welsh for helping to make the “dismal science” not so dreary. In this area, you and Paul Krugman do a terrific job.
We need this news. Clarity of differences of what they stand for, values, between the republicans and democrats could not be more starkly presented. But then they voted for Bush again, giving truth to the statement:
“Few people know their own good, or knowing it pursue”..
GSD—great way to explain it. I’ll remember that.
And who is the guy in the “I’m too sexy for my shirt” pic? Ewww is right!
Thanks. I realize they don’t have to sell, but if they do, then they get to do so tax-free? Up to what amount? If so, that’s fucked! You or I would have to pay the cap gains rate, yet a dead person’s family gets special privileges?
Lina @ 21 – it isn’t just that the left are screaming “the rich are getting richer”. I think most of us feel that it’s the timing of this “emergency”. How can this possibly be a priority for our Congress when so many other priorities face our country? I think that’s why the left is screaming…or at least a big part of the reason why.
OT – Transportation Secretary Norman Mineta,
the only Democrat in President Bush’s cabinet, has resigned.
http://thinkprogress.org/2006/…..an-mineta/
And who is the guy in the “I’m too sexy for my shirt” pic? Ewww is right!
I believe it’s Pauly Shore. Triple Ewww!
Well done, Ian.
Brings to mind Kevin Phillips (who was laying out this kind of thing almost two decades ago) and the great billmon (many tasty graph-thingies).
This is stuff that depressingly few Americans have a clue about (the “Republicans will cut spending” canard is historically and demonstrably one of the biggest piles of bullshit ever, and yet people repeat it like its gospel), and it’s central to the whoe debate about where the country is going, and why.
B. Muse -
And, don’t forget keeping Gays from marrying. CODE PINK priority.
OK, so here are some more facts from taxpolicycenter.org:
Doesn’t say right at that spot how the e.t. works with other taxes, but there’s a wealth of links, as it were. I presume the 46 percent rate applies only after the first $2m;->
If there was a Victor’s Secret catalog, that mesh tshirt would be in it.
Tom Delay said the most important thing you must do in time of war is to cut taxes.
In the 28 years I have been working in the field of estates and trusts, I have done more than my share of estate tax returns, and I have never seen a business of family farm have to be liquidated to pay taxes. As cold-hearted as the IRS can be, and seem, the regs do have a mechanism for specially valuing farm property, and for electing to pay the tax over a 10-year time period. I have seen that happen less than half a dozen times.
The rich have long had avenues to protect and preserve the bulk of their wealth. Irrevocable trusts that hold large life insurance policies that provide liquidity for estate taxes are quite common. Transfer of assets and wealth into charitable annuity or remainder trusts also mitigate the tax bite.
There’s always the argument that the assets were purchased with funds that have already been subject to income tax, and therefore, it’s wholly unfair to tax those assets at death. But consider that those assets are re-valued as of date of death. All of the growth and gain in those assets escapes capital gains taxes in the hands of the beneficiaries, unless they sell the assets for more than the date of death value, and then it is the difference between the sale proceeds and the date of death value – not the original cost. And this is true wheter you have an estate of millions, or a couple hundred thousand.
Yes the estate tax is levied at a considerably higher rate than the capital gains tax, but at present, the first 2 million in assets is exempt, and if there is a surviving spouse, and there is a properly drafted Will, there generally is no tax on the estate of the first spouse to die.
If the 2 million that is exempt from tax is put into a trust, that trust remains exempt from tax no matter how large it grows to be over time.
The bottom line is that the propaganda the GOP is dispersing is an insult to the intelligence of the average American, for whom estate tax will never be an issue.
For the GOP to pass estate tax relief with enthusiasm, but fail to raise the minimum wage for people who want to the chance to pull themselves up the economic ladder is unconscionable.
Mineta was always front and center at Bushco pressers along with Rod Page. All to make Bush look like Mr. Multi-Cultural.
It’s about time that Mineta left.
-GSD
Is that Pauly Shore? Ewww. My main problem with the estate tax is I plan to make myself a huge burial mound like Emperor Chin complete with terra cotta army so I can “take it with me” and i will have to make my burial chamber smaller if I get taxed on my gazillions of dollars.
A friend of mine likes to tell stories she learned from her grandmother. Here’s one of them:
The chart with the wavy line is simple. If we could get it on teevee and explain it to the rubes in a simple way, we could stop the right wing bs on the death tax. The rubes are now really starting to feel the pressure of the cost of living, job loss, income disparity.
Income disparity is something the rubes can relate to. The rethugs are lying like hell to them. But Limbaugh, Hannity and O’Reilly and all the rethugs have had them repeating their talking points such as:
“Well if they earned it, they oughta be able to keep it and not give it to the gubmint.”
“If I win the lottery or I get rich someday, I’d wanna keep my money, too.”
The chart demonstrates how progressive taxation worked to help regular people. And how the rethugs have been changing it back their way again.
The English created dynasties by passing on their wealth and we are recreating dynasties in the US by the right wing’s constant attack on the estate tax. The estate tax was designed to stop dynasties (like the Bush Dynasty) from forming in the US.
“Dynasties” is probably a word that rednecks woundn’t like.
IIRC, Paris Hilton, and her sister, each have a net worth of 20 million dollars.
prostratedragon 32 -
Well, it’d have to be. You got an estate of $1,999.999.99, no problem, but add two cents and they’ll take nearly HALF the total?
Rethugs HEART Paris and Anna Nicole!!!
p-dragon @#9 -
thanks for the “compared to what” sample!
hangin’ on with a push and shove…
Oh, and prostrate dragon:
“Tryin’ to make it real? compared to what!?”
Bobby G – yeah…because you know gays and lesbians marrying is a real threat to our national security.
I can’t wait to send these asshats packing.
Yes, unfortunately for everyone involved(including the viewers), that is Pauly Shore.
sticky beat me to it…
Les and Eddie…MAN, that was some kick-ass shit on that album!
most appropriately to this thread: Possession is the motivation/hangin’ up the whole damn nation
One point — we need to stop using tax cut language as much as possible.
Tax cuts are a Republican frame, and we need to stop playing into it.
This GOP Crusade is the Welfare for Paris Hilton Act.
Do you want your hard earned tax dollars subsidizing Welfare for Paris Hilton and Bill Gates?
If I can’t find that in my CD collection, I gotta Amazon that mofo.
“The president he’s got his war
people don’t know just what it’s for
Don’t gotta have no rhyme or reason
Half of one doubt, they call it treason
We’re chicken feathers, all the way out one nut
God Dammit!!
Thrin’ to make it real? Compared to what?!!”
Looks more like Hairless Hilton to me.
-GSD
ck,
That’s right. It’s welfare for the rich.
Hardworking people must work harder to pay welfare for Paris Hilton and Bill Gates.
ck @ 47
Good idea. I’ve read other suggestions about how to phrase the talking points. I sadly haven’t been keeping track of them.
Last night I saw a great post linked from Talkingpointsmemo about the latest Iraq vote in the Senate. Basically, according to Josh, we need to push the idea that the Republicans voted to for no change instead of letting them sell it as “staying the course”. They voted for “more of the same” or “no progress”.
Nicely done, Ian. This is one of my favorite subjects, since my masters thesis was done on income inequality many years ago. You can clearly see the tail end of the gilded age before the depression, and then the redistribution and relative equality during the 40’s through the 60’s, and then rising inequality after that, looking much like the onset of the gilded age.
Here is a link by a sociology professor at UC Santa Cruz (I believe) on power structures in America.
http://sociology.ucsc.edu/whor…..index.html
“Thrin” (what!?) = “Tryin’”. Oy.
Apologies to Les McCann and Eddie Harris!
Wow, just got swallowed up. Anyway, 1. Props to all the Compared to What shout-outs. Heard it last night on our local radio, where it never went out of style. 2. BobbyG, I think the tax doesn’t start until after the $2m level, so Paris would pay her first 46 cents only at $2,000,001, and I guess the raw tax without any shelters on her $20m would be 46 percent of $18m.
ck – sorry I didn’t provide a link. Here’s what Josh Marshall says about how we should be talking about the war.
What Republicans want is More of the Same.
That’s the motto. More of the Same.
The president says he wants to stay in Iraq for at least three more years. Virtually every Republican agrees. Three more years. They approve the course the president has set.
They’re for More of the Same. They don’t have a plan. They just want to stay indefinitely.
http://www.talkingpointsmemo.com/
I used to work with it a lot, and I have to say that I do think that the Estate tax system could use some reform – but definitely not repeal. The way the rates are structured is a shock to people when they first see them and the manner in which death transfers are handled is inconsistent with gift transfers on the per person front, etc. etc. Basis issues also need to be addressed.
I like GSD’s analogy, but it even goes the next stepp. It’s not just getting the lottery at no tax, it’s having someone else win the lottery, invest in stock, hold it until it has a good sized gain, then transfer it to you without anyone paying on that gain.
Income generated by wealth is already very tax-favored over income generated by blood, sweat and tears.
In any event, I do think there could be changes to make the tax look more like what people are used to seeing and dealing with; but the real issue is that so few will ever have to pay it and yet the PR machine has so many revved up over it.
The estate tax has also been a strong motivator for charitably inclined individuals. I know that there was a lot of concern at one point about the impact on this, but I quit following the whole issue a few years back and I don’t know what the actual impact has been.
AAAAAAAAAAAAAAAAAHH!!
My eyes!
Speaking of our local radio station, former congresswoman Lynn Rivers is coming on now (after the news break) with Bruce Fein to talk about warrantless spying. It’s radio station WEMU, at wemu.org, and they stream in a few formats.
Heard it last night on our local radio, where it never went out of style.
You’re lucky. The bigger, more strait-laced NPR station here in the ‘burgh is too wimpy to play it…mebbe that’s why they’re struggling to make ends meet lately, while the more freewheeling outfit across the river is going great guns.
I don’t know much about how all of this actually works, but isn’t it safe to assume that a primary reason the R’s spend so much time trying to repeal the estate tax is not so much to protect Paris Hilton’s inheritance, as it is to further dry up the revenue stream, which the R’s will then use as campaign fodder when the Democrats are forced, once again, to clean up the financial mess left by the R’s, by possibly *gasp* raising taxes?
GSD #49:
My body doesn’t know it should convulse in laughter or have the dry heaves.
Everybody’s forgetting one big thing about the estate tax. Most smart millionaires never owe taxes when they die anyway thanks to the wonder of family trusts.
When a trustee dies, all that happens is that a new trustee is appointed (usually a spouse or children). No taxes are paid and no probate is involved.
So when we look at it this way, repealing the estate tax only protects the dumbest of the rich who weren’t smart enough to set up a family trust. Who wants to protect DUMB millionaires, let alone millionaires?
If the estate tax is repealed, it will be replaced by a capital gains tax. Assets will NOT be revalued at death (see Anne 37) but will continue their old “carryover” basis as if they had been lifetime gifts. In Cozumel’s Microsoft example, above, the owner’s basis of $10,000 for the $1M current value of stock would carry over to the heirs. So if the heir sells all, he or she owes capital gains tax @ 15% on gain of $990,000, or $148,500. That same $1,000,000 would pass estate tax free today if it were the only asset in the estate.
So – if the heir has enough $ already to be able to get by on dividends from the Microsoft stock, he or she has little incentive to sell and incur the tax. Lower income heirs will be more likely to have to sell and incur the tax. Nice, huh?
BobbyG,
The first 2 million in a deceased estate is given out completely tax free. It is the amount over that point that is taxed. If your estate is worth 2,100,000, you’d pay death tax only on the 100,000, nothing else.
The Californians are wanting to do away with this tax because of real estate prices, or so I’ve been told.
Now there’s a new use for our tax structure—preserving the fitness of our national millionaire stock.
plano tex@50
to be fair, bill gates does not plan to leave his kids much
He *does* plan to administrate the distribution himself through his foundation, which in my book is OK
The repeal of the Estate tax has been a long term goal of the very few whose fortunes are actually impacted.
And , no we are not talking about $10 or even $100 million fortunes here. This lobby has been active for years, and looking to see the millions invested over the years returned in this legislation.
Why should income from work be taxed at a higher rate than unearned income?
That this isn’t even part of the debate is evidence of just how much the rich have bought and paid for our political discourse.
We should reward work and tax wealth. We should confiscate Paris Hilton’s booty while she’s still skankin’ alive, UNLESS — she invests here wealth in job creation.
Wealth and unearned income should be taxed at a higher rate than earned income, unless it is re-invested in creating jobs that pay a living wage.
Hey, John Edwards — the son of mill worker should understand that it is wrong to have a tax system that rewards the mill owners for shipping jobs overseas.
Paulie Shore -”Isn’t his 15 minutes over yet?” Oh, so over. Thank goddess.
Ian, you cut snark with the best of them.
More ammunition for us. Thanks.
As it was explained to me by a colleague in our accounting department, on transfer a new basis is set for capital gains taxes. That is, capital gains are computed on appreciation from the date of transfer, not the date of purchase. So if you die and leave the kids a stock portfolio worth $100M, they pay capital gains on the basis of the change of value in the portfolio, if and when they sell. Dividends from the portfolio are taxed at the applicable rate for income. It used to be at the rate for ordinary inome, but Commander Codpiece and his Rubberstamp Congress have messed with that so much that I’m not sure any more.
With regard to double taxation, so what? We double tax all the time. I bought a cup of coffee at the campus coffee-haus this morning. I paid for it from my income, which I pay income taxes on. I paid sales tax on that cup of decaf. That’s double taxation.
I bought my Honda Accord with money derived from my income (which was taxed), and I have to pay taxes on that thing every year. That’s double taxation.
Mark Kleiman at The Reality-Based Community suggested that we allow the GOoPers to win this one, but then institute an inheritance tax. Why should anyone have to pay taxes on income from my labor while the result of the lucky spermatozoon contest is excused?
Pretty clearly Bill Shakespeare was absolutely right in Romeo and Juliet when he had Juliet say:
Names do matter — changing the identification from estate tax to death tax was a stroke of genius. Convincing the majority of ordinary Americans that they would benefit from eliminating estate taxes was a priceless act of mendacity.
So, perhaps we should concede this one to Luntz and Company, but as the price of compromise establish an inheritance tax for transfers over a given size.
BC
The Repugs are going down grabbing, to no one’s surprise. As ever, it’s the party on the short-sighted vs. the party of the long-sighted. I don’t know from economics, but I do know what I’ve watched happen in this country over the last 14 years.
In the Clinton era, all did better precisely because all could do better. As John Edwards pointed out yesterday, the Goopers forever focus on exactly the wrong end of the economy, when actually
“The truth is that both sides should recognize that our whole economic future depends on providing upward mobility for everybody.”
High time that “Kansas” — and every other state — stopped having something the matter with it, woke up, and put a stop to grabbiness that will defeat not only itself but all the rest of us.
What’s so hard to understand about that?
iowa christine: I’ve heard that, too, but in connection with NYC real property owners. Also people with huge IRAs, which can get clobbered with an ugly combination of estate and income taxes if not planned for properly. The thing is, neither is hard to protect under today’s tax laws. There’s a special kind of trust for transferring homes at reduced value during one’s lifetime, and as Anne mentioned above, you can use a life insurance trust to protect other assets like the IRA.
The NY Times has two good editorials today on GOP priorities: comforting the comfortable (getting rid of the estate tax) and afflicting the afflicted (killing increase in minimum wage). Worth reading. For all their rightward tilt, these are hard-hitting reality-based editorials.
bee – and if they further tax advantage or tax exempt dividend income bc that has “already been taxed” too . . .
The Republican tax approach is very pro- “keep wealth with the wealthy” with a shift of tax burdens to the middle and lower income and especially to earned/labor income. Add on a secondary layer of massive lobbying/corporate welfare to take that tax money and hand it over to Hallburtons, MZMs etc with no oversight and no real asset builiding approach for the country (no hard assets, no education investment, no support of social welfare structure, etc.) and the lower and middle income earners really are supporting the system in an almost feudalistic fashion.
Then as the $$ go to corporate vehicles or NGOs that are set up for money laundering or tax evasion, the cycle begins again. Holders of ownership rights in those corporations get tax advantaged or tax exempted income streams, tax advantaged gains treatment, death transfers exempted from tax, etc. etc.
REPUBLICANS TAX WORKING PEOPLE — DEMOCRATS ONLY TAX THE DEAD ONES
Here comes one more big fat pitch right down the middle of the plate for the Democrats, IF they choose to swing at it. This is another huge example of Republican policy malpractice. It is so dumb and so irresponsible that it is just plain sad to see liberals and Democrats (again) on the defensive when they should be hitting the Republicans over their fat corrupt heads with this ridiculous idea.
Every Democrat should be making the point and attacking Bush and his Republican Congress for continually passing excessive tax burdens and increasing debt burdens on the working class while at the same time subsidizing the wealth of dead people.
WHY DO THE REPUBLICANS LOVE DEAD PEOPLE AND HATE WORKING PEOPLE?!!!
Is that too hard a fucking question for the Democrats to ask? Message for our Democratic leaders: REPUBLICANS TAX WORKING PEOPLE, DEMOCRATS TAX DEAD PEOPLE. — Hello folks! It really is that simple and has the added benefit of being true.
Until there is a fair and progressive tax system in place, it is immoral to consider more subsidies for the leisure class. Until the Republican Congress stops imposing punishing taxes on people’s labor, and until there is relief from the GOP unjustly passing their profligate and irresponsible debt burden onto working people and their children, it is immoral to consider more subsidies for the leisure class via estate tax cuts.
Cutting estate taxes is a sick idea. Democrats should be actively SUPPORTING estate taxes and PROTECTING living, breathing working people from paying for estate subsidies.
slainte,
cl
Religion is like Sodomy: Both may be harmless when practiced between consenting adults but neither should be imposed upon children.
Looks like the Dem’s may have won the war debate. The Iraqi proposed plan sounds like the Murtha/Kerry/Dem strategy much more than the Bush/Rove/Cheney/PermanantBasesforpermanantoccupationandendlessUStroopdeathstrategy.
http://www.dailykos.com/storyo…..105332/802
-GSD
Bargain Countertenor at 9:17 am –
That’s why we need to use the Welfare for the Rich or the Welfare for Millionaires and Billionaires construct.
Welfare as a word has been totally demonized by the Right Wing. What to do? Hang it around their necks!
Estate tax and death tax and inheritance tax all play into the right wing frame —
Call it Wing Nut Welfare instead.
ck says
June 23rd, 2006 at 9:16 am
Why should income from work be taxed at a higher rate than unearned income?
_______
Oh, if we don’t preferentially INCENTIVIZE the investor class, they won’t invest, which will render us all in poverty. Bwwwaaaaahhhhh!!!!
Briefly OT:
Mineta’s stepping down, eh? Hmmm, maybe that’s where they’ll stash Joe-nertia. He doesn’t know jack squat about the subject-matter, but he’s loyal as all get-out.
Perfect.
Mary – good point.
The more money the family has, the less likely the assets will be taxed, and when they are taxed, the rate will be favorable.
OfT: “Forward Together, or nowhere fast?”
By Swopa
Jun 23 2006 – 6:41am
“Last week, the new mayor of the Green Zone prime minister of Iraq, Nouri al-Maliki, announced the third annual attempt to clamp down on insurgent violence in Baghdad, through an operation given the perversely happy-talk name of Forward Together (which probably came as unwelcome news to these folks)….”
ck at 9:23
Wingnut Welfare works as the soundbite construct, but you’ve got to call in something semi-descriptive in serious discussions.
So call it an inheritance tax, change responsibility for payment from the estate to the heir and be done with it.
BC
BobbyG –
That’s my point –
The tax system is incentivized for Paris Hilton to invest in bling and boy toys . . .
And if you don’t sell bling and aren’t a boy-toy-in-waiting, you are Shit Outta Luck . . .
Forward Together?!
I think I detect a certain familar linguistic clumsiness. Idiomatic Arabic?
Plano tex @ 50
That’s right. It’s welfare for the rich.
Hardworking people must work harder to pay welfare for Paris Hilton and Bill Gates.
The term Wealthfare has had some coinage in the past.
Maybe it can be re-invigorated as a brand for this issue.
Everybody’s forgetting one big thing about the estate tax. Most smart millionaires never owe taxes when they die anyway thanks to the wonder of family trusts.
When a trustee dies, all that happens is that a new trustee is appointed (usually a spouse or children). No taxes are paid and no probate is involved
That is often the case for a properly drafted family trust/llc /ltd pship, but those are a bit more complicated than a standard living trust.
It does give you a way to get 30-40% discounts of the value of what your children receive (due to minority interest discounts) etc.
[rant]Unfortunately there are a bunch of living trust outfits that set up living trusts (not family trusts) and tout similar benefits, when a living trust does not escape estate tax any more than if the funds were not in trust. Plus they fail to even assist their clients with actually making the living trust transfers, so they don’t really even give them the “benefit” of escaping probate and most of them end up spending about the same in fees to figure out what to do with their trusts.
Sorry – but they are a pet peeve of mine. People prey on the elderly with living trust sales jobs and it always makes me angry. They are a good and appropriate vehicle for some people, some of the time, and a waste of money & mishandled for many others[/end rant]
The tax system is incentivized for Paris Hilton to invest in bling and boy toys . . .
And if you don’t sell bling and aren’t a boy-toy-in-waiting, you are Shit Outta Luck . . .
Or not. Maybe it all depends on what you call “wealth.”
Paris Hilton has something that attracts Pauly Shore.
Jane Hamsher has something that attracts over 700 friends when she’s down.
Who’s wealthier?
Republicans moan and Republicans bitch
Our rich are too poor
And our poor are too rich
Mary – the charitable organizations were very concerned about what repeal would mean, what with charitable annuity and remainder trusts being popular vehicles for giving descendants lifetime use of the funds with remainder going to charity at some point.
Total repeal would also necessitate the return of carry-over basis, something some of us witnessed in the late 70’s. Essentially, it would require the beneficiaries to “carry-over” the decedent’s original cost basis as the basis for gain or loss. This would have a pretty significant effect on the beneficiaries, both from an income tax standpoint, and from a record-keeping perspective. Trust me when I tell you it isn’t a lot of fun to have to try to unearth the cost basis of an asset that was purchased 10 or 15 or 25 or 40 years ago!
It definitely would be better not to have estate tax revert to pre-reform levels, which would tax estates over $675,000. Raising the exemption amount to the 3 million or 5 million level would not be unreasonable, and would still preserve the charitable benefit, etc.
Good tax planning can avoid many of the pitfalls that are still out there for people who do not plan ahead. Bad legislation should not be a substitute for responsible management of one’s wealth.
Oh, and appointment of trustees has no effect – it never has – on triggering any kind of taxable event.
Most people do not realize that an estate is an income tax entity all by itself. It reports and pays income tax – at much higher rates than an individual would – unless the entire estate is distributed within the estate’s fiscal year, in which case the net income passes out to the beneficiaries.
There’s a lot of detail I could go into, much of it kind of “inside baseball,” but it’s clear that there are a lot of misconceptions about how all of this works, and the administration isn’t doing any kind of job at all educating the public about it.
OMG!
Coulter endorses Lieberman??!!
Oh, thank god! We’ve finally found a use for her!
http://thinkprogress.org/2006/…..lieberman/
lotus @ 9:36
Amen.
I can’t speak for Jane, but I know for-sure that I wouldn’t trade my friends and family for Paris Hilton’s wealth and whatever-it-is-she’s-got-in-lieu-of-friends.
But it would be nice if the tax structure required PH to pay in accordance with her means, rather than giving her a walk.
BC
I gotta laugh. I work with this young dude (mid-30’s) who never passes up an opportunity to spout all this “conservative” “self-reliance” and investment crapola in the office. He’s in stock & bond markets, and “owns” about a dozen rental properties, here in Vegas, down in AZ, FL, and up in UT. He’s got about $3.5 million in mortgage debt, and is in a chronic negative cash flow circumstance of about $600 a month on them total. He shrugs it off, likens it to a car payment.
Meanwhile he bides his time in this relatively slack Medicare contractor non-profit company gig to cover his nut.
If there IS a real estate bubble burst anytime soon, he’s toast. Maybe he’ll cash out big and make it fully to the Investor Class his omnipresent dream. Maybe. Maybe he’ll go BK (more likely to me).
In the meantime, spare me the Self Reliance crap, dude.
lotus #83,
BRAVO!
Thanks, y’all, but I should have added/emphasized “true friends.”
But if I win the lottery, there will still be boy-toys around, won’t there? *g*
Double taxation – here’s my response. A. Pass through taxation – do you REALLY want that (g) and B. Limited liability repeal. Corporations get something that no earning entity got at common law. That something is called limited liability. If you don’t want double taxation, by all means do away with the concomittant limited liability.
SO when the airline can’t meet it’s payroll – all its investors have to ante up. Especially in the common law fashion of allowing a creditor to go after any “partner” so that the wealthy investors are first in line vis a vis the creditors. ;-)
OTOH, with the attacks on civil suits, they may not really need to worry about limited liability that much anymore. *g*
Still, we’d have a bit of a different corporate environment if all investors had to worry about picking up the tab from their own pocket if things were run sloppily.
Jane,
I haven’t posted for a long time due to an extremely demanding work schedule. But I do try to check in several times a week.
In any event, I just saw Christie’s post about your mom and wanted to take the time to send you my deepest sympathy for your loss. Words cannot convey the terrible pain of losing a loved one – and you can’t short circuit the greiving process – you just have to feel the pain and go with it. But time does heal.
Anne at 9:37
Thanks for the brief clarifications, it’s always good to hear from an expert.
I agree that Commander Codpiece and Republican Rubber Stampers aren’t doing any of the education on the issue, but why should they? Their strategy is a nominalist one: change the name to something offensive. If you teach people what things are (as opposed to what they’re called), you defeat the strategy.
Why should they? Well, there are the moral and ethical issues involved, but we already know where the GOoPers stand on those sorts of things.
BC
make that…”grieving”
GSD 10 and Peterr 4
Fantastic comments….great framing simple,concise and viscerally appealing.
Thanks
Mike G at 9:36 am –
I LOVE IT!!!
Republicans moan and Republicans bitch
Our rich are too poor
And our poor are too rich
Pitch Perfect Poetry!!!
Meanwhile… ‘The dumbshow must go on’
;0)
Eeew! Pauly Shore (I have a buddy who’s a professional comedian, the pros hate Pauly!) touching Paris Hilton in a lascivious manner?!?! Yuck!
Lotus…83
A bit sentimental, may I opine? And I like it. We are not judged by what we have. But how well we do without. I think.
Some nameless genius on Salon’s old, free TableTalk said it best, and made the ghost of Theodore Geisel smile somweheres too;
Republicans moan and Republicans bitch:
‘Our rich are too poor, and our poor are too rich!’
Mary – second you on the trust mills that take advantage of the elderly. Have seen a couple of real disasters on that front. Feel the same way about internet-based legal document sites that allow you to draft a Will or a trust for a couple hundred bucks. As a paralegal, I could – but don’t – do any drafting myself (I think it’s pretty boring), but a couple hundred bucks would get someone less than an hour of my time (would that my billable rate went into my pocket *g*).
Yes, OK kiddo, downright gloppy with sentiment, that was. But that’s the mode I’m still in today. I’ll snap out of it.
I’ve heard occasional news stories that mention who pays the estate tax, but it’s always in terms of “the top x%,” and unfortunately, Democratic officials generally talk in the same terms, which is one reason it doesn’t work. (Same for talk about who benefits from the other Bush tax cuts.) People don’t know what level the top 1% of income is. Heck, I don’t have more than the vaguest idea. For this to have any impact at all, it has to be in terms of fairness and “people who inherit X million dollars,” as in:
“The estate tax requires people who inherit $20 million dollars to pay $X thousand in taxes. Nobody likes to pay taxes, but doesn’t that seem fair?”
OT -Anne – I knew that charities were worried. I used to do a lot of estate planning but the last few years I haven’t. My “niece in law” does fundraising and gifts work for a children’s hospital though, and although she has only done it for a short time, they seem to be doing very well with estate gifts and even still some CRTs. So I wondered if it was more worry and less real effect, or if the real effects were being realized.
I’ve been through the basis battles too. Those are some of the days when EP lawyers love paralegals the most. *g*
OT news on Raw Story:
DEMOCRATS TO HOLD IRAQ INTELLIGENCE HEARINGS: POWELL’S EX-CHIEF OF STAFF,
TOP EX-CIA TO TESTIFY… MORE BY 1 ET…
——————————————————————————–
BBC questions gravity of Sears Tower plot: ‘A lot of talk’
“You can have my money when you pry it from my cold dead hands.”
OK. You’ve got a deal.
There should be no estate tax. If someone wants to buried, entombed or cremated with his or her assets that should be allowed.
There should be inheritance taxes. In the first place if you receive gifts (cash or other value) from a living person over, I think, $10,000 in a given year it is taxable income. Monies drawn from a trust are taxed.
My proposal is that anyone should be allowed to recieve $5 million in inheritance tax free in a lifetime. The lifetime inheritance tax rate should be 50% on the next ten million dollars and confiscatory on any money inherited beyond $15 million dollars.
The justification for this should be stated explicitedly and it is two fold. 1) As mentioned up thread there is no reason unearned income should be taxed at a rate less than earned income or investment income 2) Huge fortunes transferred intergenerationally wreck democracy.
Don’t tax the dead, tax the living.
I wrote my senator and told him in no uncertain terms that not only should we not repeal the estate tax, we should raise it! To whom much is given, much is expected in return.
For any left behind, new thread.
CMike – not exactly. Gifts are not taxable as income to the recipient at any amount. Currently, an individual can give $12,000 per year to an unlimited number of individuals without reducing the lifetime credit, or being required to file a gift tax return.
Gifts of property retain the same basis in the hands of the recipient as they did in the hands of the donor. If your aunt gives you stock currently valued at $12,000, but which she bought for 6,000, your basis in the stock is $6,000. If you sell it, you will pay capital gains on the difference between that basis and the sale proceeds.
Inheritance tax and estate tax are two different things, with inheritance tax generally levied by states as a percentage of what a beneficiary receives, not what the decedent owned at death.
Many states have repealed the inheritance tax, which has been a negative revenue issue for these states. I won’t go into a discussion about the “State Death Tax Credit” as it’s just too hard to do in this forum. Suffice it to say that estates used to get a credit against fed. estate tax for state estate or inheritance taxes paid. Many states have
de-coupled” from this, and require estates to pay in state estate tax the amount of the credit that would have been given under the old rules. It’s a gigantic pain in the butt, but states could not afford to lose all the revenue.
Taxable income received from trusts is not necessarily the same as the actual distributions received, as it is net income which is taxed. Distributions which exceed income are considered to be principal and are not subject to income tax.
I’m sure eyes are glazing over, but I think it’s important for people to be able to judge whether what they are hearing from politicians is an accurate assessment of what really happens and who is and is not subject to tax, etc.
Caoimhin Laochdha at 74: A-f*ucking-men. Another prime example of the Dems ceding the battle by letting the Repubs frame it.
Anne & Mary,
Thank you for your indepth discussion today about the estate tax. I understood the “who” after the pres. debates of 2004, but not the how and why. One other point seems clear to me (forgive me if you have already covered it by the time I post this)—that, if you have the money, you hire someone capable to watch and shelter it, and if you don’t have it, you do the best you can on your own. Many hardworking Americans will be taxed their whole lives at a higher rate than the Hiltons, no?
Regarding “living trusts”—my father has one, and you are making me very nervous about it. Any easy way to determine if it is a good thing or not?
I don’t know Lina, but this comment should not be left hanging without a retort – even if it is a troll.
Lina @ 21 said:
“Isn’t this all just political posturing on both sides of the aisle?
Anyone can avoid estate taxes by setting up a variety of “trusts” and “gifts.”
The Right gets to blather on about “cutting your taxes” and the left gets to scream “the rich are getting richer.”
It’s all nonsense when you think about it.”
Response: This is not “all nonsense”. People cannot use “trusts” and “gifts” to get around the estate tax. Just look at the tax revenues that are raised by it. If it was “no big deal:, there would not be revenues. These devices can help, but the Republicans are being ferociously lobbied by a handful of very wealthy families for a reason – because the estate tax does bite them.
Isn’t that Arnold Horshack?
If you really want a snapshot of the impetus behind the movement to repeal the estate tax, Google “estate tax 18 families”.
Anne @ 113 thanks for the correction.
CMike – happy to oblige – it makes me feel less guilty for doing this when I should be working!
But… what would Jefferson say? As I remember he said confiscatory taxation of all large estates at death above a minimum value, with marginal tax rates rising geometrically with value above minimum. Distribute money for public schools, parks, improvements and whatnot. He said it in some letters, I think. I’ll look for the letter.
No rights violation, since, as Jefferson said, the dead are nothing on this earth, and have no rights, and the heirs did not earn the wealth themselves, hence have no natural right to it. Natural human feelings, he said, dictate that families should be able to pass some wealth to progeny, but no one has right to get rich off of parents’ or ancestors’ wealth.
That is what I remember. So estate tax is the American Way, which I hope all good Democrats will remember at the next Jefferson Day Dinner.
Cool graphics on social mobility from NYT
http://www.nytimes.com/package…..ex_03.html
via
http://en.wikipedia.org/wiki/Social_mobility
(which is sloppy article, but info seems OK)
Compare poverty in income inequality across countries (download the excel fine that appears in browser and look around)
http://www.oecd.org/dataoecd/12/4/35445297.xls
Sorry, trying to link to that xls file out of the comments does funny things, at least on my computer. If you want to compare US inequality and poverty to other major developed countries, go to
http://www.oecd.org/topicstats….._1,00.html
and click on
Selection of figures from OECD Questionnaire on Income Distribution and Poverty(xls,162Kb,English)
Democrats should be harping on the fact that republican support for estate tax repeal/reduction exposes all republican tax policy for the sham that it is. After all what could be a better incentive for the uber wealthy to spend money and stimulate the economy (i.e., demonstrate actual trickle-down) than the incentive of avoiding the estate tax. Hell, if they spent enough of their hard earned [cough] accumulated wealth before dying they could presto-magic avoid the tax altogether.
If republicans really believed in stimulating the economy through tax policy, they should be clamoring to INCREASE the estate tax to cover more people and stimulate the economy all the more. But with republicans salivating over elimination/reduction of the estate tax (in this time of [metaphorical] war and massive budget deficits), republican tax policy is revealed as true self: nothing more than their incessant, obscene effort to lower the tax burden of the extremely wealthy by increasing the nation’s tax burden to hard working Americans.
.
Lay off Pauly Shore. Pauly Shore is Dead was a pretty funny movie.
“What do you wanna be, the weasel or Pauly?”
“The Weasel.”
“No dumbshit, you wanna be Pauly!”
Sorry I wasn’t here when the thread was live:
Lina at 21: in fact, if you set things up correctly you won’t lose much money from the estate. However the government will still get its money, as a rule, and ’setting things up right’ costs money.
A hundred billion a year isn’t peanuts. If estates don’t pay it, you will.
Mary – the effect was estimated in one article I saw, as about halving bequests to charitable foundations. I don’t recall the actual estimate, but it was huge, in the billions.
CK @ 67 – I agree, taxing unearned income at lower rates than earned income is extremely unfair. It also leads to some interesting distortions in the economy.
Anne and Mary – thanks for explaining estate tax and other tax issues in details.
All – thanks for yet another excellent thread. I love the FDL commenters and I’m sad that I missed this conversation real time.
Yes, we are sheep if we let this happen. Baaaa.
We have an aristocracy here that makes that of England in 1776 look middle class.
I’ve had a feeling a long time that significant numbers of Americans feel less that they’re overtaxed and more that they’re underserved by the government that collects those taxes. Periodically this view is reaffirmed by polls which indicate people would tax themselves a given amount of money if it would buy them cleaner air, more efficient public transportation or better health care, and of course this is the principle behind the passage of any local bond issue. So here’s a proposition in two and one/half parts, with details to be worked out later:
1: Don’t eliminate the estate tax. Anyone who is rich enough to qualify paying for it should be mature enough not to whine about having to pay it.
2: Don’t eliminate earmarking, BUT
2.5: CHANGE who gets to do the earmarking by introducing (fanfare) PEOPLE’S EARMARKS!. Suppose you were able to direct X% (10%? 20%?) of your taxes to any existing program in the Federal Budget? How would you apportion your contribution? Wouldn’t it be novel if our public servants tried convince us to direct our money in the direction of their favorite projects rather than the reverse? There’s precedent in the provision for us to tick off a contribution to political campagning without having that contribution raise our taxes or lower our refunds. Suppose one could do the same thing with aid to education, funding for rebuilding following natural disasters, medical research or anything else the government invests in. Yes, this would include military spending, the works. Congress could appropriate only say 90% of the authorized funds for any program, and would have to convince the public that the remainder of the program was worth funding or live with the consequences. If the public thought the program was more worthy of investment than the Congress did, sobeit. The administrators of the program could enrich and amplify it to meet the public’s will.
I can think of no better way to prove what “the people want rather than what the special interests want than to let the people vote with their tax dollars.
If I could dedicate 10% of my taxes to any project I wanted, I suspect I’d divide it between restoring grants and loan subsidies for higher education, mass transit, and election reform. What about the rest of you?
Maybe we could have a thread about this sometime.
Preview seems not to be working, so I apologize in advance if this looks crummy. :-)
I also apologize if the idea is crummy. [snicker]
Pauly Shore’s fifteen minutes never started.
Now I actually feel some concern for Paris. She should get all points of contact with Pauly disinfected as soon as possible.
We should really call the repeal of the estate tax the Unearned Income Tax Credit (UITC).
Ultimately, Republicans want to do away with all estate, dividend, and capital gains taxes, as well as any tax on corporate income (60% of corporations pay no taxes as it is). Almost the entire tax burden is being shifted to wage income only, and that’s the intention.
So eventually, a Paris Hilton can inherit her hundred million, have it earn millions in dividends during her lifetime, and leave what would likely be an even larger estate to her children without paying a penny in taxes on any of that income, ever. And then it’s the kiddies’ turn.
Remember what Leona Helmsley said, taxes are for the little people. It’s class warfare, folks, and guess who’s losing the war.
(Want to raise your blood pressure? Read Perfectly Legal by David Cay Johnston on how the ultra-wealthy manipulate the tax system—designed by their bought and paid for legislators—to avoid paying taxes.)
Foo@116.
It’s relatively easy to set a “small” estate of 5 to 20 million dollars up so that the estate tax takes little bite. As you get richer it becomes harder. Bill Gates doesn’t mind the estate tax, but there is not enough insurance capacity in the world to cover it for him if he did.
Ian,
Bill Gates doesn’t mind the estate tax because he doesn’t intend for his estate to pay it. He has said (and I believe) that he will leave what you or I would consider a substantial inheritance to his children, but that the bulk of his wealth will go to the Bill and Melinda Gates Foundation.
I don’t have a problem with that method of avoiding estate taxes, as long as the foundations are monitored to make certain that they are fulfilling their public service charter. If Richard Mellon Scaife or the Coors brothers want to leave the bulk of their estates to educational, health or other (approved) charitable foundations, that’s fine with me too.
What is important is that the megafortunes are not available to their heirs to do with as they please. I don’t even care if the heirs sit on the foundation’s board and draw salaries for their ‘work’ there. They won’t be able to set up self-sustaining hereditary aristocracies.
Presenting these people with a choice is fine. When you’re gone, all of your fortune will be out of your control. You can set up a foundation and earmark it for public goods dear to you, or you can give most of it to the Treasury for the government to earmark for what it thinks is the public good. You choose.
BC
I know the point of this diary is the obscene Paris Hilton Tax Cut; but I couldn’t concentrate on your fine content with the image of that incredibly ugly man in the cammo fuck clothing pawing that vapid tart with the Ann Coulter hair burned into my brain.
my eyes!! ugh, my stomach!!
i was just about to eat lunch… omg…
I loved that scene from the West Wing where CJ Craig (the tall lady who plays press secretary) first heard the “I’m too sexy” song and went around singing it all day. That was hilarious.
Unfortunately the Republicans who are pandering to the rich are not hilarious. They’re just dangerous.
We’ve gotta stop them and somehow convince Americans to get back with the program — the U. S. Constitution, or else we’ll lose it all. Then we’ll just be China’s bitch. You don’t want that, do you?
…I’m too sexy for my keyboard… :-) What a hoot.
I don’t understand why the Republicans can rename it to the “Death Tax” and get away with it. Why don’t the Democrats simply start refering to it as the “Billionaire’s Tax”?
Personally I call the Republicans the tax, spend and corruption party, but hey, if you like aristocracy, suck it up. It has nothing to do with Marxism and everything to do with a hatred of inherited wealth and power.
Unearned wealth.
How pathetic that Republicans have come to the point where everything their founders fought for they repudiate.