CDZ Should there be a Federal inheritance tax?

[HenryBHough]

Once liberalism is fully implemented there will be no need for a death tax as nobody will have any wealth to tax.

 

[BlackSand]

I would prefer a 'wealth' tax rather than an income tax or sales tax, and an inheritance tax is a wealth tax- on someone who is no longer alive.

You cannot tax someone that is no longer alive.
Good luck putting their corpse in jail ... Otherwise you are taxing their heirs.

.

 

[Slyhunter]

He's a lottery winner.

So. Their parent's or whoever left them the money....that money belonged to them....not the government, not you.....it is theirs to do with as they wish......you guys hate them because you are jealous....

But the kid won the lottery by being born to those parents. The kid did nothing to deserve those parents. Are you saying kids of poverty stricken welfare mothers deserve it? Or simply lost the lottery.

The kid did nothing to deserve those parents.

So what?

He didn't earn it, tax the shit out of it to even the playing field for those who were unlucky and born to poor parents.

He didn't earn it

The government didn't earn it.

tax the shit out of it to even the playing field for those who were unlucky and born to poor parents

Where in the Constitution does the government have the power to "even the playing field"?

Equal under the law, general welfare.

 

[boedicca]

In answer to the OP: No.

The income, assets, and investments have already been taxed during the lifetime of the deceased.

 

[boedicca]

There should never be an inheritance tax. The assets inherited were taxed when the decedent bought/used them. Some of them, like real property and in some states personal property, will be taxed when the inheritor uses/retains ownership of them. In the case of real property, business property and some personal property, when the inheritor sells it, s/he will be taxed federally on the gain on sale, thus taxed twice for the same property.

The only inherited assets that are double taxed are cash accounts. The others are usually appreciated assets which avoid capital gains taxes through a stepped up cost basis for the beneficiaries. The only taxes they ever pay are for capital gains while they owned the assets, not during the life of the decedent. Thus the appreciation of these assets, if sold for their value when inherited, is never taxed.

If capital gains taxes were due upon inheritance, there would be no need for an inheritance tax. Even so, there are plenty of other ways for wealthy individuals to shield their estates from taxes. Private foundations, anyone?

Thus the appreciation of these assets, if sold for their value when inherited, is never taxed.
Income taxes were already paid on the money used to buy the stock.

Do you understand capital gains? I may have paid $10 per share (with after-tax money*), but it is now worth $100 per share. If I sell it, I pay capital gains tax on the $90 gain. If my beneficiaries sell it, they pay no tax on that gain.

*Pre-tax accounts are never taxed at all upon inheritance.

The gain has already been largely taxed via inflation.

 

[BlackSand]

Equal under the law, general welfare.

It isn't against the law to be wealthy nor afford a decent/competent lawyer.
Of course if you are suggesting we sue the poor for bringing down the general welfare, failing to do a better job of providing for themselves or being prosperous enough to put up their share ... I don't really see where that is going to help.

.

 

[Toddsterpatriot]

So. Their parent's or whoever left them the money....that money belonged to them....not the government, not you.....it is theirs to do with as they wish......you guys hate them because you are jealous....

But the kid won the lottery by being born to those parents. The kid did nothing to deserve those parents. Are you saying kids of poverty stricken welfare mothers deserve it? Or simply lost the lottery.

The kid did nothing to deserve those parents.

So what?

He didn't earn it, tax the shit out of it to even the playing field for those who were unlucky and born to poor parents.

He didn't earn it

The government didn't earn it.

tax the shit out of it to even the playing field for those who were unlucky and born to poor parents

Where in the Constitution does the government have the power to "even the playing field"?

Equal under the law, general welfare.

Equal under the law, general welfare.

Neither of which gives government the power to "even the playing field".

 

[Fair&Balanced]

In all of the discourse over income inequality, there has not been much focus on inherited wealth. I just read Bernie Sanders 13 point plan for income redistribution. Here is what he proposed for a Federal inheritance tax:

"He will create a progressive estate tax on the top 0.3 percent of Americans who inherit more than $3.5 million."

To me that seems a rather high bar for money that was "not earned". If you are tapping that income pool, why would you not go after the much larger percentage of Americans that inherited, say, more than $1 million? Or less? Or is inherited money, under all circumstances, off limits? This is one area where I COULD support a new Federal tax.

IF and only IF it were possible to take Federal inheritance tax money and DIRECTLY use all of it for a specific purpose such as reduction of college tuition and/or skills training, I would support it. I would pick a low percentage, around 10% and a level of $1 million with specific language in the law that it NEVER increases in percentage or inheritance amount. No inflation or other adjustments allowed.

What do you think? Should the IRS tax code be modified to tax inherited money, and if so at what level, and what percentage and why? How would you ensure that the inheritance tax money DIRECTLY benefited the poor?

OF course not. That money has already been taxed as income. Double taxation?

 

[320 Years of History]

• There should never be an inheritance tax. The assets inherited were taxed when the decedent bought/used them. Some of them, like real property and in some states personal property, will be taxed when the inheritor uses/retains ownership of them. In the case of real property, business property and some personal property, when the inheritor sells it, s/he will be taxed federally on the gain on sale, thus taxed twice for the same property.
• .

This is a rather misleading statement. It suggests capital gains is "double taxation", which simply is not true.

I'm not sure what you are getting at. Let's consider a simple example. For simplicity, assume the inheritance tax rate is 20%.

I die and leave my home to my son. I bought the house for ~$2M. Over time, the home's value has increased to ~$6M. For the purposes of inheritance tax, the basis of the house to my son is $6M. My son will thus have to pay $220K in inheritance tax on the house. If he doesn't have $220K, he will have to sell the house and use the proceeds of the sale to pay the $220K. If my son sells the house for $6M, there is no gain on the sale. If he sells it for more than $6M, there will be a long term capital gain and he will pay capital gains tax on that gain at whatever be the capital gains tax rate at the time.

It is worth noting that estate taxes generally have an exemption, that absolves the first "$X" of value from the estate tax. I've left that out purely for simplicity. I don't know the specific sum of the exemption, but I think the federal exemption was last ~$5.4M.
​

The substance of that sequence of events is that my son is taxed on the house for the gain from $2M to $6M and he's taxed on the gain on the sale of the house if there is one. That's where the "taxed twice for the same property" comes in.

As for the subjective conclusion one may draw from the event pattern noted above, I do not believe inheritors should be taxed on the inherited asset. I'm fine with inheritors being taxed on the gains from the sale of inherited assets.

 

[GaryDog]

• There should never be an inheritance tax. The assets inherited were taxed when the decedent bought/used them. Some of them, like real property and in some states personal property, will be taxed when the inheritor uses/retains ownership of them. In the case of real property, business property and some personal property, when the inheritor sells it, s/he will be taxed federally on the gain on sale, thus taxed twice for the same property.
• .

This is a rather misleading statement. It suggests capital gains is "double taxation", which simply is not true.

I'm not sure what you are getting at. Let's consider a simple example. For simplicity, assume the inheritance tax rate is 20%.

I die and leave my home to my son. I bought the house for ~$2M. Over time, the home's value has increased to ~$6M. For the purposes of inheritance tax, the basis of the house to my son is $6M. My son will thus have to pay $220K in inheritance tax on the house. If he doesn't have $220K, he will have to sell the house and use the proceeds of the sale to pay the $220K. If my son sells the house for $6M, there is no gain on the sale. If he sells it for more than $6M, there will be a long term capital gain and he will pay capital gains tax on that gain at whatever be the capital gains tax rate at the time.

It is worth noting that estate taxes generally have an exemption, that absolves the first "$X" of value from the estate tax. I've left that out purely for simplicity. I don't know the specific sum of the exemption, but I think the federal exemption was last ~$5.4M.
​

The substance of that sequence of events is that my son is taxed on the house for the gain from $2M to $6M and he's taxed on the gain on the sale of the house if there is one. That's where the "taxed twice for the same property" comes in.

As for the subjective conclusion one may draw from the event pattern noted above, I do not believe inheritors should be taxed on the inherited asset. I'm fine with inheritors being taxed on the gains from the sale of inherited assets.

I fully agree that inheritance tax is "double taxation" on the same asset. I was merely arguing that capital gains tax is not double taxation.

 

[320 Years of History]

• There should never be an inheritance tax. The assets inherited were taxed when the decedent bought/used them. Some of them, like real property and in some states personal property, will be taxed when the inheritor uses/retains ownership of them. In the case of real property, business property and some personal property, when the inheritor sells it, s/he will be taxed federally on the gain on sale, thus taxed twice for the same property.
• .

This is a rather misleading statement. It suggests capital gains is "double taxation", which simply is not true.

I'm not sure what you are getting at. Let's consider a simple example. For simplicity, assume the inheritance tax rate is 20%.

I die and leave my home to my son. I bought the house for ~$2M. Over time, the home's value has increased to ~$6M. For the purposes of inheritance tax, the basis of the house to my son is $6M. My son will thus have to pay $220K in inheritance tax on the house. If he doesn't have $220K, he will have to sell the house and use the proceeds of the sale to pay the $220K. If my son sells the house for $6M, there is no gain on the sale. If he sells it for more than $6M, there will be a long term capital gain and he will pay capital gains tax on that gain at whatever be the capital gains tax rate at the time.

It is worth noting that estate taxes generally have an exemption, that absolves the first "$X" of value from the estate tax. I've left that out purely for simplicity. I don't know the specific sum of the exemption, but I think the federal exemption was last ~$5.4M.
​

The substance of that sequence of events is that my son is taxed on the house for the gain from $2M to $6M and he's taxed on the gain on the sale of the house if there is one. That's where the "taxed twice for the same property" comes in.

As for the subjective conclusion one may draw from the event pattern noted above, I do not believe inheritors should be taxed on the inherited asset. I'm fine with inheritors being taxed on the gains from the sale of inherited assets.

I fully agree that inheritance tax is "double taxation" on the same asset. I was merely arguing that capital gains tax is not double taxation.

Well, I don't really care which one constitutes the first taxation on the asset. I care that the asset suffers from being taxed twice. LOL

Truly, if the Congress wants to write the tax code such that gains resulting from the sale of inherited assets are not subject to capital gains or income taxes, I would then be okay with them being subject to the inheritance tax. I wouldn't advocate for such an approach to abating the double taxation issue for it strikes me as adding complexity to tax calculation.

 

[Holos]

In all of the discourse over income inequality, there has not been much focus on inherited wealth. I just read Bernie Sanders 13 point plan for income redistribution. Here is what he proposed for a Federal inheritance tax:

"He will create a progressive estate tax on the top 0.3 percent of Americans who inherit more than $3.5 million."

To me that seems a rather high bar for money that was "not earned". If you are tapping that income pool, why would you not go after the much larger percentage of Americans that inherited, say, more than $1 million? Or less? Or is inherited money, under all circumstances, off limits? This is one area where I COULD support a new Federal tax.

IF and only IF it were possible to take Federal inheritance tax money and DIRECTLY use all of it for a specific purpose such as reduction of college tuition and/or skills training, I would support it. I would pick a low percentage, around 10% and a level of $1 million with specific language in the law that it NEVER increases in percentage or inheritance amount. No inflation or other adjustments allowed.

What do you think? Should the IRS tax code be modified to tax inherited money, and if so at what level, and what percentage and why? How would you ensure that the inheritance tax money DIRECTLY benefited the poor?

"Tax inherited money"
"Inheritance tax money"
"inheritance tax"
"inherited money"


Can we first agree on the difference there is between "tax" and "money" before we begin our discussion on inheritance?

Tax is money calculated, allocated and distributed. Is that simple enough? The very specific reason why Tax in the case is so much more inclusive than money is because Tax allocation and Tax distribution are not the same and cannot be the same. Money will have its allocation and distribution as possibly the same.

By definition, tax is continuous. Once secured it escalates.
By definition, money is expendable. Once secured it is static.

Now inheritance is a possible cause and a possible consequence of using money, not of using tax, so I comprehend your question.

How can inherited money efficiently become tax money?

Bernie's proposal is simple mathematics. The reason why you would not go for a larger statistical range including people with $1 million or less when already making the extraction from those with $3.5 millions is because the tax value of dollar (money) increases mostly by distribution and not mostly by allocation. That is, money more so greatly allocated at a single point has greater, more efficient return once distributed by the same ways that money less so greatly allocated has. You've got 6 people waiting, and only one to deliver. The work the one has to do in order to distribute a pack of 3 juices is excessive in relation to the work one has to do in order to distribute a pack of 6 juices. The pack of 3 juices would require two trips.

I am all for tax code modification and am not really concerned with the rate of the change, since I do not have access to the actual transactions occurring even as the values are publicly disclosed. Basically, I trust in the government and I trust in the citizens so I may also continue providing. There should be no reason not to allow one to provide, therefore any improvement is welcome.

So that any citizen may benefit with the continuity of tax money all that is required is their involvement in politically oriented work with their chosen careers, whatever that may be. Poverty is not really about not having a career while looking for one, and it is essentially that professional, politically oriented pursuit which guarantees wealth.

 

[ScienceRocks]

Of course there should be,,,Got to pay for the roads you drive on, the army, navy, police, clean air, food and water that you enjoy.

 

[Dekster]

In all of the discourse over income inequality, there has not been much focus on inherited wealth. I just read Bernie Sanders 13 point plan for income redistribution. Here is what he proposed for a Federal inheritance tax:

"He will create a progressive estate tax on the top 0.3 percent of Americans who inherit more than $3.5 million."

To me that seems a rather high bar for money that was "not earned". If you are tapping that income pool, why would you not go after the much larger percentage of Americans that inherited, say, more than $1 million? Or less? Or is inherited money, under all circumstances, off limits? This is one area where I COULD support a new Federal tax.

IF and only IF it were possible to take Federal inheritance tax money and DIRECTLY use all of it for a specific purpose such as reduction of college tuition and/or skills training, I would support it. I would pick a low percentage, around 10% and a level of $1 million with specific language in the law that it NEVER increases in percentage or inheritance amount. No inflation or other adjustments allowed.

What do you think? Should the IRS tax code be modified to tax inherited money, and if so at what level, and what percentage and why? How would you ensure that the inheritance tax money DIRECTLY benefited the poor?

I am not sure you understand how the federal estate tax system works. As long as the states in which the dead people lived do not have a separate estate tax, they can elect to have the federal government distribute the revenue to them. It is essentially a system in which the government collects the money and sees to it the right amounts go to the right states without keeping much of it in the federal purse. A lot of people who want to eliminate it don't seem to grasp that without it, a dead person's estate may be paying multiple estate taxes at different rates in different states.