Bill Gate's Sr.'s View of Estate Tax

[pal_of_poor]

Without an estate tax and the related gift tax, huge untaxed fortunes could be built and passed on generation after generation tax-free. No one knows it better than the richest man in America, Bill Gates.

Microsoft began with a gift from his parents, Bill Sr. and the late Mary Gates. And in significant ways it was the taxpayers who made that gift possible. The father went to college on the GI Bill. The couple bought their first house with a VA loan. Those investments by the taxpayers paid off for the Gates family, as they did for millions of other Americans. The father became a successful Seattle lawyer. The couple had money to give their son to start his business, after he dropped out of Harvard, because the taxpayers also paid a salary to Mrs. Gates when she taught public school. So not only did the country's largest fortune begin with a gift that was tax-free, but also the gift money was there because of the taxpayers.

Many wealthy Americans who favor the estate tax do so because they understand that taxpayer investments like those made in the Gates family helped build our society and economy. That the supporters of an estate tax are led by Bill Gates Sr., along with billionaires Warren Buffett and George Soros, is an inconvenient fact for Soldano and her backers. They have worked so hard to create the impression that opposition is universal among all but estate tax lawyers and the random socialist or communist, yet here are these rich men saying keep the estate tax.

While Bill Gates himself has not lent his name to the cause, there is no question that he supports his father’s work. He made his father president of the Bill and Melinda Gates Foundation (the largest private foundation in the world), which works to improve the chance that children born in poverty will get a shot at a healthy and successful life. And he has his own plans, which he will announce in his own time that will eventually demonstrate his own awareness that his fortune was not the result of just his negotiating skills and smarts, but of public investments in his family, in education and scientific research and in the precursor to the Internet.

“What makes America great are the things we have done to strengthen equality of opportunity,” Bill Gates Sr. and Chuck Collins wrote in their slender book defending the estate tax, Wealth and our Commonwealth.

Perfectly Legal, The Covert Campaign to Rig our Tax System to Benefit the Super-Rich--and Cheat Everybody Else, by David Cay Johnston p. 83

I keep plugging on this issue because I hope to keep people informed with the truth of the issue, and the motivations behind it, because it will come up again in 2010 (no estate taxes) and 2011, back to old levels.

I actually advocate a higher cap, and perhaps a slightly lower tax. But for the same reasons it was put in place, I believe this tax on the richest families in America, is a good thing, to keep the cream rising to the top, rather than a plutocracy of American Royalists, keeping the smartest people down. In some small way, it levels the playing field a bit, and allows our most talented people to rise. Often second, and third generation rich atrophy from the initial generation, or the kids of the rich end up being Paris Hilton-esque, though our country is so messed up that idiots like her are worshipped for the stupidest things.

 

[pal_of_poor]

Buffett believes that America has been a huge economic success because open political debate has helped to get the rules by which society functions right enough for both freedom and wealth to flourish. Without an estate tax, these rich men believe, America will have a growing concentration of power, not in the hands of the industrious or even the merely lucky, but in the hands of people whose only smart economic decisions were picking their parents and staying in their good graces.

Repealing the estate tax, Buffett said, is “the equivalent in economic terms of choosing our Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics. We would regard that as absolute folly in terms of athletic competition. We have come closer to a true meritocracy than anywhere else around the world. You have mobility so people with talents can be put to the best use. Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit.

Buffett said that he favors even higher estate tax rates so that the majority of each giant fortune flows to government coffers after a couple dies to make America’s dream available to the next generation. At the same time he would raise the threshold for paying the tax, which was $1 million in 2003, so that it is focused on giant fortunes like his own, not on the moderately rich.

Better to defer a tax until one is gone, Buffett said, than pay it during his lifetime. This is an important consideration, overlooked in the “Death tax” debate, because repeal of the estate tax means a heavier reliance on taxes paid during life such as income taxes. Simply repealing the estate tax is yet another tactic by some of the richest Americans to shift the burden of sustaining our society onto those with less. Yet this issue is hardly mentioned in the debate and most news coverage has contained only the unstated assumption that the estate tax is suspect, without consideration of the moral issue of shifting burdens from the richest Americans to those with less.

The idea that the estate tax promotes a society based on merit rather than inheritance may not be valid. Does a taxing large fortunes at death encourage a meritocracy, as Gates Sr. and Buffett contend? Likewise, should we ponder whether the estate tax could be a way to require those who benefited the most economically from everyone’s tax dollars to give back?

Should we also debate whether, from a tax standpoint, it makes sense to look at wealthy Americans the way they look at their stock portfolios? There will always be investments that lag or go sour, just as there will always be people who, because of illness, accident, crime, or their own shortcomings, will become tax-eaters, burdening all of society. An investment portfolio makes up for losing investments by harvesting the winning investments so that, overall, there is a net gain. One tax strategy would be to harvest from the gains of those who have a large surpluses to make up for the drag on the economy from the unfortunate who cannot be productive.

The debate about the estate tax largely ignores these questions. There is no room for such thoughtfulness in a debate driven by slogans such as “It’s your money.”

PEFECTLY LEGAL, The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich—And Cheat Everybody Else, pp. 84-85, by David Cay Johnston

The book is a good read, and there is a newer version out now, I believe, updated, as well as a sort of sequel. It is nice to discuss these things based on the reasons they were put into effect, and try to discern whether we want a country run by the economically royal, or continue with this tax, and have a meritocracy.

 

[PLYMCO_PILGRIM]

I dont like the estate/death/inheritance tax for one reason.

That wealth was already taxed when it was earned.

The income from investment or interest off of that wealth is also taxed.

Feels like a double dip.

Just my 2 cents, BTW I hate all taxes so i'm a tough one to convince of any tax being ok.

 

[KittenKoder]

Link it Pal.

 

[pal_of_poor]

I dont like the estate/death/inheritance tax for one reason.

That wealth was already taxed when it was earned.

The income from investment or interest off of that wealth is also taxed.

Feels like a double dip.

Just my 2 cents, BTW I hate all taxes so i'm a tough one to convince of any tax being ok.

Here is the best link I can come up with.

[ame=http://www.amazon.com/Perfectly-Legal-Campaign-Benefit-Everybody/dp/1591840198]Amazon.com: Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else (9781591840190): David Cay Johnston: Books[/ame]

There may be another section offered for free reading too, an excerpt.

You earn a paycheck. It's taxed federal income tax, state income tax in most states, you pay for stuff like groceries out of your net income, and you pay sales tax. You buy gas out of your net income, and you pay gas taxes, in Alabama, about 30 cents/gallon. In California, about sixty cents a gallon. Up to a hundred thousand a year, you fully pay FICA/SS taxes, but if you make more than that, which most of the people will, or do that earn the right by being vastly rich, to pay this tax, you don't pay payroll tax on amounts over one-hundred thousand. The super rich usually have investments over time, that earn huge gains, and aren't taxed each year, as incomes are, depending on whether they sell the stock or not, then only paying 15 percent capital gains taxes. Often, this is much, much less than the income tax for that group.

You pay your rent each month, and you pay a bit to pay for property taxes, and if you own, you pay property taxes both from your after tax income. You pay utility bills, and you pay your after tax dollars, on taxes too. For hunting, or driving licenses, and other government functions, such as busness licenses, you pay fees, which is another word for taxes.

People buy cigarettes, and alcohol from after tax dollars, and they are both hugely taxed. In fact, if you want to pay less taxes, quit drinking or smoking. Yet, marijunana smokers get theirs tax free, and we spend vast sums on the legal industrial complex too, of taxes. Is that right, in times where we need the money, and prison space so badly?

So, that argument doesn't hold water, not at all, as we are all taxed multiple times in society. In fact, the richest people don't pay as much as the middle class, in particular, percentage wise. The top and bottom quintiles pay about 19 and 18 percent taxes, as a percentage of incomes (all taxes included).

For all the reasons above, in particular keeping our society more of a meritocracy, paying back society for using its infrastructure, and to pay extra at the end, for all the tax breaks the rich get already.

If you really want some support, you guys on the right should work on cutting the taxes we all pay, regressive taxes, like gas, and sales taxes in particular. The federal income tax, and the inheritance tax (as dead people don't pay taxes), are the only two that the rich pay a higher percentage. But like I said, I'd support a higher cap, and perhaps a bit less then 55 percent on all wealth over that amount.

One of our biggest problems with things like this, and the minimum wage, and welfare, is that we don't often index them to the rate of inflation, or that million dollar cap that is coming back down the pike in 2011, would be much, much higher, and the minimum wage would be $12 an hour.

Finally, it isn't just about raising taxes. With a 9 Trillion and growing debt, a huge recession due to 30 years of conservative republican & democratic policies, taxes will be raised. The real question is, do you want to support tax cuts on the richest people, and then have them put onto your backs, with higher regressive taxes?

 

[pal_of_poor]

Excerpts
More here.

 

[KittenKoder]

Thank you.

 

[pal_of_poor]

I might also add, it is very simplistic to look at any issue, and for just one reason, like, or not like it. Certaily multiple taxation, in all income groups comes into play. But as shown by the Johnston, there are many reasons to consider, before you get rid of another tax only the top 2ish percent of Americans will ever have to pay. The biggest is, it'll probably get put back on your back, and others in your income group, to fill the hole left by cutting their taxes. Do you want that?

There is a lot to consider Pilgrim in these issues, so you might not want to grab that bone, and not let it go. You might find a whole pile of bones around the corner.

 

[PLYMCO_PILGRIM]

I might also add, it is very simplistic to look at any issue, and for just one reason, like, or not like it. Certaily multiple taxation, in all income groups comes into play. But as shown by the Johnston, there are many reasons to consider, before you get rid of another tax only the top 2ish percent of Americans will ever have to pay. The biggest is, it'll probably get put back on your back, and others in your income group, to fill the hole left by cutting their taxes. Do you want that?

There is a lot to consider Pilgrim in these issues, so you might not want to grab that bone, and not let it go. You might find a whole pile of bones around the corner.

i dont agree with them charging me a sales tax on the income i've already paid tax on either.

beer and smokes are an excise/luxury tax. I think that i should be able to deduct my sales/excise taxes from my state/federal income tax.

you forgot the taxes on you phone, cable, electric, heat, and water bills too. or the yearly RMV fees, or in my state the taxes on your health insurance premiums.

I dont like taxes and dont believe in the estate/death/inheritance tax as that money has already had taxes levied on it.

 

[Ame®icano]

I might also add, it is very simplistic to look at any issue, and for just one reason, like, or not like it. Certaily multiple taxation, in all income groups comes into play. But as shown by the Johnston, there are many reasons to consider, before you get rid of another tax only the top 2ish percent of Americans will ever have to pay. The biggest is, it'll probably get put back on your back, and others in your income group, to fill the hole left by cutting their taxes. Do you want that?

There is a lot to consider Pilgrim in these issues, so you might not want to grab that bone, and not let it go. You might find a whole pile of bones around the corner.

i dont agree with them charging me a sales tax on the income i've already paid tax on either.

beer and smokes are an excise/luxury tax. I think that i should be able to deduct my sales/excise taxes from my state/federal income tax.

you forgot the taxes on you phone, cable, electric, heat, and water bills too. or the yearly RMV fees, or in my state the taxes on your health insurance premiums.

I dont like taxes and dont believe in the estate/death/inheritance tax as that money has already had taxes levied on it.

Bottom line, we should just go back to basics - The Constitution.

 

[veritas]

I don't like Estate Taxes that kill things though, as in the instance of a family farm or a winery or whatever. I think if things such as those are operating and continue to operate they should be left alone to keep functioning.

This is a complicated issue.

 

[pal_of_poor]

I might also add, it is very simplistic to look at any issue, and for just one reason, like, or not like it. Certaily multiple taxation, in all income groups comes into play. But as shown by the Johnston, there are many reasons to consider, before you get rid of another tax only the top 2ish percent of Americans will ever have to pay. The biggest is, it'll probably get put back on your back, and others in your income group, to fill the hole left by cutting their taxes. Do you want that?

There is a lot to consider Pilgrim in these issues, so you might not want to grab that bone, and not let it go. You might find a whole pile of bones around the corner.

i dont agree with them charging me a sales tax on the income i've already paid tax on either.

beer and smokes are an excise/luxury tax. I think that i should be able to deduct my sales/excise taxes from my state/federal income tax.

you forgot the taxes on you phone, cable, electric, heat, and water bills too. or the yearly RMV fees, or in my state the taxes on your health insurance premiums.

I dont like taxes and dont believe in the estate/death/inheritance tax as that money has already had taxes levied on it.

Who likes taxes? Who likes multiple taxation? We're ten trillion in the hole, in case you missed it. I don't like them being in two wars, two very expensive wars, wasting our money, trying to change their primitive government, or get oil for corporations, or get pipeline avenues for the same. But each time we cut taxes, we'll have higher debt, and deficits each year. Then we'll pay interest on the debt, out of what? Taxes. So going further into debt, causes us to pay more taxes.

If you are going to campaign for a cut in taxes, why don't you focus on the ones we all pay, instead of just trying t cut taxes on people who are the richest two percent in the world, because you know what? When you cut taxes on them, we are all going to have to pay more. It's a fact, and one you should get used to, as I suspect you are nowhere near that level of income. So if you don't want to pay taxes, how about trying to get your own taxes cut, and no worry about a guy who's got fifteen houses, and 20 cars. I think they'll be OK.