Is the inheritance tax just?

[Socrates]

If a firefighter makes two million dollars by working overtime for 20 years and a kid born into a wealthy family inherits two million dollars without working a minute, which person's $2 million should be taxed at a higher rate?

Bush: The inherentance shouldn't be taxed at all !! 0%.
We should tax the money earned from labor 25 or 30%.

Kerry: This is silly. It's certainly fair to tax passive income more than income from labor. Hard work should be encouraged. We don't need policies that punish those who work hard, just so we can perpetuate an aristocracy of the wealthy.

Kerry's right.

 

[MtnBiker]

How much was that 2 million taxed when earned before the kid recieved it?

 

[MtnBiker]

A farmer works the land for 40 years earning a modest income. At the end of his life he has little liquid assets to pass down to his children but wants to pass down the land and equipment for the farm valued at 2 million dollars. The government places an inheritance tax on the estate greater than the family can afford to pay and must sell the farm at a lost value, to pay tax.

Kerry is right?

 

[Socrates]

Originally posted by MtnBiker
A farmer works the land for 40 years earning a modest income. At the end of his life he has little liquid assets to pass down to his children but wants to pass down the land and equipment for the farm valued at 2 million dollars. The government places an inheritance tax on the estate greater than the family can afford to pay and must sell the farm at a lost value, to pay tax.

Kerry is right?

The answer is that the government should not make them sell their family farm, and the government does not. Neither Kerry nor Bush nor anyone else proposes that policy.

Now, I've answered your question, will you answer mine?

Most people who pay inheritance tax are not family farmers, and since there's an exemption for them anyway, they can't be used to avoid answering the policy question I originally asked.

So, yes, Kerry is right (unless you're rich, elitist, and in favor of rewarding privileged birth rather than hard work).

 

[MtnBiker]

Originally posted by MtnBiker
How much was that 2 million taxed when earned before the kid recieved it?

What about this?

Do you have something against rich people?

 

[Socrates]

Originally posted by MtnBiker
How much was that 2 million taxed when earned before the kid recieved it?

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If I work for my dad, my income is taxed. If I don't work for him, but just wait and inherit the money, then I don't get taxed when I receive it. So, the answer to your question is that it doesn't matter how much tax the person paid before he transferred it to me. When I get income, I have to pay tax on it. (Unless I'm elitist and believe in special rights for being born into a privileged family.)

 

[Socrates]

Originally posted by MtnBiker
What about this?

Do you have something against rich people?

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No. Do you have something against poor and middle class people since you don't want rich people to pay their fair share of taxes?

My parents are worth over 3 million bucks, so according to some people, they're rich and I'm going to inherit part of their estate. But I still think I should pay more on money I don't work for than money I work for.

 

[OCA]

Biker forget about it, its just another person who's repeating the lies about the rich they read on some blog somewhere or that some lefty professor drilled into them. The simple fact is that the rich pay disproportionately more taxes in America and the rich are who drives the economy by creating new business. But no the left wants to punish them out of some sort of weird jealousy make everyone equal type deal.

To answer Socrates(your nickname perturbs me as i'm a native born Greek and with your views you are doing him a disservice and dishonouring a person who would've had no views like you) question no tax on inheritance and lower the firefighters tax rate. Double taxation on inheritance money is wrong.

 

[Socrates]

Originally posted by OCA
Biker forget about it, its just another person who's repeating the lies about the rich they read on some blog somewhere or that some lefty professor drilled into them. The simple fact is that the rich pay disproportionately more taxes in America and the rich are who drives the economy by creating new business. But no the left wants to punish them out of some sort of weird jealousy make everyone equal type deal.

To answer Socrates(your nickname perturbs me as i'm a native born Greek and with your views you are doing him a disservice and dishonouring a person who would've had no views like you) question no tax on inheritance and lower the firefighters tax rate. Double taxation on inheritance money is wrong.

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Of course rich people pay disproportionately more in taxes- they have most of the wealth in this country. My dad's net worth has gone up over 1 million dollars in the past 2 years, and he hasn't worked a single day. It's perfectly fair for society to tax me on that money when I inherit it. He didn't work for it, and I didn't work for it. That's not punishment. Punishment is taxing labor more than privilege.

2nd: How can we lower taxes even more now since we can't even come close to paying our bills? You are like Reagan- you love huge deficits. Let our children pay it off?

 

[5stringJeff]

Originally posted by Socrates
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Of course rich people pay disproportionately more in taxes- they have most of the wealth in this country. My dad's net worth has gone up over 1 million dollars in the past 2 years, and he hasn't worked a single day. It's perfectly fair for society to tax me on that money when I inherit it. He didn't work for it, and I didn't work for it. That's not punishment. Punishment is taxing labor more than privilege.

2nd: How can we lower taxes even more now since we can't even come close to paying our bills? You are like Reagan- you love huge deficits. Let our children pay it off?

First, because people have more, they should give more (i.e. in a "progressive" tax scheme)? Sounds like Marx at his best: "From each according to his ability, to each according to his needs."

Second, we are at war, in case you haven't noticed, and we need quite a bit of extra money. Smart bombs ain't cheap. And we will get more in tax revenues by charging a lower tax rate. Reagan's tax policies proved that.

 

[OCA]

Originally posted by gop_jeff
First, because people have more, they should give more (i.e. in a "progressive" tax scheme)? Sounds like Marx at his best: "From each according to his ability, to each according to his needs."

Second, we are at war, in case you haven't noticed, and we need quite a bit of extra money. Smart bombs ain't cheap. And we will get more in tax revenues by charging a lower tax rate. Reagan's tax policies proved that.

Yeppers that is something that Demos are just absolutely unwilling to face. Without oppressive tax rates how else would Robert KKK Byrd bring home all that pork to West Virginia?

 

[Socrates]

Originally posted by gop_jeff
First, because people have more, they should give more (i.e. in a "progressive" tax scheme)? Sounds like Marx at his best: "From each according to his ability, to each according to his needs."

Second, we are at war, in case you haven't noticed, and we need quite a bit of extra money. Smart bombs ain't cheap. And we will get more in tax revenues by charging a lower tax rate. Reagan's tax policies proved that.

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Reagan and both Bushes have proposed and passed progressive tax schemes. According to you, they're Marxists.

Second, tax revenue as a % of GNP went down after Reagan's tax cuts. What Reagan's tax cuts show is that if you won't tax, but you spend more on both the military and one social programs (which he did- social security and health care), then the government can't pay its bills (what a shock!), and the nation ends up with a crushing debt. And we did.

Too bad. Our country would be a lot stronger if that 250 billion dollars a year that pays only interest on his debt could be used constructively.

 

[OCA]

Here ya go, read it and weap.

Real Truth About Reaganomics

Economic Growth. The average annual growth rate of real gross domestic product (GDP) from 1981 to 1989 was 3.2 percent per year, compared with 2.8 percent from 1974 to 1981 and 2.1 percent from 1989 to 1995. The 3.2 percent growth rate for the Reagan years includes the recession of the early 1980s, which was a side effect of reversing Carter's high-inflation policies, and the seven expansion years, 1983-89. During the economic expansion alone, the economy grew by a robust annual rate of 3.8 percent. By the end of the Reagan years, the American economy was almost one-third larger than it was when they began. [13] Figure 1 shows the economic growth rate by president since World War II. That rate was higher in the 1980s than in the 1950s and 1970s but was substantially lower than the rapid economic growth rate of more than 4 percent per year in the 1960s. The Kennedy income tax rate cuts of 30 percent that were enacted in 1964 generated several years of 5 percent annual real growth.

Economic Growth per Working-Age Adult. When we adjust the economic growth rates to take account of demographic changes, we find that the expansion in the Reagan years looks even better and that the 1970s' performance looks worse. GDP growth per adult aged 20-64 in the Reagan years grew twice as rapidly, on average, as it did in the pre- and post-Reagan years.

Median Household Incomes. Real median household income rose by $4,000 in the Reagan years--from $37,868 in 1981 to $42,049 in 1989, as shown in Figure 2. This improvement was a stark reversal of the income trends in the late 1970s and the 1990s: median family income was unchanged in the eight pre-Reagan years, and incomes have fallen by $1,438 in the anti-supply-side 1990s, following the 1990 and 1993 tax hikes. [14] Most of the declines in take-home pay occurred on George Bush's watch. Under Bill Clinton's tenure, there has been zero income growth in median household income.

Employment. From 1981 through 1989 the U.S. economy produced 17 million new jobs, or roughly 2 million new jobs each year. Contrary to the Clinton administration's claims of vast job gains in the 1990s, the United States has averaged only 1.3 million new jobs per year in the post-Reagan years. The labor force United States has averaged only 1.3 million new jobs expanded by 1.7 percent per year between 1981 and 1989, but by just 1.2 percent per year between 1990 and 1995. [15]

Hours Worked. Table 1 confirms that hours worked per adult aged 20-64 grew much faster in the 1980s than in the pre -or post-Reagan years.

Unemployment Rate. When Reagan took office in 1981, the unemployment rate was 7.6 percent. In the recession of 1981-82, that rate peaked at 9.7 percent, but it fell continuously for the next seven years. When Reagan left office, the unemployment rate was 5.5 percent. This reduction in joblessness was a clear triumph of the Reagan program. Figure 3 shows that in the pre-Reagan years, the unemployment rate trended upward; in the Reagan years, the unemployment rate trended downward; and in the post-Reagan years, the unemployment rate has fluctuated up and down but today remains virtually unchanged from the 1989 rate.

Productivity. For real wages to rise, productivity must rise. Over the past 30 years there has been a secular downward trend in U.S. productivity growth. Under Reagan, productivity grew at a 1.5 percent annual rate, as shown in Figure 4. This was lower than in the 1950s, 1960s, and 1970s but much higher than in the post-Reagan years. Under Clinton, productivity has increased at an annual rate of just 0.3 percent per year--the worst presidential performance since that of Herbert Hoover.

Inflation. The central economic evil that Ronald Reagan inherited in 1981 from Jimmy Carter was three years of double-digit inflation. In 1980 the consumer price index (CPI) rose to 13.5 percent. By Reagan's second year in office, the inflation rate fell by more than half to 6.2 percent. In 1988, Reagan's last year in office, the CPI had fallen to 4.1 percent. Figure 5 shows the inflation and interest rate trend.

Interest Rates. In 1980 the interest rate on a 30-year mortgage was 15 percent; this rate rose to its all-time peak of 18.9 percent in 1981. The prime rate steadily fell over the subsequent six years to a low of 8.2 percent in 1987 as the inflationary expectation component of interest rates fell sharply. The prime rate hit its 20-year low in 1993 at 6.0 percent. The Treasury Bill rate also fell dramatically in the 1980s--from 14 percent in 1981 to 7 percent in 1988. In the 1990s, interest rates have continued to migrate gradually downward, as shown in Figure 5.

Savings. The savings rate did not rise in the 1980s, as supply-side advocates had predicted. In fact, in the 1980s the personal savings rate fell from 8 percent to 6.5 percent. [16]In the 1990s the average savings rate has fallen even further to an average of 4.9 percent [17]--although the rate of decline has slowed.
The decline in the personal savings rate in the 1980s was disappointing, but two factors mitigate the implications of these statistics. First, the drop in the savings rate was partly a natural response to demographic changes in America--namely, the baby boomers entering their peak spending years. Second, the savings rate data fail to account for real gains in wealth, which clearly are an important form of savings. The real value of capital assets and property doubled from 1980 to 1990. The Dow Jones Industrial Average nearly tripled from a low of 884 in 1982 to 2,509 in 1989. These increases in the value of stocks, bonds, homes, businesses, and so forth added to Americans' balance sheets hundreds of billions of dollars of wealth that are not accounted for in the savings rate statistics. [18]






Total Revenue Growth. Nominal federal revenues dou-bled in the 1980s from $517 billion to $1.031 trillion. From 1981 to 1989 real federal revenues climbed by 20 percent. As a share of GDP, however, federal tax revenues fell by 1.0 percentage point during that period.

Income Tax Receipts. Even income tax revenues grew substantially in the 1980s. In 1981 income tax receipts totaled $347 billion; in 1989 they totaled $549 billion, a 58 percent increase. In fact, income tax collections grew only slightly slower in the 1980s than in the 1990s despite income tax rate reductions in the Reagan years and increases in the Bush-Clinton years. Real income tax revenues rose by 16.3 percent from 1982 to 1989 after the top income tax rate had been reduced from 70 percent to 50 percent in 1983, and then to 28 percent in 1986. According to the latest (August 1996) Congressional Budget Office (CBO) forecast, real income tax revenues will have grown by 17.9 percent from 1990 to 1997, following the raising of the top income tax rate from 28 percent to 31 percent in 1990 and then to 39.6 percent in 1993. [19] On a purely static basis, the 1990 tax increase raised $380 billion less in income tax revenues from 1991 to 1995 than had been predicted. [20]

Federal Spending. The federal budget was not cut under Reagan. In fact, it was 69 percent larger when Reagan left office than when he entered it--22 percent larger in real terms. As a share of GDP, federal outlays declined by less than 1 percentage point. [21]




Fable 10: In the 1980s the Rich Got Richer and the Poor Got Poorer

During the 1980s the bucket of liberty and economic freedom rose, while the bucket of income equality fell. Upper-tier Americans significantly expanded their share of national wealth, while low-income citizens lost ground. Reagan policies were critical to the shift. [48]

During the Reagan years, the total share of national income tilted toward the wealthiest Americans. From 1980 to 1988 the wealthiest 5 percent of Americans increased their share of total income from 16.5 to 18.3 while the poorest fifth saw their share fall from 4.2 to 3.8 percent. [49]

Yet it is not true that the gains by the wealthiest Americans came at the expense of low-income Americans. From 1981 to 1989, every income quintile--from the richest to the poorest--gained income according to the Census Bureau economic data (see Figure 11). [50] The reason the wealthiest Americans saw their share of total income rise is that they gained income at a faster pace than did the middle class and the poor. But Reaganomics did create a rising tide that lifted nearly all boats.




Fable 11: The Poor and Minorities Lost Ground under Reagan's Economic Policies

The 1980s was the first decade since the 1930s in which large numbers of Americans actually suffered a serious decline in living standard. [51]

The poorest 20 percent of Americans experienced a 6 percent gain in real income in the 1980s and have suffered a 3 percent loss in income in the 1990s. Figure 13, which compares the income trends for the poorest fifth of Americans over the past 20 years, shows that the poor did the best during the Reagan years. Black Americans saw their incomes grow at a slightly faster pace (11.0%) than whites (9.8%) in the Reagan years (see Table 9).




Fable 12: The Rich Saw Their Tax Bills Go Down in the 1980s While Everyone Else Paid More

Contrary to popular rhetoric, the wealthiest Americans did not pay less taxes; rather, they paid more taxes after the income tax rate cuts in 1981. In constant dollars, the richest 10 percent of Americans paid $177 billion in federal income taxes in 1980 but paid $237 billion in 1988. The remaining 90 percent of households paid $5 billion less in income taxes over this period. [52] They earned more and they paid more. In fact, Federal Reserve Board member Lawrence Lindsey has shown that taxes paid by the wealthy were substantially higher than they would have been if the top tax rate had remained at 70 percent.[53] Figure 14 shows that the share of total income taxes paid by the wealthiest 1 percent of all Americans actually rose from 18 percent in 1981 to 25 percent in 1990. The wealthiest 5 percent of Americans saw their tax share rise from 35 to 44 percent. So the rise in the deficit was clearly not a result of "tax cuts for the rich."



Conclusion

The 1980s were years of economic progress, not decline. Real GDP grew by about one-third in the 1980s. The economic gains were widely distributed among income groups, with every income quintile, from the richest fifth to the poorest fifth, gaining ground in the Reagan years.

The Reagan tax cuts were not a primary cause

of the eruption of the deficit in the 1980s. The main two causes were an unexpectedly sharp reduction in inflation in the early 1980s that led to large real increases in federal spending, and a nearly $1 trillion military build-up during the last phase of the cold war.

Most significantly, the economy of the 1980s outperformed that of the 1990s in virtually every measurable category. Economic growth was higher, job creation was faster, incomes rose much faster, and productivity climbed at a healthier pace.

Here you go Demos, try and debunk it if you like and hit the link if you'd like to learn more truth.

Jimmy sorry it was so long

http://www.cato.org/pubs/pas/pa-261.html



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03-19-2004 03:23 PM

 

[5stringJeff]

Originally posted by Socrates
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Reagan and both Bushes have proposed and passed progressive tax schemes. According to you, they're Marxists.

Second, tax revenue as a % of GNP went down after Reagan's tax cuts. What Reagan's tax cuts show is that if you won't tax, but you spend more on both the military and one social programs (which he did- social security and health care), then the government can't pay its bills (what a shock!), and the nation ends up with a crushing debt. And we did.

Too bad. Our country would be a lot stronger if that 250 billion dollars a year that pays only interest on his debt could be used constructively.

Well Reagan and Bush 43 actually lowered top tac rates, making the tax structure more fair (i.e. proportionate, where everyone pays an equal percentage of their income in taxes, regardless of income level). Bush 41 didn't and it cost him the election in 1992. His bad.

Second, you are ignoring the fact that Reagan's budgets were much smaller on the social spending side than the budgets that were eventually passed by the then-Democrat-controlled Congress. Tip O'neill and his boys increased social spending, which bloated the national debt just as much as anything else. Reagan's budgets would have held all non-defense spending at inflation levels. So if you want to whine about debt, go whine to all the Democrat reps and Senators who couldn't stop increasing social programs by 10% a year.

 

[OCA]

Originally posted by gop_jeff
Well Reagan and Bush 43 actually lowered top tac rates, making the tax structure more fair (i.e. proportionate, where everyone pays an equal percentage of their income in taxes, regardless of income level). Bush 41 didn't and it cost him the election in 1992. His bad.

Second, you are ignoring the fact that Reagan's budgets were much smaller on the social spending side than the budgets that were eventually passed by the then-Democrat-controlled Congress. Tip O'neill and his boys increased social spending, which bloated the national debt just as much as anything else. Reagan's budgets would have held all non-defense spending at inflation levels. So if you want to whine about debt, go whine to all the Democrat reps and Senators who couldn't stop increasing social programs by 10% a year.

Oh no Jeff, according to Socrates Reagan should not have signed those budgets and by doing so and avoiding a budget crisis or shutdown he is responsible for the increased spending. Isn't it funny how the Demos play the game then turn the blame around later on down the road?

 

[5stringJeff]

Riiiiiight... IMO Democrat's obsession with the debt is ridiculous. Democrats are always whining that "our children will have to pay for this." Don't you guys want to raise taxes on everyone anyway? If a higher debt means higher taxes, then every Democrat in the US should be happy that there's such a huge debt - another excuse to raise taxes!!!

 

[Annie]

Originally posted by gop_jeff
Riiiiiight... IMO Democrat's obsession with the debt is ridiculous. Democrats are always whining that "our children will have to pay for this." Don't you guys want to raise taxes on everyone anyway? If a higher debt means higher taxes, then every Democrat in the US should be happy that there's such a huge debt - another excuse to raise taxes!!!

anyone have a clue to the interests rates the past few years? Better they borrow than tax!

 

[rtwngAvngr]

Originally posted by Socrates
If a firefighter makes two million dollars by working overtime for 20 years and a kid born into a wealthy family inherits two million dollars without working a minute, which person's $2 million should be taxed at a higher rate?

Bush: The inherentance shouldn't be taxed at all !! 0%.
We should tax the money earned from labor 25 or 30%.

Kerry: This is silly. It's certainly fair to tax passive income more than income from labor. Hard work should be encouraged. We don't need policies that punish those who work hard, just so we can perpetuate an aristocracy of the wealthy.

Kerry's right.

Total fucking crap. IT's taxed when it's earned. That's it. There should be no inheritance tax. If you want to encourage hardwork, get rid of welfare.

 

[Socrates]

The "It's taxed twice" argument is a loser. I get taxed when I earn money, and when I transer it to someone else then it is income for then and they have to pay tax on it. In the case of inheritance tax, the person who has already been taxed on it is now dead, so there's no way to tax him twice. It gets transferred to someone else, and that person should definitely have to pay at least the same rate as on his/her other income.

My parents are worth about 3 million dollars. That's their money, not mine. If I work for them and they pay me income, I rightly pay income tax on the money I earn. If, on the other hand, I wait and inherit it from them without doing any work for it, then I don't get taxed on it at all. This is silly. I should pay more tax on money I don't earn than on money I do earn. We need to encourage and reward those who actually work. So, the "taxed twice" argument really doesn't hold any water at all.

 

[Socrates]

To say that Democrats are obsessed with the deficit and the debt is not a substantive reply, nor is it even true.

Nearly all economists agree that the national debt has a hugely harmful effect on the US economy. If a Democrat points this fact out, and recommends that we do something about it, then how do our Republican friends reply? By saying that we should stop talking about it. Better to increase the debt than to tax enough to pay it off.

The fallacy with this argument is that if you lose more by paying interest on the debt than you would if we raised your taxes and paid it off! 14% of the taxes you pay every year just pays interest on Reagan's debt. If we paid it off, then we could give you a whopping 14% tax cut without cutting any of our government services. But you'd rather have a 3% tax cut and increase your losses on the debt to 15 or 16%. Taking a 3% raise to keep a 15% loss does't make sense in anybody's book.