Is the inheritance tax just?

[Socrates]

Republicans' completely irrational, religious devotion to tax cuts at all cost- even when they lose money to get them- has cost this country dearly. It really isn't very complicated; the government, just like individuals, needs to pay its bills. If it doesn't, in the long term the interest eats you up. 250 billion dollars a year would make a huge difference in our nation's well-being.

 

[nbdysfu]

My grandfather WAS a fire safety inspector. He made a modest fortune by investing. And of course that money was taxed even though he worked for every penny of it, and droves his kids nuts and his marriage nearly into the ground in the process.

Fast forward through 15 years of retirement. My grandfather has died of cancer and my aging grandmother is left to try and figure out how to avoid the taxes on what she merely owns, as well as to pass it on.

In that case do you feel the inheritance tax is right?

 

[Avatar4321]

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!!!

Very well said.

The fact is none of you people whining about the debt really care about it. Because if you did you wouldnt be telling us to raise taxes. quite the opposite youd be telling us to lower taxes to stimulate the economy and more importantly Youd would want to cut spending! None of you proposing higher taxes are proposing that we cut social spending. Which is a majority of the budget and totally unrequired by the constitution. Hence, to say you really are concerned about the debt is disingenuous. you could care less about the debt or you would be critizing whats causing it. The outrageous spending.

 

[Avatar4321]

Originally posted by 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.

Actually we are all for cutting the debt. But you wont do it with tax increases. quite the opposite.

 

[Socrates]

Originally posted by nbdysfu
My grandfather WAS a fire safety inspector. He made a modest fortune by investing. And of course that money was taxed even though he worked for every penny of it, and droves his kids nuts and his marriage nearly into the ground in the process.

Fast forward through 15 years of retirement. My grandfather has died of cancer and my aging grandmother is left to try and figure out how to avoid the taxes on what she merely owns, as well as to pass it on.

In that case do you feel the inheritance tax is right?

I have no problem with spouses wealth not being taxed until both of them die since they really co-own it. But when it gets transferred to someone else- whether that be their kids, friends, or whoever- it's income for the new person and should be taxed. My parents' money is not my money. I have no right to any of it. If they choose to transfer it to me during their lives or after they die, it's income for me and (like everyone else) I should pay tax on my (unearned) income.

 

[Socrates]

Originally posted by Avatar4321
Very well said.

The fact is none of you people whining about the debt really care about it. Because if you did you wouldnt be telling us to raise taxes. quite the opposite youd be telling us to lower taxes to stimulate the economy and more importantly Youd would want to cut spending! None of you proposing higher taxes are proposing that we cut social spending. Which is a majority of the budget and totally unrequired by the constitution. Hence, to say you really are concerned about the debt is disingenuous. you could care less about the debt or you would be critizing whats causing it. The outrageous spending.

The US wastes 250 million dollars a year paying interest on Reagan's debt. Of course I care about this. It hurts me financially since it costs me hundreds of dollars per year, every year (it has cost me thousands of dollars over the years). Clinton raised taxes on the rich, and he started paying off the debt. That was good policy. He also cut spending a lot which was also good (including more welfare reform than either Reagan or Bush have done).

To say that the debt is caused by spending is, of course, true by definition. The only way to build up debt is to spend. The question is: Exactly what spending do you want to cut? The military, social security, health care, and interest on the debt make up almost all of the budget. Which of these do you want to cut? I'd rather tax the rich their fair share than cut any of the first three. I'd like to pay off the damn debt so we could get 250 billion (!) extra dollars every year to use for whatever purpose we choose. But spending more on the military, more on social security, more on health care, and just continually increasing the debt is irresponsible and harmful. And that is exactly what Reagan did and what Bush II is doing now.

 

[Socrates]

Originally posted by Avatar4321
Actually we are all for cutting the debt. But you wont do it with tax increases. quite the opposite.

Clinton raised taxes on the rich in order to start paying down the debt. So, yes, you can pay it down by raising taxes.

The only other way to do it, as you said, is to cut spending. Which is fine, but it doesn't help to say this if you can't specify exactly what spending you want to cut. Your four options are
1 the military (16%)
2 social security (23%)
3 health care (medicare and medicaid) (20%)
4 interest on the debt (14%)

So, these 4 categories make up almost 75% of the budget.

These are the 4 big expenses. Everything else combined- highways, education, food stamps, veteran's benefits, transportation, foreign spending, etc- makes up only 27% pf the budget.

Since the vast majority of the population is opposed to cutting 1, 2, or 3, the best thing to cut is the debt. It's about the only place to make a significant difference. Can you believe that we're wasting almost the same amount of money on debt interest as we spend for our entire military! That is really bad economic policy.

 

[Annie]

Socrates, where do you get your numbers? Even with WOT military expenditures have not gone up more than 8%:

http://www.cia.gov/cia/publications/factbook/geos/us.html

Military expenditures - dollar figure:
$276.7 billion (FY99 est.)
Military expenditures - percent of GDP:
3.2% (FY99 est.)
Military - note:
note: 2002 estimates for military manpower are based on projections that do not take into consideration the results of the 2000 census

http://www.usnewsclassroom.com/issue/010423/budget.htm

Because US budget data takes years to really analyze, it's always 'old', but even US News and World Report states that about a third is discretionary, 8% of the US budget is A LOT.

 

[Socrates]

Originally posted by Kathianne
Socrates, where do you get your numbers? Even with WOT military expenditures have not gone up more than 8%:

http://www.cia.gov/cia/publications/factbook/geos/us.html

Military expenditures - dollar figure:
$276.7 billion (FY99 est.)
Military expenditures - percent of GDP:
3.2% (FY99 est.)
Military - note:
note: 2002 estimates for military manpower are based on projections that do not take into consideration the results of the 2000 census

http://www.usnewsclassroom.com/issue/010423/budget.htm

Because US budget data takes years to really analyze, it's always 'old', but even US News and World Report states that about a third is discretionary, 8% of the US budget is A LOT.

The percentages are % of the total budget, not % of GDP. So, 14% of the entire budget for the year gets spent on interest on the debt, 23% gets spent on social security, etc.

I got my numbers from the University of Minnesota economics department.

 

[Annie]

Originally posted by Socrates
The percentages are % of the total budget, not % of GDP. So, 14% of the entire budget for the year gets spent on interest on the debt, 23% gets spent on social security, etc.

I got my numbers from the University of Minnesota economics department.

Thanks. I tried to search for your numbers, but no luck. Could you please supply the link.

 

[Socrates]

Originally posted by Kathianne
Thanks. I tried to search for your numbers, but no luck. Could you please supply the link.

I didn't get this information from a web site. I got it from an economics course I took. The stats are actually from the late 90s, but I'm sure the percentages are roughly the same now.

 

[Annie]

I believe you, what's funny is those are the same numbers used by a site: www.warresisters.org

I kid you not, they have an agenda. Everything else uses numbers we are all familiar with. Gotta be amazed at this world.

 

[dilloduck]

Originally posted by 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.

If you feel so guilty about inheriting money that you didn't work for and without it being taxed, then I suggest that you give it to the government to pay down the debt or donate it to a reputable and charitable cause.

 

[Socrates]

Originally posted by dilloduck
If you feel so guilty about inheriting money that you didn't work for and without it being taxed, then I suggest that you give it to the government to pay down the debt or donate it to a reputable and charitable cause.

I don't feel guilty. I said that it is fair to tax my unearned income more than the income I worked for, or at least as much. I'm talking about fair economic policy for the whole country, and I'm willing to pay my fair share, not out of guilt, but because I know this country does a lot for me too.

 

[dilloduck]

Originally posted by Socrates
I don't feel guilty. I said that it is fair to tax my unearned income more than the income I worked for, or at least as much. I'm talking about fair economic policy for the whole country, and I'm willing to pay my fair share, not out of guilt, but because I know this country does a lot for me too. [/QUOTE

The main fallacy of your argument is claiming there is money that wasn't worked for. Maybe YOU didn't work for it but somebody did and then worked some more to save it and protect it. Your postion still smacks of guilt for having more money than someone else does no matter what the reason. Everyone has the right to work hard and become eligible for the benefits.

 

[Socrates]

Originally posted by dilloduck

Originally posted by Socrates
I don't feel guilty. I said that it is fair to tax my unearned income more than the income I worked for, or at least as much. I'm talking about fair economic policy for the whole country, and I'm willing to pay my fair share, not out of guilt, but because I know this country does a lot for me too. [/QUOTE

The main fallacy of your argument is claiming there is money that wasn't worked for. Maybe YOU didn't work for it but somebody did and then worked some more to save it and protect it. Your postion still smacks of guilt for having more money than someone else does no matter what the reason. Everyone has the right to work hard and become eligible for the benefits.

Speculating about each other's motivations isn't helpful in a rational debate. You can say I feel guilty for having rich parents or I can say you're elitist and care only about yourself (since you hope to be rich someday). Putting aside such speculation and sticking to rational argument, the issue is: Is it fair to tax unearned income (inheritance) as much or more than earned income (wages)? I say the answer is yes and my argument is that it is good policy to encourage and reward hard work.

My claim that there is money that wasn't worked for is this: There is a distinction between passive income and active income. Passive income is income from investments while active income is a wage you get for labor. Both are legitimate. The question is: How much should each type be taxed? If I invest 1 million dollars and get $200,000 of passive income from it, am I entitled to keep all $200,000? Clearly not. The investment income is, in part, made possible by our economic system, and the ecomomic system (roads, courts, military, etc) is expensive to maintain. It is clearly just to tax this passive income. Bush thinks that it should be taxed less than wages since capital gains and inheritance (both passive sources of income) are taxed less than wages. This is unjust. It's unjust to punish labor and discourages productivity also. This is why it is not a fallacy to say that some income is unearned.

 

[Annie]

The question is: How much should each type be taxed? If I invest 1 million dollars and get $200,000 of passive income from it, am I entitled to keep all $200,000? Clearly not. posted by Socrates

Did you mean to add, 'in my opinion' before or after the Clearly not?

 

[Socrates]

By the way, I'm not the only one who recognizes the distinction between passive income and active income. Republicans from Teddy to Nixon explicitly made this distinction and agreed with the view that passive income should be taxed at least as much. Bush himself implicitly acknowledges this distinction too, he just thinks that the passive should be taxed less than the active.

 

[Socrates]

Originally posted by Kathianne
Did you mean to add, 'in my opinion' before or after the Clearly not?

Clearly not, as long as you believe that people deserve to be rewarded more for their work than for being born into a rich family.

 

[Socrates]

George was born into a life of economic privilege, as were all of his close friends. I understand the temptation to use government to preserve that privilege position. What I don't understand is how come so many average Americans are so interested in preserving it at their own expense. Fairness does not require it.