Taxes & Wealth Distribution

[Baltar]

Originally Posted by Karma Police

I've been talking about the estate tax, which doesn't tax the "wealthy people" who did something right, it taxes the wealthy people's children who did nothing "right" to generate the wealth that's being passed to them. Are you suggesting that the children of wealthy people are somehow more inherently deserving of having wealth than the children of poor people?

Certainly people who didn't earn the money don't inherently deserve it. However, this is a moral issue and I don't think the government has a right to take the money for that particular reason. A person can give their money to anyone (while they're alive) without being hit with an estate tax, right? Why should it be different for money given to others after they die? Although the children didn't earn the money, their parents did and their parents have the right to give it to whoever they want, including their children. That may not be great parenting, but it's only fair to let people decide what happens to the money they earned.

Originally Posted by Karma Police

Also, I think it's far too simplistic to say that poor people are poor because they are doing something wrong and deserve to be poor. Often, the main thing they've done wrong is being born to the "wrong" nation, neighborhood, or family.

I didn't mean that as a sweeping stereotype of every poor person (although that's probably how it came out), but rather in the sense that Doku said -- that in general, poor people are poor because they're not financially educated/savvy. For example, if you give a poor person a million dollars it'll be gone very quickly because they don't know how to manage that kind of money (happens a lot to lottery winners). The reason they don't have it in the first place is the same reason they'd quickly lose it if you gave it to them.

Originally Posted by Karma Police

From personal observation, I believe it's much easier for someone of average intelligence to be a "success" if the person is born into an upper middle class family instead of a lower income family.

People born into wealthy families have just as much of a chance of losing all their inherited money as poor people who win the lottery (and I bet that happens sometimes). The difference seems to be that wealthy families educate their children differently about how to handle money. This is what I gather from "Rich Dad, Poor Dad" and what Count Doku said.

[Karma Police]

Originally Posted by Baltar

Certainly people who didn't earn the money don't inherently deserve it. However, this is a moral issue and I don't think the government has a right to take the money for that particular reason. A person can give their money to anyone (while they're alive) without being hit with an estate tax, right?

Not exactly. In general, you can give away $1 million during your lifetime. After that, gifts are subject to the gift tax, which is generally designed to work in sync with the estate tax. I.e., the gift tax is the lifetime version of the estate tax.

[Doku]

Originally Posted by Karma Police

I don't get your last comment. How is applying the estate tax to everyone going full circle to eliminate it? I'm a fairly smart guy, but I'm not following you.

Let's quote a smaller portion, and see if you understand it then.

Originally Posted by Karma Police

But there would still be some discrimination. Those who don't inherit any money wouldn't have to pay the tax.

Your initial question was wether there should be an estate tax on the ultra-wealthy. I said no. With this statement, you agreed that the current estate tax is discrimination, and should not exist as-is. Therefore, you started out on one side of the fence in the argument. The discussion has taken its course, and come to the point where we now agree that it needs to go. And now that I think about it, "gone full circle" is not the statement that I was looking for because you have not yet hopped back over the fence to disagreement... It is late, and my brain isn't at 100%, and I can't recall the proper expression/idiom for "reached a final and natural conclusion." which is what I was looking for.

Originally Posted by Karma Police

I've been talking about the estate tax, which doesn't tax the "wealthy people" who did something right, it taxes the wealthy people's children who did nothing "right" to generate the wealth that's being passed to them.

Again, semantics. Technically, it IS a death tax. "The estate tax in the United States is a tax assessed against the estate of a deceased person, before property (real estate, stocks and bonds, business interests, etc.) is transferred to heirs" You died. Uncle Sam reaches out and touches you from beyond the grave one last time... just so that you know who's boss. Furthermore, the gov has given themselves the right to tax the previous three years worth of stuff that you personally gave away before you kicked the bucket.

Originally Posted by Karma Police

Are you suggesting that the children of wealthy people are somehow more inherently deserving of having wealth than the children of poor people?

So, when I buy my kid a Bentley, I am morally obligated to buy one for the kid down the street? (example... I wouldn't buy my kid a 300k car... unless normal used cars cost that much in the future)

Originally Posted by Karma Police

From personal observation, I believe it's much easier for someone of average intelligence to be a "success" if the person is born into an upper middle class family instead of a lower income family. I'm not making excuses for anyone, but I don't think it's fair to "blame" someone for conditions they didn't create.

Yes, I agree. The upper class family did what a family does, and made sure that their young had the best advantages that they could provide... just as my lower/working class parents did.

Originally Posted by Karma Police

Also, I think it's far too simplistic to say that poor people are poor because they are doing something wrong and deserve to be poor.

I never said that poor people deserve to be poor. Poor people who don't TRY deserve what they get. Same with people who start off rich, and lose it all via stupidity.

I still fail to see how the "I'm po, and y'all should be po as well. Jus cuz yer daddy is rich don make you no better 'n me" argument makes any sense.

[Karma Police]

Originally Posted by Doku

With this statement, you agreed that the current estate tax is discrimination, and should not exist as-is. Therefore, you started out on one side of the fence in the argument. The discussion has taken its course, and come to the point where we now agree that it needs to go.

I agreed that the current estate tax "discriminates," in that people in different situations are treated differently. Under that definition of "discrimination," your proposal and every tax known to man discriminates. It's quite clear I never agreed that the current estate tax should go.

Originally Posted by Doku

Again, semantics. Technically, it IS a death tax. "The estate tax in the United States is a tax assessed against the estate of a deceased person, before property (real estate, stocks and bonds, business interests, etc.) is transferred to heirs" You died.

As you said, the person is dead. A person's estate is not the deceased person. Your estate is simply a collection of the property you used to own and debts you used to owe. The heirs bear the tax, and we all know that.

Originally Posted by Doku

I never said that poor people deserve to be poor. Poor people who don't TRY deserve what they get. Same with people who start off rich, and lose it all via stupidity.

If you'll look closely, you see that part of my post was addressed to Baltar, not you.

Originally Posted by Doku

I still fail to see how the "I'm po, and y'all should be po as well. Jus cuz yer daddy is rich don make you no better 'n me" argument makes any sense.

Well, that's not my argument, and I don't blame you for not understanding an argument that isn't being made.

The estate tax isn't going to make anyone poor. Heirs who are exercising individual responsibility (as you advocate poor people should do) will be earning their own living rather than waiting to inherit daddy's millions. If the estate tax applies, it simply means that an heir, who hasn't created the inheritance, will get less of a windfall than he or she otherwise would.

If my parents died with $30 million and I received $15 million, I'd be thankful. I'd be thankful for the $15 million and thankful we live in a country with a modern government, economic system, technological and physical infrastructure, political stability, and many other benefits. As a specific example, I'd be thankful for the SEC's enforcement of laws preventing public companies from defrauding shareholders, which allows confidence in the capital markets and the generation of great wealth.

I'd be thankful for all those things that contributed to an economic environment in which it's possible to accumulate $30 million, all of which require taxes to maintain.

[Doku]

Ok, fine then. I don't get it, Karma Police.

My point is that the estate tax should not exist because it is discrimination against a minority group.

What, exactly, is your point?

[gberardi]

Actually, Karma Police, when you put it that way, I have to wonder why you would be satisfied with $15 million, knowing that there was 100% more available. If anything illustrated the opposing viewpoint more, it was this statement.

I like how we keep talking about statistics and lies, though. I admit that my 4e-5 gives an inaccurate view, but then we get back to 2% if we only count the number of Americans who died. How, then, does it affect more than "people claim"? Do we have to play with statistics and only include those people who die and had more than X dollars in value in their estates?

Statistics and lies. 2% doesn't sound like a lot. 12,600 paying a "death tax" out of the entire population definitely doesn't sound like a lot. Either way, it's a very small segment of the population that gets affected by this law.

Not that I am claiming that it is right, of course. I'm just trying to stop the emotional claims that many people seem to make. Most people just won't be affected by this law, and making it seem like it is separate from the death tax is just dishonest. If you truly believe it is wrong, then you can make an argument that isn't designed to mislead someone to your conclusion.

The gift tax and the estate tax are related. The gift tax was a way to prevent someone from avoiding the estate tax by giving away their things right before they died. The estate tax's purpose? Originally it was to raise revenue. From what I've been reading, the idea that the rich can afford to pay a heavier burden has been with the country since the beginning. $100 is worth more to someone with less than it is to someone with more. $100 is a choice between groceries and medication for one person while it can be the choice of picking between a new investment option or not investing for another.

If you think I am being too simplistic and purposefully trying to mislead you to a different conclusion, I am simply pointing out that you don't pay for air to breathe because it is easy and abundant for everyone, whereas NASA pays a lot for research and development to get breathable air into the space shuttle. You can tell me all you want about how you value the air just as much as NASA does, but it seems to me that air is worth a lot more to you if you don't have it. Why would money be different? Because the rich somehow understand the value more, $100 is worth more to them than it is to someone who can't pay the bills?

The people who understand the value of a dollar will get ahead with that knowledge. It doesn't change the fact that basic necessities need to be paid for, and someone who has no money will find $100 to be incredibly useful as opposed to someone who is rich.

Back to the estate tax, the original purpose was to raise revenue, and the original thought was that the richer you are, the more you can afford to pay. At least, that seems to be what I have learned in a couple of days of research. I am not an expert on this topic at all.

Once the income tax was established, it taxed income and wealth. It is why you read or hear about class warfare all the time, and why people keep talking about "punishing" the rich and "rewarding" the poor.

Currently, I think that the estate tax is like capital gains. You didn't pay taxes on the gains yet because you didn't sell it. If you sell it, then you pay taxes. Regardless if you think we should have a capital gains tax, the tax exists. If you give the property to someone else with no payment, that's a gift, and let's assume that there is no estate or gift tax for a second. What happens? Someone just got a lot of wealth for free.

I don't see a problem intrinsic in that. I am not a fan of the idea that the rich NEED to give their wealth to the poor. Contrary to what some people may claim, just because I don't immediately agree with them, I am not and have not ever been a member of the communist party. I am honestly trying to learn about the issue, and emotional name-calling on either side of a debate is just more cruft for me to get through.

Let's say that the estate tax applied to everyone who dies instead of just 2% of those who die. The "punishment" would be spread across everyone, then. Of course, we then get back to the idea that those who have less will miss the money more. "I couldn't pay rent this month!" vs "I couldn't invest more!"

Do we get rid of the estate tax? That way, no one gets "punished" for having wealth, and the government will just have to find a different way to pay down its debts. 2% of the families of the deceased get to have more inheritance in exchange for what? What's the benefit? I guess I am just wondering what happens then. Will the government just find a different way to pay for its debt? Won't that just mean that the tax is applied elsewhere, "punishing" the rich in another way?

Once again, I appreciate this discussion, and I am learning a lot. I prefer to be convinced with facts, reason, and logic. I also think I am pretty good at seeing BS, such as arguments about triple taxation when no taxation was done in the first place, which can convince me that a "real" argument can't be made. Other people make stronger arguments, and I am actually willing to believe that the estate tax is unfair to the very wealthy. I just don't see it as unfair to all taxpayers, which is what I usually hear as an argument.

[Karma Police]

I think we've about exhausted this topic and will leave you with my original point and final comments.

In spite of all the so-called "unfairness" of the estate tax and "punishment" of the rich, we have massive budget deficits and there's a growing gap in the disparity between the super-rich and everyone else in our society. Here, I'm stating facts, not making a value judgments.

If you're really interested in this issue, you can visit Responsible Wealth and other sites for more information. You'll find that many super-wealthy people, like the Gates family and Warren Buffet, support the estate tax, because they're thankful for all the benefits of our society and do not believe they are solely responsible for creating all of the wealth they enjoy. Also, they do not believe a few hundred wealthy families should wield such a disproportionate amount of power in a democracy.

Study this issue for yourself. Look for actual facts and do not rely on political slogans from either side.

[Doku]

Originally Posted by Karma Police

I think we've about exhausted this topic and will leave you with my original point and final comments.

Yep. You aren't really getting anywhere, so it is probably best to duck out.

Originally Posted by Karma Police

In spite of all the so-called "unfairness" of the estate tax and "punishment" of the rich, we have massive budget deficits and there's a growing gap in the disparity between the super-rich and everyone else in our society. Here, I'm stating facts, not making a value judgments.

The super-rich did not single handedly create the budget deficits.

Originally Posted by Karma Police

You'll find that many super-wealthy people, like the Gates family and Warren Buffet, support the estate tax, because they're thankful for all the benefits of our society and do not believe they are solely responsible for creating all of the wealth they enjoy. Also, they do not believe a few hundred wealthy families should wield such a disproportionate amount of power in a democracy.

That is their personal choice, and their personal beliefs.

Originally Posted by Karma Police

Study this issue for yourself. Look for actual facts and do not rely on political slogans from either side.

Good/solid advice.

[Karma Police]

Originally Posted by Doku

Ok, fine then. I don't get it, Karma Police.

My point is that the estate tax should not exist because it is discrimination against a minority group.

What, exactly, is your point?

Originally Posted by Doku

Yep. You aren't really getting anywhere, so it is probably best to duck out.

Doku,

You can have the final word on the substantive tax debate, but we're here to learn and engage in friendly discussions, so there's no need for playground taunts and "gotcha's."

From your 8:26 post, it appeared to me you didn't have anything to new to say. I understand you feel it's wrong to "discriminate" against the wealthy. OTOH, I don't believe it's "unfair discrimination" to treat people in different circumstances differently. Those points have already been made repeatedly, so why continue the "is-to, is-not" arguments?

If you have something new to add, I'd be glad to debate it. But, I'm not interested in wasting time making the same arguments again and again.

Peace to you.

[duhshuh]

I'm all for implementing a flat tax on purchases and doing away with income tax altogether.

It'd make the whole tax process streamlined and everyone would be equally taxed, including drug dealers and others who avoid paying income tax.

[TheBull]

Originally Posted by Baltar

I imagine if the US didn't spend (that is, waste) so much money on the military we'd have much lower taxes.

Have you ever worked for the government? The government wastes vast amounts of money and one of the few places where it is putting it to any good use is the military. If anything it isn't enough, just ask all of the service men and women who live below poverty while essentially working a 24 an hour job, and have lost benefits in the last 10-15 years as well. I know, I used to be in the service and saw how a lot of spending goes and lost health benefits, retirement benefits, etc.

Also, don't forget that the military buys its hardware from companies that employ tens of thousands of people.

Having said that, the rest of the government could definitely cut spending drastically and save the tax payers billions every year.

[TheBull]

Originally Posted by Karma Police

In spite of all the so-called "unfairness" of the estate tax and "punishment" of the rich, we have massive budget deficits and there's a growing gap in the disparity between the super-rich and everyone else in our society.

And this is the fault of the government? The beauty of America is that you CAN become wealthy and even super rich is YOU work hard enough. Why should you be punished for it. Massive budget deficits have nothing to do with the rich, or the poor for that matter. It has to do with irresponsible spending by the government and no accountability for that spending. You are comparing apples to oranges here.

Do you honestly think that taxing the super-rich even more is going to solve the national deficit issues? That would be like giving your teenager a credit card and when they charge it to the max say "Oh I'll solve your credit debt by giving you more money". Yea that will work.

Besides, many very wealthy people are great givers back to society, and they don't need to government to do it.

Also, they do not believe a few hundred wealthy families should wield such a disproportionate amount of power in a democracy.

As previously mentioned, that is their personal belief and they are entitled to it, but it isn't the belief of everyone. If you asked them, I would highly doubt that they would say that the government would spend their money better than they would. Take Bill Gates for example, he could just give his billions to the government and say "Here put this to good use", but no he is far smarter than that and decided to start a foundation where he and his wife are spending billions of their money helping people in various ways. Oh yea, and Warren Buffet has pledged his billions to that same foundation. Imagine that.

[Karma Police]

Originally Posted by TheBull

And this is the fault of the government? The beauty of America is that you CAN become wealthy and even super rich is YOU work hard enough. Why should you be punished for it.

As I've said before, tax policy isn't about blaming, assigning fault, or punishing anyone. It's about raising money to pay for the society we've all created, good or bad. There's no cosmic accountant somewhere, assigning blame and cost-accounting for auto pollution, budget deficits, poverty, dependence on oil, etc.

The suggestion that wealth is created solely by individual hard work (i.e., labor) is a myth. Otherwise, many other countries would be wealthier than America. All around the world, there are smart people who work as hard as Bill Gates, but they haven't accumulated billions. What's the difference? Probably many different factors, such as:

* "luck" (i.e., being at the right place at the right time);

* government financed infrastructure and technological advances, such as the internet (who do you think developed those space-aged polymers that make the Ginsu knife possible? );

* economic policies, including but not limited to tax policy;

* individual and corporate contributions that are not accounted for in our wonderful, but imperfect, system of economic trade (e.g., Xerox was responsible for the first GUI, but Gates and Jobs were able to "borrow" the idea and exploit it to make billions);

* government and private industry that are, for the most part and relatively speaking, free from corruption (which is a function of everyone in society enforcing a set of ethical standards);

* the list goes on...

Why do we perceive the Middle East to be strategically important to our national interests? Oil. Yes, we all benefit from using oil, but who benefits most economically? I'm not saying that's why the wealthy should pay more, just illustrating that our system cannot accurately assign the costs associated with creating economic wealth.

Originally Posted by TheBull

Massive budget deficits have nothing to do with the rich, or the poor for that matter. It has to do with irresponsible spending by the government and no accountability for that spending.

Exactly, and we're all responsible for paying for the government spending. I agree government should spend less, but that's a different argument than how we pay for the spending that's already occurred.

How is it "punishing" the wealthy or being unfair to continue the same tax laws, i.e., "rules of the game," that have been in place since 1916 and under which the super-wealthy have accumulated their wealth?

[Scipio]

Originally Posted by Karma Police

What do you think about imposing taxes on the ultra-wealthy in order to redistribute accumulated wealth? Should there be a limit to the amount of wealth that can be inherited?

Wealth being redistributed is a misnomer. It was never distributed in the first place, it was made by the productive activity of the wealth-creator. "Redistribution" hides the premise that the money that they created is somehow ours to take back. What I make is the product of my own work and effort--it is wholy mine--just as what is owned by the ultra-wealthy is entirely theirs. No one else has a right to claim it, because nobody has the right to another's life.

[Brutha]

Wealth being redistributed is a misnomer. It was never distributed in the first place, it was made by the productive activity of the wealth-creator.

The goverment distribute it to those people who produced it.
If someone wants to take something from the wealth creator the goverment punishes the "thief".
If it wouldn't do that distributing, their is nothing wrong ideas like those that lead to the french revolution.
Ownership arises from laws.