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Mitochondria wrote:
Way to pull out the outliers as an example.

Almost every hetero couple is fully capable of procreation.

I am not sure if your argument is classified as "whataboutism" or a strawman.

Literally every single heterosexual couple in the country will eventually reach the age where they can no longer produce children, and yet they still get the marriage tax break. There is a 20 year window, more or less, where a marriage produces children, but women in the US live to an average age of almost 79 years - 40 years past where they generally have children, and they get the tax break, if married, for all of those years.

Please make the most minimal effort.

 Ouze wrote:

Mitochondria wrote:
Way to pull out the outliers as an example.

Almost every hetero couple is fully capable of procreation.

I am not sure if your argument is classified as "whataboutism" or a strawman.

Literally every single heterosexual couple in the country will eventually reach the age where they can no longer produce children, and yet they still get the marriage tax break. There is a 20 year window, more or less, where a marriage produces children, but women in the US live to an average age of almost 79 years - 40 years past where they generally have children, and they get the tax break, if married, for all of those years.

Please make the most minimal effort.

You are correct. They get the tax break for life.

Most of them procreate during that fertile time.

Most of them pick up the slack for the non-producers.

Mitochondria wrote:


Yes they do.

Most of them procreate during that time.

Most of them pick up the slack for the non-producers.

47% of US women will choose not to have children, but again, they are eligible for the tax break. Literally half the population isn't much of an "outlier". They will spend their entire married lives gaining a tax benefit and producing no children.

Please make a minimal effort.

Mitochondria wrote:
Hahaha. I fething knew it!

All of the progressives were like, "No, nothing of the sort will ever happen!"

The government gives financial incentives to married hetero couples for one very cynical reason.

They breed the next generation of taxpayer.

Something the gays and singles are not doing.

Nothing to do with "the gays". male/female couples have been abusing marriage laws for decades for things like immigration, after all. To be honest, this occurred to me the day civil partnerships were introduced - and IIRC it was discussed on occasion in the media too - if I live at home with an elderly parent, there's no reason I shouldn't enter into a civil partnership with them for the tax benefits. In fact, it'd be better to separate the legal and ... "personal" aspects of civil partnership/marriage entirely. Get married in a church? no benefits other than your old granny stops complaining about you "living in sin". Want the tax benefits of cohabiting with someone else? Get a civil partnership, no matter what your relationship with the other person is.

Mitochondria wrote:
Are you claiming that a majority of single parent households receive NO government assistance?

As in none whatsoever?

Virtually every household in the US receives some "government assistance". Your statement is so vague as to have no value.

 AndrewGPaul wrote:


if I live at home with an elderly parent, there's no reason I shouldn't enter into a civil partnership with them for the tax benefits.

You can civilly partner your parents in the US?

Mitochondria, clean up your posting and behave like a decent person or you're out of the OT for the forseeable future

Heh...

Marriage of convenience is literally the reason why marrriage began in the first place.

Well done mates!


Automatically Appended Next Post:

 Howard A Treesong wrote:

 AndrewGPaul wrote:


if I live at home with an elderly parent, there's no reason I shouldn't enter into a civil partnership with them for the tax benefits.

You can civilly partner your parents in the US?

No.

AllSeeingSkink wrote:
It mostly makes me wonder why inheritance tax is a thing in the first place. Why should the government have a say in to whom you leave your property.

I agree. Property and inheritance taxes are two that I think need to be abolished.

AllSeeingSkink wrote:
It mostly makes me wonder why inheritance tax is a thing in the first place. Why should the government have a say in to whom you leave your property.

It's a slight aside, but as I understand it - historically, inheritance tax was applied at a level that meant it only ever affected the landed gentry: the sort of people who were passing down, say, ownership of the best part of a county to their children. But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(

I honestly don't think home-ownership can even be considered "average" anymore. Real estate in general is now hugely valuable, and as the years have marched on the ability to even afford engaging in home ownership had continued to diminish. Having the ability to own a home already sets you above a lot of people when it comes to wealth.

The issue here is the same that we see in income really. The value of property varies wildly across the country, and practically accounting for it in tax law is a complete crap shoot.

 greatbigtree wrote:

Call me old-fashioned, but yes, if you live with someone and plan to raise a family, you are expected to share responsibilities for your lives. Full Stop. That's one of those grow-up-and-be-an-adult deals that you choose to follow or don't. Children create tax breaks because they are literally the future of humanity.

Too bad tax organizations have bad habit of assuming all male/female couples living in same apartment(but different rooms) as couples intending to live and raise a family. Regardless of do they actually intend to raise a family. Or even have sex. Or have anything more common than say "hmm this apartment is more expensive than either can afford alone but hey together we could and it conveniently has 2 rooms".

Crispy78 wrote:

AllSeeingSkink wrote:
It mostly makes me wonder why inheritance tax is a thing in the first place. Why should the government have a say in to whom you leave your property.

It's a slight aside, but as I understand it - historically, inheritance tax was applied at a level that meant it only ever affected the landed gentry: the sort of people who were passing down, say, ownership of the best part of a county to their children. But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(

Maybe in London and the SE it does. In most of the country you can still easily pass down an average home and some savings capital on top without going over the threshold, and anything more than that just ingrains inequality. The only problem with inheritance tax - in the UK - to my mind is how easily the wealthy can avoid paying it. Mind you that's the problem with most taxes in the UK.

Crispy78 wrote:

AllSeeingSkink wrote:
It mostly makes me wonder why inheritance tax is a thing in the first place. Why should the government have a say in to whom you leave your property.

But after many years of inflation, and the threshold not being correspondingly adjusted, it now affects the average home-owner... :(

Don't quote me on this but I think in Germany your main home (house/flat) is excluded (to a certain degree, castles probably don't count) from calculations when it comes to inheritance.

The question is not "why should there be an inheritance tax", it's "why shouldn't there be a tax on inheritance". Any other property transfer is taxed, so why should there be a special tax-free transfer just because the reason for the transfer is "someone died" instead of "you bought this thing"? And the answer is so that you can avoid situations like someone suddenly owing tons of taxes on the family home, or having to desperately beg for money to pay the taxes and avoid losing a family member's beloved possessions. That's a good reason to grant an exception to the usual taxes, one that benefits society as a whole. What is not a good and generally-beneficial exception is allowing large amounts of wealth to be transferred without penalty. That isn't a case of struggling to keep family heirlooms in the family, it's simply ensuring that the rich stay rich. And that isn't something we need to give special privileges for.

 Peregrine wrote:
The question is not "why should there be an inheritance tax", it's "why shouldn't there be a tax on inheritance"

I would be wary of situations where double taxation would be applied. If I sold a bunch of stock and paid capital gains tax on the sale, and die, then why should the government be double dipping into my estate when I die? I'm not wholly averse to the estate tax, but double dipping seems pretty crappy.

Mitochondria wrote:

What would you prefer me to call the gays? The homosexuals?

People?

 Ouze wrote:

 Peregrine wrote:
The question is not "why should there be an inheritance tax", it's "why shouldn't there be a tax on inheritance"

I would be wary of situations where double taxation would be applied. If I sold a bunch of stock and paid capital gains tax on the sale, and die, then why should the government be double dipping into my estate when I die? I'm not wholly averse to the estate tax, but double dipping seems pretty crappy.

But that same double dipping occurs if you sell stock, pay capital gains, and then give the money to someone else while you're still alive. Why should the tax rate be lowered just because the reason for your gift is "I'm dead now" vs. "you want the money"?

We pretty much universally tax the transfer of good/wealth across the board, ignoring it only when the value is so low as to be below the radar/not worth the paper work/impractical. The whole estate tax thing has nothing to do with anything but the super-rich objecting the idea of taxation itself, getting additional traction because there's always sympathy for relatives/loved ones of the deceased and the fact that home values have sky rocketed the past half century, dragging many people originally exempt for such taxation into the range of it (which arguably should be fixed but that's not an easy thing to fix).

The debate has nothing to do with governance and everything to do with sentiment.

 Peregrine wrote:

 Ouze wrote:

 Peregrine wrote:
The question is not "why should there be an inheritance tax", it's "why shouldn't there be a tax on inheritance"

I would be wary of situations where double taxation would be applied. If I sold a bunch of stock and paid capital gains tax on the sale, and die, then why should the government be double dipping into my estate when I die? I'm not wholly averse to the estate tax, but double dipping seems pretty crappy.

But that same double dipping occurs if you sell stock, pay capital gains, and then give the money to someone else while you're still alive. Why should the tax rate be lowered just because the reason for your gift is "I'm dead now" vs. "you want the money"?

There's a pretty high threshold before the gift tax kicks in though, right? Like $5 million or so?

I guess - and my thoughts on this aren't fully fleshed out - I think double dipping is wrong, but I also temper that with thinking there is a government interest in prevent enormous tax-free transfers of wealth accumulating over time*. Having a high threshold for both gifts and taxes sounds fair to me.


(*that's the specific part that I don't really have all the way fleshed out. If some dude makes 400 million dollars, let's say, and wants to hand it down; where is the government interest in interfering with that? The idea that big piles of money just hang out and don't get invested seem the immediate answer to that, but is the solution telling having the government tell people how to best spend their money? I think there have to be better arguments I don't yet know)

Wait just one second

wasn't this the plot for some comedy movie?


edit wait never mind what im thinking of was "i now pronounce you chuck and larry"

same thing though

the inheritance tax, or estate tax, or "death tax," actually closes a loophole that most of us take for granted: the idea that gifts are not taxable income.

If my employer gives a $50 bonus, I pay taxes on it. If I win $1000 in the lottery, I pay taxes on it. but if my gives me $7,000 to pay off my credit card, I don't pay taxes on that.

The reason is that we allow people to receive gifts and charity without being taxed. Instead, we tax people giving gifts, either while alive or in their wills. Because the system is reasonable, each person gets a credit of ~$13,000 a year, plus a lifetime credit of close to $5 Million of gifts. Beyond that, the gift giver is liable for the taxes.

As for the government interest, inheritance is actually one of those matters where the government matters a great deal. Even in a libertarian paradise, there will be probate courts parceling up a persons goods.

Also, money is constantly double taxed. Dividends were taxed first a corporate profit, then as a capital gain to the recipient (although current laws have lowered both dramatically). More prosaically, in states with sales tax, most people will pay sales tax on all goods and services they buy, with money they were already taxed on. Even rent includes the property tax for the dwelling.

The estate tax is a crude mechanism for avoiding dynastic, unearned wealth. But dynastic wealth is not good for society, and is almost certainly at least somewhat harmful.

 Howard A Treesong wrote:

 AndrewGPaul wrote:


if I live at home with an elderly parent, there's no reason I shouldn't enter into a civil partnership with them for the tax benefits.

You can civilly partner your parents in the US?

Who knows? Who cares? I'm not in the US. To be honest, I don't know if you can do it in the UK, either.

You can’t.

I doubt there are many people who will marry for money rather than love.

 Kilkrazy wrote:
I doubt there are many people who will marry for money rather than love.

I guess every form of refuge has its price.

 Polonius wrote:
The estate tax is a crude mechanism for avoiding dynastic, unearned wealth. But dynastic wealth is not good for society, and is almost certainly at least somewhat harmful.

Yeah this is the part that I think I need expanded. I sort of agree this is bad but I don't really know why, other then "it seems bad".

Thanks for the thought out post especially on double dipping, which I still think is pretty crappy even if I concede it does happen regularly.

 Ouze wrote:
Yeah this is the part that I think I need expanded. I sort of agree this is bad but I don't really know why, other then "it seems bad".

Dynastic wealth is bad because it's unearned wealth. Someone who inherits a ton of money isn't wealthy because they have worked hard for it, or provided any useful service to society. They just happened to be lucky enough to be born into a family that had money and live in a society that makes it absurdly easy to continue to be wealthy once you get your initial fortune. They never have to work, or build anything, or do anything but pay a decent salary to some investment managers who make sure that the fortune continues to accumulate faster than they can spend it. A high degree of dynastic wealth means that a large fraction of the total wealth of society is in the hands of people who did nothing to earn it, rather than the people who are doing productive things that we want to reward. And the incentive to produce and improve the world is reduced, on top of any questions about fairness and equality.

Now, this doesn't necessarily mean that we need punitive taxes to actively work against inherited wealth. But we certainly don't need to be giving special tax breaks to assist people in maintaining dynastic wealth.

The estates tax is a fairly antiquated mechanism in attempts to dampen dynastic wealth.

Doesn't really work all the time as it does create perverse effect in other industries (ie, family farms sold to corporations as family can't keep inheritance properties) which is kinda the opposite of many 'death tax supporters' would advocate for...

If you really want to put a damper on dynastic wealth, make trusts illegal.

 Ouze wrote:

 Polonius wrote:
The estate tax is a crude mechanism for avoiding dynastic, unearned wealth. But dynastic wealth is not good for society, and is almost certainly at least somewhat harmful.

Yeah this is the part that I think I need expanded. I sort of agree this is bad but I don't really know why, other then "it seems bad".

Thanks for the thought out post especially on double dipping, which I still think is pretty crappy even if I concede it does happen regularly.

So, straight up, the first thing to understand about any sort of taxation is Sutton's Law. Why do we tax the wealthy more? Because that's where the money is.

Progressive taxation (meaning that higher incomes pay not just more, but a higher percentage) can be justified with plenty of moral and ethical reasoning, but at the end of the day, taxation that isn't progressive simply will not work. For example, one famous society that only taxed the poor and middle class was pre-revolutionary France, and things did not end well. There's a reason no serious economist or policy mind argues for the flat tax. So, a few fringe folks aside, nobody is arguing against progressive taxation, but only the details. (Side note: only federal income tax is significantly progressive. Most other taxes are slightly to highly regressive, meaning that poor people pay a larger share of their income than richer people. Sales taxes, excises taxes (on gas, alcohol, and tobacco), property taxes, and even payroll taxes are all some form of regressive. Property tax is a bit of a special case, since the very poorest people don't own any property to tax, but it is more regressive than progressive. This is why the infamous remark about how many Americans don't' pay taxes was so ill informed.)

So, why is double taxation okay? For corporations, it's the cost of incorporation, with all of the benefits it provides. You don't have to run your business as a corporation for taxes, but if you do, and you enjoy the benefits of limited liability, and the corporate veil, and virtual immunity to criminal prosecution, you pay more in taxes. We're not talking about Ma and Pa Kettle here, this is American society making a deal with the most powerful corporations int eh world. They're not getting bilked. In practice, of course, corporate tax rates are far lower than are advertised, with many industries paying a marginal tax rate in the single digits, due to credits and deductions. Further, while a stockholder is taxed on dividends, that's also taxed at the capital gains rate, not their normal income rate. So, that means that for most shareholders, while corporate profits are "double taxed," the profits are taxed at a lower effective rate than if the money was taxed once as normal income.

As for the argument that the estate tax is a double tax, it can be at times, but in practice it usually isn't. The reason is a bit complicated, but I'll try to explain it as best I can. For most people, their income and wealth are both directly tied to their salaries. So, if you're a Nurse or a programmer or an electrician, pretty much everything you have is based on your wages and savings. So, when you die, everything you've earned was taxed as income, and thus if you paid an estate tax on those savings, it would be double taxation. However, the estate tax has a credit for $5 million, which means that your estate has to be worth over that to actually pay tax. And people don't regularly accumulate $5 million in assets by saving wages or salary, they get that either by growing a business or investing well. And this where it gets complicated. Whenever a taxpayer sells something, if they sell it for profit, meaning they sold it for more than they paid for it, they technically owe taxes on that gain. Of course, virtually always, we sell things for far less than we paid. The biggest exception for most families are homes, and the tax code explicitly waives taxing gains on homes if they are used to buy another home. But if you buy a house for a rental proprety for $100,000, and sell it 10 years later for $150,000, you would owe taxes on that $50,000. the price you paid is called "basis," and the gain is the selling price minus the basis. That's what's called a realized gain, because you actually sold it, and you know what you made. Where things get trickier is for things that aren't sold. So, if you buy a rental house for $100,000, and never sell it, you never owe taxes on it. If you hold that house until you die, and when you die, it's now worth $250,000, amazingly, the tax code allows whoever inherits that property to take the property at a "step up" basis, which is set at the current fair market value, not whatever the first person pays.

In general, the tax code is very generous to taxpayers, in that it will go out of its way to not tax people on an unrealized gain. If you bought $1000 of microsoft in 1985, and it's now worth $10 million, you haven't paid a drop of tax on that, and you won't until you sell it. It's an unrealized gain. However, the tax code does allow people to write off unrealized losses, mostly under what's known as depreciation. Depreciation is when a company can claim a deduction from certain purchases, not all at once, like salaries or office supplies, but over the life of the item. So, if a landscaping business buys a pick up truck, they can't call it all a business expesne up front, because that truck is also an asset. but... there's an unrealized loss on that truck, because everybody knows the business will sell the truck for less than it paid. So the IRS allows business to write up a portion every year. things like computres depreciate over a few years, trucks over five or so, all the way up to apartment buildings at like 22 years. However, each time you take depreciation on an item, you also lose corresponding basis in that item, so when you sell it, you can't take as large a loss, or if you do sell for a profit, you pay tax on more gain.

What does this have to do with the Estate tax? Everything. this means that a person can buy a rental house for $100,000 dollars, take ~$5000 in a depreciation tax deduction for 22 years, and then when they die, pass the house, which has a tax basis of zero, to their children at full market value basis. So if the house is now worth $400,000, nobody every pays tax on that gain, because when it's inherited, the house gets step up basis. And yes, even if you look at the initial $100,000 as having been taxed, the initial tax payer got that all back in deductions due to depreciation.

Most estates that actually pay estate tax involve two major assets: closely held family businesses, or securities (stocks and bond). Sheer propety, like real estate or intellectual property, happens, but as i described above, enjoys huge benefits already. For a family business, usually the initial tax payer puts his own investment money in, and the business grows, mostly through reinvestment of profit. Very few people that have $5million dollar businesses when they die started with all that much, so much of the business's value is due to growth. this is unrealized gain of course, but just like the rental house, when the kids inherit that business, they don't pay taxes on the growth. So a landscaping business started in 1975 for $10k that is worth $10Milliion when the owner dies has never paid taxes on that growth, only on the profits that were eventually paid out. Basically, they got 9.99 Million richer, and never paid a cent prior to the estate tax. Likewise, if the taxpayer didn't own a business, but was a successful physician broadly invested in the market. They turned $1 Million in investments into a $10 Million dollar portfolio over 50 years (a non unrealistic rate of return). When they die, their heirs owe estate tax on everything over $5 Million... but nobody every paid taxes at all on $9 million in growth. Even if they did sell some stocks, they weren't taxed as normal income, but as a "capital gains" at 15%, or 40% of what most high earners pay on income.

So, putting this all together, you can end up with dynastic wealth that has paid shockingly little tax on the growth of their wealth. and that's before we get into ways to avoid actually paying the estate tax. Basically, very rarely does the estate tax doubly tax a person's earnings. Sure, for very high income figures that die in their earning prime, they might get hit, but the majority of estate taxes are paid on wealth that has grown untaxed, not on already taxed wages.




Automatically Appended Next Post:

 whembly wrote:
Doesn't really work all the time as it does create perverse effect in other industries (ie, family farms sold to corporations as family can't keep inheritance properties) which is kinda the opposite of many 'death tax supporters' would advocate for...

that's a common myth. Extremely few family farms reach the level of paying estate tax, especially because farm estates can be valued at their "farm use rate", rather than fair market value. for more, see:

http://thefederalist.com/2017/09/28/heres-need-know-estate-tax-family-farmers/




Automatically Appended Next Post:

 Ouze wrote:
Yeah this is the part that I think I need expanded. I sort of agree this is bad but I don't really know why, other then "it seems bad".

So, dynastic wealth isn't bad as much as it is far less good than other types of wealth. Very broadly, a person can make money in two ways: the first is what most people do: work for it, either for a salary, or commission, or by running a business, or some sort of hustle. Your labor or industry or services or advice or something you do or create is paid for. The other way is through rents. Either literally rents from somebody using your property, or more abstractedly by paying you for use or access to something you control or own.

Historically, the wealthy have made their money through rents. You own a ton of land, and rent it out to tenants, who do all the work, and you collect the profit. If this sounds a bit like feudalism, you're getting the point already.

When people talk about the idle rich, it's a moral or character judgment on people that do not need to work, because they can live off of their wealth. But, it's a serious concern, because you have capital that's far removed from daily life. The most popular argument for reducing taxes on the very wealthy is that it will free up money for further investment, allowing the wealthy to grow businesses, fund new start ups, and do other things that will create jobs and prosperity. That's really only true in economic situations where capital is difficult to come by, which of course is not the case right now. You can get funding for almost anything right now, because money is cheap and investors are always looking for good ideas. (That our economy is unceasingly regulated to protect large actors and stifle new enterprise is a different topic.)

Taxes policy is often brutally pragmatic: the idea is to get the money we need from those that can pay, with the least harm to the economy. And dynastic wealth is the fat of the land. It's the low hanging fruit. As noted above, this wealth has seldom been taxed at a high rate, if at all.