A option they seemed to have left out is raising the "inheritance tax". If these baby boomers got Reagan tax breaks in their prime earning years, we should compensate by increasing the "death tax".
Our (U.S.) tax code is absolutely horrible, but even with that revenue isn't the problem, spending is. I would say that politicians will ALWAYS spend every dime they have, but in reality they spend money they dont have. Awesome system we have.
When you're dead, you don't need money (unless you want to buy cryogeny contract, but you'll pay for it when you are living).
If you pass on this money to your family, 2 things happen : - you skew the odds in their favor. Other people who might be equally capable and intelligent won't be able to compete with them. that's a class society as in medieval europe, where wealth in inherited - you incentivize their laziness, and encourage them to destroy their life with this unearned money. you basically ensure they won't be able to grow from normal bad experiences. trust fund kids give a glowing example.
As much as I hate giving money to a government, I'd rather see my money there when I die that either or both of these 2 things happening. The alternative would be earmarking that money to debt reduction, so that at least it wouldn't be redistributed. That could be a good alternative.
The wealthy would respond to such a system by giving all their stuff to their kids before they die. It always amuses me when people prescribe magical tax plans in a static world as if people won't change their behavior. Despite thousands of changes in tax law over decades, the maximum level of revenue the government has been able to extract from the population has remained remarkably constant[1]
[1]http://www.heritage.org/federalbudget/current-tax-receipts
Some people will change their behavior and that's ok- because they'll be able to see with their own eyes, while they are still alive, the damage they'll do on their own family and maybe on society too.
That could induce other changes, such as them giving conferences to other people considering doing the same of the damages of 'unearned money'.
And even if only 1% could be shaved of the business and income tax, that'd be a move in the right direction - and sending a good message.
The idea is not so much increasing government revenue (I'd rather see it lowered to limit the waste) but reducing the damages caused by the whole idea of 'inheritance'.
Of course, as people have already pointed out they can just be given away before death. As long as it's not a sudden, unexpected death.
Then do it. There is no tax minimum; pay more on your taxes, make the US government the recipient of your assets in your will.
Also, if someone buys say an apartment complex, using depreciation for their tax benefit, then dies and leaves it to an heir, the heir generally receives a favorable tax benefit since the asset gets a step-up in cost basis, whereas if the original person sold the asset, they'd have to then pay the taxes from the profit and the depreciation they took over the years.
The tax code is already heavily weighted to favor the wealthy, allowing people to amass great wealth without having to contribute it back to society is very short-sighted. Earning money is fine, dying with it is a sin, as someone once said.
your money is taxed once: when you receive it.
Until you receive it, it isn't your money, it's your parent's.
It's a tax on the one percent. The vast, vast majority of Americans will never be bothered by it.
Furthermore, this exemption can currently be used as a lifetime gift-tax exemption rather than an estate tax exemption, which allows large estates to transfer assets to heirs and use the extra years to undergo compound accumulation of assets instead of exposing a larger sum to estate taxes in the future.
An estimated 52 500 returns will pay estate taxes in 2013.
(52000 / 142823000) * 100 ~= 0.036
You're right. It's not a tax on the "one percent", it's a tax on the "one-third of one-percent"
http://www.census.gov/compendia/statab/cats/federal_govt_fin...
http://www.taxpolicycenter.org/briefing-book/key-elements/es...
I believe the tax only effects the money over $1,000,000, you can also gift $14k/year tax free to each individual. I would expect that you really would need to have something along the lines of 1.5million in hard assets to even have to do much in the lines of tax planning, and using irrevocable trusts I'm fairly certain you can avoid taxes to a much higher number than that.
Maybe i'm living outside of reality but i don't understand why we can't have a single flat sales tax. The more you spend the more you pay. For some reason people think that just because you make more means you should pay a higher %, ofc you should pay more, but a higher % is the complete definition of unfair.
And some in favor of progressive taxation: - Letting the lowest earners keep their money can be cheaper than taking it and then giving it back through inefficient social services - Tax cuts on low earners translate to increased spending better than tax cuts on high earners
Regarding fairness, how is it fair that one person is born to wealthy parents and inherits $5 million while another inherits nothing, but unfair to set tax rates based on income?
This doesn't mean it's a good idea, or a bad idea, but very progressive places have used them without the world ending. It's probably a good way to keep spending in check, because it makes it a lot harder to jack up someone else's taxes to pay for your stuff.
(And while they do tax their rich more than America taxes its rich, the shape of the slope is nowhere what you would imagine. It's very rare for any marginal rate to get over 50%.)
I am by NO means wealthy lol, but if i had more money i know i would definitely be spending it lol.
People who come into wealth quickly seem to spend money quickly (athletes and lotto winners come to mind, hell even Willie Nelson went bankrupt at one point). People who earn wealth more slowly tend to end up investing their money and saving a larger percentage. If you make 300k/year, you could save 25% without blinking an eye, not so much if you earn 30k/year, especially if you have a dependent.
Its ridiculous, even beyond the ridiculous notion of taxing someone to die, how many times should YOUR money get taxed? Once? Twice? Three times? When does it stop?
Money is taxed almost every time it changes hands. This is entirely reasonable, and the way that the entire world works. If you only taxed each dollar once, after all, you'd have to figure out who the first owner of that dollar in its existence was, and make sure to only tax them.
The point of money is to flow, facilitating debts and trades. It's not supposed to have agency of its own, people are.
Besides, you can't take it with you into the next world. So why not confiscate your wealth when you're too dead to use it? Why not confiscate the ill-gotten gains of capitalists even before they die ;-)?
Our (U.S.) tax code is absolutely horrible, but even with that revenue isn't the problem, spending is. I would say that politicians will ALWAYS spend every dime they have, but in reality they spend money they dont have.
This theory sounds intelligent only by dint of sheer cynicism, and entirely fails to explain the Clinton budget surpluses.
Though i will ask you as far as Clintons budget surplus who was the ruling party in congress(the ones who make the decisions/changes) during this time?
Also what lead the the housing bubble that was the primary cause of the economic situation we are in right now? Clinton lowering mortgage interest rates and requires comes to mind(that and fannie mae and freddie mac). While he was praised for these two things and honestly they had good intentions. We all know what the road to hell is paved with so the saying goes.
So are trust fund transfers: http://en.wikipedia.org/wiki/Generation-skipping_transfer_ta...
It's not 100% trivial, but there is an entire industry devoted to helping people with this. That industry really shouldn't exist.
Deleted comment
This is just nonsense. Argue for an estate tax if you want, but don't say it's to compensate for the low taxes the boomers got.
Really, while there are arguments to be made for and against estate taxes, using it to correct a generational imbalance is incredibly silly.