Generational Wealth

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

I'm the PP at 14:25 who has studied tax policy in the context of wealth disparity. Like I said, I have never really found an answer. But the closest thing to a good answer was to drastically increase transfer taxes (inheritance and gift). I think it is the most palatable answer all around (if not the best one), but in the US extreme notions about property rights prevail, making this close to politically impossible.

What happens today in reality is that the really rich pay a lot to lawyers to get around estate taxes, so it falls mainly on the upper middle class instead.

I live in DC, which has a much lower estate tax threshold than the federal government, which, given the price of housing, is not all that hard to exceed.

I have been told I can go to a lawyer and set up trusts to avoid the tax, but why do I have to enrich lawyers by thousands because we naively bought in DC instead of VA (no estate taxes) decades ago?

And if I can do this, what is the point of the estate tax? It constitutes just 0.06% of the District's revenue. But it discourages residency by older, relatively well-off people who are willing to pay the high income tax and use very few city services, but don't want the District to diminish what goes to their heirs.

Up to you, but it will only cost $2-3K to set up the trusts to protect yourself from estate taxes from DC. We live in a state with low level for estate taxes and it would be downright foolish to not hire the lawyer to protect your assets. It's legal, and most people will protect themselves. if you have more than 1-2M in net worth you need to.
I'd rather pay the lawyer a few thousand and not have my kids loose 20% of the estate to our state and another 18-40% for federal. close to 60% of our estate would disappear. Seems worth a few thousand now to protect it legally

Woah woah woah, what happened to the wealthy paying their fair share y’all?

First---that income was fully taxed when earned. No reason it should be taxed again when we die.
We do pay our "fair share". When we earned $10M one year it was ALL taxable at the Fed and State level---a portion was LT Cap Gains rest was ST Cap Gains. No way to protect that. Same when we earn our typical $1M in a year---it's all income and there is no way to shelter it. We pay more in fed and state income taxes in a year than most people make in a year. Anything over ~400K is taxed at the 38% and top state bracket. So please don't talk about "fair share".

Finally, it is legal to establish trusts for protecting your wealth from being taxed a 2nd time at your death. As long as it's legal, why wouldn't you utilized that? I'm all for paying taxes the first time, but don't take my money a 2nd time just because I dropped dead.

Why shouldn't it be? Money is always taxed at transfer. I pay taxes on the money I earn, then again on that same money when I spend it. Why should your money be singularly protected from taxation on transfer when no one else's is?

[Anonymous]

Anonymous wrote:Generational wealth means that the oldest generation leaves behind assets for the next generation to inherit and so on and so on. In other words successive generations dying with more than 0.

This. My family has some generational wealth (from my grandparents on) and it is certainly nowhere close to millions. What does it mean? My grandparents not only supported themselves until their deaths, they left excess. Not a huge amount, in the low 6 figures, but it was EXTRA. My parents, being Boomers, did very well financially as solidly middle to upper middle class. So they didn't need the extra. It was funneled directly to me in a few different ways. My siblings and I went to college and left debt free. That alone was a huge financial safety net. I was given almost $80k for a downpayment that came from different grandparents in different ways (one was an investment account started with very little when I was 10 years old).

So while I will always work, I have had financial help in ways that many millions of other people do NOT have help. There's no trust fund or many millions in stocks. Me, my siblings and my spouse all work, and will work until our 60s. But tens of thousands makes huge progress for the next generation too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

I'm the PP at 14:25 who has studied tax policy in the context of wealth disparity. Like I said, I have never really found an answer. But the closest thing to a good answer was to drastically increase transfer taxes (inheritance and gift). I think it is the most palatable answer all around (if not the best one), but in the US extreme notions about property rights prevail, making this close to politically impossible.

What happens today in reality is that the really rich pay a lot to lawyers to get around estate taxes, so it falls mainly on the upper middle class instead.

I live in DC, which has a much lower estate tax threshold than the federal government, which, given the price of housing, is not all that hard to exceed.

I have been told I can go to a lawyer and set up trusts to avoid the tax, but why do I have to enrich lawyers by thousands because we naively bought in DC instead of VA (no estate taxes) decades ago?

And if I can do this, what is the point of the estate tax? It constitutes just 0.06% of the District's revenue. But it discourages residency by older, relatively well-off people who are willing to pay the high income tax and use very few city services, but don't want the District to diminish what goes to their heirs.

Up to you, but it will only cost $2-3K to set up the trusts to protect yourself from estate taxes from DC. We live in a state with low level for estate taxes and it would be downright foolish to not hire the lawyer to protect your assets. It's legal, and most people will protect themselves. if you have more than 1-2M in net worth you need to.
I'd rather pay the lawyer a few thousand and not have my kids loose 20% of the estate to our state and another 18-40% for federal. close to 60% of our estate would disappear. Seems worth a few thousand now to protect it legally

Woah woah woah, what happened to the wealthy paying their fair share y’all?

First---that income was fully taxed when earned. No reason it should be taxed again when we die.
We do pay our "fair share". When we earned $10M one year it was ALL taxable at the Fed and State level---a portion was LT Cap Gains rest was ST Cap Gains. No way to protect that. Same when we earn our typical $1M in a year---it's all income and there is no way to shelter it. We pay more in fed and state income taxes in a year than most people make in a year. Anything over ~400K is taxed at the 38% and top state bracket. So please don't talk about "fair share".

Finally, it is legal to establish trusts for protecting your wealth from being taxed a 2nd time at your death. As long as it's legal, why wouldn't you utilized that? I'm all for paying taxes the first time, but don't take my money a 2nd time just because I dropped dead.

I understand it’s legal. It’s also the kind of thing people who say “make the wealthy pay their fair share”, want to get rid of.

Sales and excise taxes are paid using money that was already taxed once, same with any sort of fees paid to a government.

Yes, You probably pay more in taxes every year than than multiple median-income-earning-Americans even make in one year. And you still end up with multiple times more than what someone earning the median income makes.

And yet inequality and the frustration and malaise it brews in our society is only getting worse and worse so there’s something wrong. Last time I checked it was.. more than 80% of stocks are owned/controlled by the top 10% of earners.

In my opinion there’s something wrong with that. And removing currently-legal “tricks” that help contribute to this insane concentration of wealth is something that needs to happen if we don’t want our society to collapse.

True, you earn money and pay taxes on it and then pay sales/excise taxes when you spend it. So, yes, taxed twice.

But with estate taxes, the money is triply taxed. Once when you earn the money, again when you die, and then again when your heirs spend it.

This 1000%! Why should you not be able to give your kids the money you earned? They will then be taxed when they spend it and on it's growth (cap gains, interest, etc).

For those of us whose income is W2/option income, there is truly no way to reduce taxes on it. We pay 38% on everything over the ~$453K level (Don't care to look up the exact number with the IRS). We are not Buffet who pays a "lower tax rate than his EA". We basically pay an effective tax rate over 30% every year, many years it's closer to 35-38% for the federal level, and the same for the state level. I feel that paying close to 50% combined (not counting SS, medicare, FICA, etc. ) is really enough. I'm not sheltering any of it while I'm alive as there are not any legal ways to do so (it's W2/option income).

But the argument that money should be taxed again when transferred upon death to an immediate family member (kids/grandkids) is wrong IMO. Would be much better to target corporation and start making them pay some taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

I'm the PP at 14:25 who has studied tax policy in the context of wealth disparity. Like I said, I have never really found an answer. But the closest thing to a good answer was to drastically increase transfer taxes (inheritance and gift). I think it is the most palatable answer all around (if not the best one), but in the US extreme notions about property rights prevail, making this close to politically impossible.

What happens today in reality is that the really rich pay a lot to lawyers to get around estate taxes, so it falls mainly on the upper middle class instead.

I live in DC, which has a much lower estate tax threshold than the federal government, which, given the price of housing, is not all that hard to exceed.

I have been told I can go to a lawyer and set up trusts to avoid the tax, but why do I have to enrich lawyers by thousands because we naively bought in DC instead of VA (no estate taxes) decades ago?

And if I can do this, what is the point of the estate tax? It constitutes just 0.06% of the District's revenue. But it discourages residency by older, relatively well-off people who are willing to pay the high income tax and use very few city services, but don't want the District to diminish what goes to their heirs.

Up to you, but it will only cost $2-3K to set up the trusts to protect yourself from estate taxes from DC. We live in a state with low level for estate taxes and it would be downright foolish to not hire the lawyer to protect your assets. It's legal, and most people will protect themselves. if you have more than 1-2M in net worth you need to.
I'd rather pay the lawyer a few thousand and not have my kids loose 20% of the estate to our state and another 18-40% for federal. close to 60% of our estate would disappear. Seems worth a few thousand now to protect it legally

Woah woah woah, what happened to the wealthy paying their fair share y’all?

First---that income was fully taxed when earned. No reason it should be taxed again when we die.
We do pay our "fair share". When we earned $10M one year it was ALL taxable at the Fed and State level---a portion was LT Cap Gains rest was ST Cap Gains. No way to protect that. Same when we earn our typical $1M in a year---it's all income and there is no way to shelter it. We pay more in fed and state income taxes in a year than most people make in a year. Anything over ~400K is taxed at the 38% and top state bracket. So please don't talk about "fair share".

Finally, it is legal to establish trusts for protecting your wealth from being taxed a 2nd time at your death. As long as it's legal, why wouldn't you utilized that? I'm all for paying taxes the first time, but don't take my money a 2nd time just because I dropped dead.

Why shouldn't it be? Money is always taxed at transfer. I pay taxes on the money I earn, then again on that same money when I spend it. Why should your money be singularly protected from taxation on transfer when no one else's is?

Typically, money is taxed upon transfer when you receive a good or service in return that is subject to sales/excise taxes. In other words, the money transferred is not taxed, but what one buys with it is.

This is not the case with estate taxes in which the money itself is taxed before its can be spent on a good or service and another tax paid.

[Anonymous]

Anonymous wrote:I thought it meant you were able to ease the way for your kids and grandkids - pay for college, help with down payment, help with private school - during your life. Wealth beyond just inheriting the family home and a bit of cash.

This. Or in general even not paying for things for the generation before.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

I'm the PP at 14:25 who has studied tax policy in the context of wealth disparity. Like I said, I have never really found an answer. But the closest thing to a good answer was to drastically increase transfer taxes (inheritance and gift). I think it is the most palatable answer all around (if not the best one), but in the US extreme notions about property rights prevail, making this close to politically impossible.

What happens today in reality is that the really rich pay a lot to lawyers to get around estate taxes, so it falls mainly on the upper middle class instead.

I live in DC, which has a much lower estate tax threshold than the federal government, which, given the price of housing, is not all that hard to exceed.

I have been told I can go to a lawyer and set up trusts to avoid the tax, but why do I have to enrich lawyers by thousands because we naively bought in DC instead of VA (no estate taxes) decades ago?

And if I can do this, what is the point of the estate tax? It constitutes just 0.06% of the District's revenue. But it discourages residency by older, relatively well-off people who are willing to pay the high income tax and use very few city services, but don't want the District to diminish what goes to their heirs.

Up to you, but it will only cost $2-3K to set up the trusts to protect yourself from estate taxes from DC. We live in a state with low level for estate taxes and it would be downright foolish to not hire the lawyer to protect your assets. It's legal, and most people will protect themselves. if you have more than 1-2M in net worth you need to.
I'd rather pay the lawyer a few thousand and not have my kids loose 20% of the estate to our state and another 18-40% for federal. close to 60% of our estate would disappear. Seems worth a few thousand now to protect it legally

Woah woah woah, what happened to the wealthy paying their fair share y’all?

First---that income was fully taxed when earned. No reason it should be taxed again when we die.
We do pay our "fair share". When we earned $10M one year it was ALL taxable at the Fed and State level---a portion was LT Cap Gains rest was ST Cap Gains. No way to protect that. Same when we earn our typical $1M in a year---it's all income and there is no way to shelter it. We pay more in fed and state income taxes in a year than most people make in a year. Anything over ~400K is taxed at the 38% and top state bracket. So please don't talk about "fair share".

Finally, it is legal to establish trusts for protecting your wealth from being taxed a 2nd time at your death. As long as it's legal, why wouldn't you utilized that? I'm all for paying taxes the first time, but don't take my money a 2nd time just because I dropped dead.

Why shouldn't it be? Money is always taxed at transfer. I pay taxes on the money I earn, then again on that same money when I spend it. Why should your money be singularly protected from taxation on transfer when no one else's is?

Typically, money is taxed upon transfer when you receive a good or service in return that is subject to sales/excise taxes. In other words, the money transferred is not taxed, but what one buys with it is.

This is not the case with estate taxes in which the money itself is taxed before its can be spent on a good or service and another tax paid.

No, it's taxed on all transfers. When you sell a stock, you're taxed on the appreciation (not a good or service) BEFORE you can spend it on a good or service. It's the transfer that's taxed, not specifically purchases. You're trying to create a special loophole for transfers due to inheritance but it doesn't hold up to scrutiny. I guess we shouldn't tax lottery winnings by this reasoning either - you haven't spent it yet!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

Why does it "seem a little off"? For someone worth 30-40M, they most likely earned that themselves. And most likely paid high taxes on it already (speaking from experience, it is very high----if earned income, no way to not pay taxes/protect it). Why should the government get to tax it again when you die?
If you are smart, they wont as you will pass it on while still alive and use legal trusts to ensure it's not taxed again.
I'm all for taxes, but one and done please.

When I wrote it seems a little off, what I meant was that it's one thing to earn the money yourself and use it to its fullest while you are alive, but to pass on tens of millions to your heirs is what seems off. It's not that I believe the government is so great, but intergenerational wealth transfers are not really in society's best interests, in my opinion. I'm just saying that there is value to hard work and drive and determination to get the most out of life and I think if you could only inherit $5-10 million, that is probably enough to carry on the legacy of your parent, but not prevent you from reaching your potential. It would prevent, for example, someone never working thinking they have it made forever. I don't know, maybe I'm wrong, but $5-10 million in today's dollars seems like enough to pass along to each heir.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

I'm the PP at 14:25 who has studied tax policy in the context of wealth disparity. Like I said, I have never really found an answer. But the closest thing to a good answer was to drastically increase transfer taxes (inheritance and gift). I think it is the most palatable answer all around (if not the best one), but in the US extreme notions about property rights prevail, making this close to politically impossible.

What happens today in reality is that the really rich pay a lot to lawyers to get around estate taxes, so it falls mainly on the upper middle class instead.

I live in DC, which has a much lower estate tax threshold than the federal government, which, given the price of housing, is not all that hard to exceed.

I have been told I can go to a lawyer and set up trusts to avoid the tax, but why do I have to enrich lawyers by thousands because we naively bought in DC instead of VA (no estate taxes) decades ago?

And if I can do this, what is the point of the estate tax? It constitutes just 0.06% of the District's revenue. But it discourages residency by older, relatively well-off people who are willing to pay the high income tax and use very few city services, but don't want the District to diminish what goes to their heirs.

Up to you, but it will only cost $2-3K to set up the trusts to protect yourself from estate taxes from DC. We live in a state with low level for estate taxes and it would be downright foolish to not hire the lawyer to protect your assets. It's legal, and most people will protect themselves. if you have more than 1-2M in net worth you need to.
I'd rather pay the lawyer a few thousand and not have my kids loose 20% of the estate to our state and another 18-40% for federal. close to 60% of our estate would disappear. Seems worth a few thousand now to protect it legally

Woah woah woah, what happened to the wealthy paying their fair share y’all?

First---that income was fully taxed when earned. No reason it should be taxed again when we die.
We do pay our "fair share". When we earned $10M one year it was ALL taxable at the Fed and State level---a portion was LT Cap Gains rest was ST Cap Gains. No way to protect that. Same when we earn our typical $1M in a year---it's all income and there is no way to shelter it. We pay more in fed and state income taxes in a year than most people make in a year. Anything over ~400K is taxed at the 38% and top state bracket. So please don't talk about "fair share".

Finally, it is legal to establish trusts for protecting your wealth from being taxed a 2nd time at your death. As long as it's legal, why wouldn't you utilized that? I'm all for paying taxes the first time, but don't take my money a 2nd time just because I dropped dead.

Why shouldn't it be? Money is always taxed at transfer. I pay taxes on the money I earn, then again on that same money when I spend it. Why should your money be singularly protected from taxation on transfer when no one else's is?

Typically, money is taxed upon transfer when you receive a good or service in return that is subject to sales/excise taxes. In other words, the money transferred is not taxed, but what one buys with it is.

This is not the case with estate taxes in which the money itself is taxed before its can be spent on a good or service and another tax paid.

No, it's taxed on all transfers. When you sell a stock, you're taxed on the appreciation (not a good or service) BEFORE you can spend it on a good or service. It's the transfer that's taxed, not specifically purchases. You're trying to create a special loophole for transfers due to inheritance but it doesn't hold up to scrutiny. I guess we shouldn't tax lottery winnings by this reasoning either - you haven't spent it yet!

No, it's the unrealized gains that are taxed when you sell a stock. So the "new income", not the "transfer". You are not taxed on the entire value of the stock you sell. It's not a transfer tax.

Inheritance is family money, taxes were already paid on it when the original owners earned it. And will be taxed again when the kids/grandkids spend it on products/goods.

Lottery winnings are new income and obviously should be taxed just like any income you earn in a W2 job.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

Why does it "seem a little off"? For someone worth 30-40M, they most likely earned that themselves. And most likely paid high taxes on it already (speaking from experience, it is very high----if earned income, no way to not pay taxes/protect it). Why should the government get to tax it again when you die?
If you are smart, they wont as you will pass it on while still alive and use legal trusts to ensure it's not taxed again.
I'm all for taxes, but one and done please.

When I wrote it seems a little off, what I meant was that it's one thing to earn the money yourself and use it to its fullest while you are alive, but to pass on tens of millions to your heirs is what seems off. It's not that I believe the government is so great, but intergenerational wealth transfers are not really in society's best interests, in my opinion. I'm just saying that there is value to hard work and drive and determination to get the most out of life and I think if you could only inherit $5-10 million, that is probably enough to carry on the legacy of your parent, but not prevent you from reaching your potential. It would prevent, for example, someone never working thinking they have it made forever. I don't know, maybe I'm wrong, but $5-10 million in today's dollars seems like enough to pass along to each heir.

Why do you get to set the amount? Why should someone worth 60M not be able to pass 20M to all 3 of their kids? They can still reach their potential and be contributing members of society. Why do you feel the govt is entitled to part of this money just because someone died?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

Why does it "seem a little off"? For someone worth 30-40M, they most likely earned that themselves. And most likely paid high taxes on it already (speaking from experience, it is very high----if earned income, no way to not pay taxes/protect it). Why should the government get to tax it again when you die?
If you are smart, they wont as you will pass it on while still alive and use legal trusts to ensure it's not taxed again.
I'm all for taxes, but one and done please.

When I wrote it seems a little off, what I meant was that it's one thing to earn the money yourself and use it to its fullest while you are alive, but to pass on tens of millions to your heirs is what seems off. It's not that I believe the government is so great, but intergenerational wealth transfers are not really in society's best interests, in my opinion. I'm just saying that there is value to hard work and drive and determination to get the most out of life and I think if you could only inherit $5-10 million, that is probably enough to carry on the legacy of your parent, but not prevent you from reaching your potential. It would prevent, for example, someone never working thinking they have it made forever. I don't know, maybe I'm wrong, but $5-10 million in today's dollars seems like enough to pass along to each heir.

Why do you get to set the amount? Why should someone worth 60M not be able to pass 20M to all 3 of their kids? They can still reach their potential and be contributing members of society. Why do you feel the govt is entitled to part of this money just because someone died?

An individual is limited to about $13 million in gifts per the lifetime exemption, excluding annual gifts of about $17k to as many people as they want. Anything above the $13 results in paying a gift tax. Or, if the money passes along after death estate taxes are due.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

I'm the PP at 14:25 who has studied tax policy in the context of wealth disparity. Like I said, I have never really found an answer. But the closest thing to a good answer was to drastically increase transfer taxes (inheritance and gift). I think it is the most palatable answer all around (if not the best one), but in the US extreme notions about property rights prevail, making this close to politically impossible.

What happens today in reality is that the really rich pay a lot to lawyers to get around estate taxes, so it falls mainly on the upper middle class instead.

I live in DC, which has a much lower estate tax threshold than the federal government, which, given the price of housing, is not all that hard to exceed.

I have been told I can go to a lawyer and set up trusts to avoid the tax, but why do I have to enrich lawyers by thousands because we naively bought in DC instead of VA (no estate taxes) decades ago?

And if I can do this, what is the point of the estate tax? It constitutes just 0.06% of the District's revenue. But it discourages residency by older, relatively well-off people who are willing to pay the high income tax and use very few city services, but don't want the District to diminish what goes to their heirs.

Up to you, but it will only cost $2-3K to set up the trusts to protect yourself from estate taxes from DC. We live in a state with low level for estate taxes and it would be downright foolish to not hire the lawyer to protect your assets. It's legal, and most people will protect themselves. if you have more than 1-2M in net worth you need to.
I'd rather pay the lawyer a few thousand and not have my kids loose 20% of the estate to our state and another 18-40% for federal. close to 60% of our estate would disappear. Seems worth a few thousand now to protect it legally

Woah woah woah, what happened to the wealthy paying their fair share y’all?

First---that income was fully taxed when earned. No reason it should be taxed again when we die.
We do pay our "fair share". When we earned $10M one year it was ALL taxable at the Fed and State level---a portion was LT Cap Gains rest was ST Cap Gains. No way to protect that. Same when we earn our typical $1M in a year---it's all income and there is no way to shelter it. We pay more in fed and state income taxes in a year than most people make in a year. Anything over ~400K is taxed at the 38% and top state bracket. So please don't talk about "fair share".

Finally, it is legal to establish trusts for protecting your wealth from being taxed a 2nd time at your death. As long as it's legal, why wouldn't you utilized that? I'm all for paying taxes the first time, but don't take my money a 2nd time just because I dropped dead.

Why shouldn't it be? Money is always taxed at transfer. I pay taxes on the money I earn, then again on that same money when I spend it. Why should your money be singularly protected from taxation on transfer when no one else's is?

Typically, money is taxed upon transfer when you receive a good or service in return that is subject to sales/excise taxes. In other words, the money transferred is not taxed, but what one buys with it is.

This is not the case with estate taxes in which the money itself is taxed before its can be spent on a good or service and another tax paid.

No, it's taxed on all transfers. When you sell a stock, you're taxed on the appreciation (not a good or service) BEFORE you can spend it on a good or service. It's the transfer that's taxed, not specifically purchases. You're trying to create a special loophole for transfers due to inheritance but it doesn't hold up to scrutiny. I guess we shouldn't tax lottery winnings by this reasoning either - you haven't spent it yet!

No, it's the unrealized gains that are taxed when you sell a stock. So the "new income", not the "transfer". You are not taxed on the entire value of the stock you sell. It's not a transfer tax.

Inheritance is family money, taxes were already paid on it when the original owners earned it. And will be taxed again when the kids/grandkids spend it on products/goods.

Lottery winnings are new income and obviously should be taxed just like any income you earn in a W2 job.

And the "original owners" don't get taxed again; they're dead. It's new income to the decedents who did nothing to earn it, not earnings they've paid tax on. The fact that someone else has paid tax on money doesn't exempt other people who later hold those dollars from paying taxes. Like I said, this line of reasoning doesn't stand up to the barest bit of scrutiny.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

Why does it "seem a little off"? For someone worth 30-40M, they most likely earned that themselves. And most likely paid high taxes on it already (speaking from experience, it is very high----if earned income, no way to not pay taxes/protect it). Why should the government get to tax it again when you die?
If you are smart, they wont as you will pass it on while still alive and use legal trusts to ensure it's not taxed again.
I'm all for taxes, but one and done please.

When I wrote it seems a little off, what I meant was that it's one thing to earn the money yourself and use it to its fullest while you are alive, but to pass on tens of millions to your heirs is what seems off. It's not that I believe the government is so great, but intergenerational wealth transfers are not really in society's best interests, in my opinion. I'm just saying that there is value to hard work and drive and determination to get the most out of life and I think if you could only inherit $5-10 million, that is probably enough to carry on the legacy of your parent, but not prevent you from reaching your potential. It would prevent, for example, someone never working thinking they have it made forever. I don't know, maybe I'm wrong, but $5-10 million in today's dollars seems like enough to pass along to each heir.

Why do you get to set the amount? Why should someone worth 60M not be able to pass 20M to all 3 of their kids? They can still reach their potential and be contributing members of society. Why do you feel the govt is entitled to part of this money just because someone died?

An individual is limited to about $13 million in gifts per the lifetime exemption, excluding annual gifts of about $17k to as many people as they want. Anything above the $13 results in paying a gift tax. Or, if the money passes along after death estate taxes are due.

Or you simply set up a legal trust so there are no estate taxes. That's what smart people do. Legal and quite simple to do

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

Why does it "seem a little off"? For someone worth 30-40M, they most likely earned that themselves. And most likely paid high taxes on it already (speaking from experience, it is very high----if earned income, no way to not pay taxes/protect it). Why should the government get to tax it again when you die?
If you are smart, they wont as you will pass it on while still alive and use legal trusts to ensure it's not taxed again.
I'm all for taxes, but one and done please.

When I wrote it seems a little off, what I meant was that it's one thing to earn the money yourself and use it to its fullest while you are alive, but to pass on tens of millions to your heirs is what seems off. It's not that I believe the government is so great, but intergenerational wealth transfers are not really in society's best interests, in my opinion. I'm just saying that there is value to hard work and drive and determination to get the most out of life and I think if you could only inherit $5-10 million, that is probably enough to carry on the legacy of your parent, but not prevent you from reaching your potential. It would prevent, for example, someone never working thinking they have it made forever. I don't know, maybe I'm wrong, but $5-10 million in today's dollars seems like enough to pass along to each heir.

Why do you get to set the amount? Why should someone worth 60M not be able to pass 20M to all 3 of their kids? They can still reach their potential and be contributing members of society. Why do you feel the govt is entitled to part of this money just because someone died?

An individual is limited to about $13 million in gifts per the lifetime exemption, excluding annual gifts of about $17k to as many people as they want. Anything above the $13 results in paying a gift tax. Or, if the money passes along after death estate taxes are due.

Or you simply set up a legal trust so there are no estate taxes. That's what smart people do. Legal and quite simple to do

Can you put retirement accounts into a trust? For many, that is their major financial asset.

[Anonymous]

Anonymous wrote:
Can't be bothered to read most of your angry rant but irony is that the working class populists are following Turnip. Not AOC.

Tells you all.

Yes, and when there’s someone who’s a populist like Trump and doesn’t care much for social justice and identity issues, and isn’t a raging narcissist. BUT with the economically progressive far-left beliefs of AOC, Bernie Sanders, Elizabeth Warren, etc…

That’s what I mean by someone more competent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I wish I did have a solution but I strongly believe the gap between the well off and the poor underlies much of what is going wrong in our society. I’m in favor of something like an inheritance tax. Something where you can leave a reasonable amount of money to each of your children but the rest goes to the government. That’s probably impractical but it might be a start. And by reasonable I mean $5 million or $10 million. Something indexed for inflation. But this idea of having huge amounts of money passed to the next next generation seems a little off to me.

Why does it "seem a little off"? For someone worth 30-40M, they most likely earned that themselves. And most likely paid high taxes on it already (speaking from experience, it is very high----if earned income, no way to not pay taxes/protect it). Why should the government get to tax it again when you die?
If you are smart, they wont as you will pass it on while still alive and use legal trusts to ensure it's not taxed again.
I'm all for taxes, but one and done please.

When I wrote it seems a little off, what I meant was that it's one thing to earn the money yourself and use it to its fullest while you are alive, but to pass on tens of millions to your heirs is what seems off. It's not that I believe the government is so great, but intergenerational wealth transfers are not really in society's best interests, in my opinion. I'm just saying that there is value to hard work and drive and determination to get the most out of life and I think if you could only inherit $5-10 million, that is probably enough to carry on the legacy of your parent, but not prevent you from reaching your potential. It would prevent, for example, someone never working thinking they have it made forever. I don't know, maybe I'm wrong, but $5-10 million in today's dollars seems like enough to pass along to each heir.

Why do you get to set the amount? Why should someone worth 60M not be able to pass 20M to all 3 of their kids? They can still reach their potential and be contributing members of society. Why do you feel the govt is entitled to part of this money just because someone died?

An individual is limited to about $13 million in gifts per the lifetime exemption, excluding annual gifts of about $17k to as many people as they want. Anything above the $13 results in paying a gift tax. Or, if the money passes along after death estate taxes are due.

Or you simply set up a legal trust so there are no estate taxes. That's what smart people do. Legal and quite simple to do

It doesn’t work like that. If you set up an irrevocable trust, the money you put into it is subject to gift tax. If you set up an revocable trust, the money is still part of your estate for estate tax purposes and subject to estate tax when you die.