Vox article on inheritance

[Anonymous]

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

[Anonymous]

If you guys are mad about regular estate taxes you will be really upset when you learn about dynasty trusts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

I also work hard, save and invest. But I have to pay taxes. I would love a step up in basis for my capital gains. Why do heirs and heiresses get one and not me?

[Anonymous]

Anonymous wrote:If you guys are mad about regular estate taxes you will be really upset when you learn about dynasty trusts.

Trusts are taxed at a higher rate than ordinary income. And, yes, these trusts exist to avoid estate taxes. But they aren't a free lunch.

[Anonymous]

"An rarely is an asset sold immediately at death, so heirs still pay a capital gains tax, just in a lower amount."

Huh? Every single person I know, who inherits a house, sells it immediately. Stocks, no they likely aren't getting sold immediately.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

I also work hard, save and invest. But I have to pay taxes. I would love a step up in basis for my capital gains. Why do heirs and heiresses get one and not me?

+1. If you want to incentivize hard work, how about no income tax until you reach a lifetime earnings of 11 million dollars? That would actually incentivize work. The $11 million estate tax exemption? Nope.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

I also work hard, save and invest. But I have to pay taxes. I would love a step up in basis for my capital gains. Why do heirs and heiresses get one and not me?

Every tax you pay was also paid by the decadent. And your children are able to inherit on the same tax basis as everyone else.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

I also work hard, save and invest. But I have to pay taxes. I would love a step up in basis for my capital gains. Why do heirs and heiresses get one and not me?

Every tax you pay was also paid by the decadent. And your children are able to inherit on the same tax basis as everyone else.

That still doesn't explain why society should give up a step up in basis to heiresses. Why not me, right now, a living person who works for my money? What is the benefit of that? What are estates taxed differently that ordinary income?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

As the very kind tax professional told me, this is what happens when people are working with incomplete knowledge. Complete knowledge, it turns out, is incredibly important when you’re dealing with the tax code.

Meanwhile, incomplete knowledge is kind of the human condition. Tax professionals cost money, which can be prohibitive for many people, especially those who’ve received a windfall but worry they’re about to be staring down some enormous bills.

Both parties, but especially Republicans, have made the tax code more complex.

Complexity advantages the rich, who have money to hire advisors.

Simplify the tax code. Raise the estate tax. No one deserves to be born with a silver spoon in their mouth. Make the playing field equal.

People whose parents were prudent with money dont “deserve” it but their parents deserve to pass on what they earned and saved and planned for their kids.

Sounds good. But let's update the tax code so that the step up in basis is eliminated. It's isn't right that people can make millions of dollars and never pay taxes on it.

That money has already been taxed at least once, possibly multiple times.

It's extremely clear that you don't know what the step up in basis is. No, that money has never been taxed.

You are strident, but not that bright. Say the asset is stock. Parent buys stock with salary , which is taxed. Any dividends accrued on stock while held are taxed, If heir sells stock, that is also taxed

Dividends have nothing to do with it since yes, they are taxed. And if reinvested, the basis for those shares is what they were worth when purchased. Then I inherit the stock. If there are dividends I get taxed. If I reinvest them and eventually sell I am taxed on the gain from when I inherited it (not prior gains) except for what I purchased, which has its own basis.

So, pp was correct, the capital gains have never been taxed. Dividends are not the same.

If they get rid of the step up for inherited assets (has been talked about prior to election), how are they going to figure the 120 acres I got from my mom, who got when my dad died, who got from his dad, who got from his dad, who homesteaded it. What the heck is the basis?

(Reason my sibs and I got land is we kept mom out of a nursing home through 15 years of decline including loss of ability to walk and several years on dialysis.)

[Anonymous]

Anonymous wrote:"An rarely is an asset sold immediately at death, so heirs still pay a capital gains tax, just in a lower amount."

Huh? Every single person I know, who inherits a house, sells it immediately. Stocks, no they likely aren't getting sold immediately.

Family farms are rarely sold immediately, I personally know plenty of people who chose t move into their parents house rather than sell it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

As the very kind tax professional told me, this is what happens when people are working with incomplete knowledge. Complete knowledge, it turns out, is incredibly important when you’re dealing with the tax code.

Meanwhile, incomplete knowledge is kind of the human condition. Tax professionals cost money, which can be prohibitive for many people, especially those who’ve received a windfall but worry they’re about to be staring down some enormous bills.

Both parties, but especially Republicans, have made the tax code more complex.

Complexity advantages the rich, who have money to hire advisors.

Simplify the tax code. Raise the estate tax. No one deserves to be born with a silver spoon in their mouth. Make the playing field equal.

People whose parents were prudent with money dont “deserve” it but their parents deserve to pass on what they earned and saved and planned for their kids.

Sounds good. But let's update the tax code so that the step up in basis is eliminated. It's isn't right that people can make millions of dollars and never pay taxes on it.

That money has already been taxed at least once, possibly multiple times.

It's extremely clear that you don't know what the step up in basis is. No, that money has never been taxed.

You are strident, but not that bright. Say the asset is stock. Parent buys stock with salary , which is taxed. Any dividends accrued on stock while held are taxed, If heir sells stock, that is also taxed

Dividends have nothing to do with it since yes, they are taxed. And if reinvested, the basis for those shares is what they were worth when purchased. Then I inherit the stock. If there are dividends I get taxed. If I reinvest them and eventually sell I am taxed on the gain from when I inherited it (not prior gains) except for what I purchased, which has its own basis.

So, pp was correct, the capital gains have never been taxed. Dividends are not the same.

If they get rid of the step up for inherited assets (has been talked about prior to election), how are they going to figure the 120 acres I got from my mom, who got when my dad died, who got from his dad, who got from his dad, who homesteaded it. What the heck is the basis?

(Reason my sibs and I got land is we kept mom out of a nursing home through 15 years of decline including loss of ability to walk and several years on dialysis.)

There is way more first generation wealth than generations old wealth. Heirs pay capital gains tax when they sell the asset, they aren’t exempt from that.

[Anonymous]

BTW, they make it sound like Megan's land just sits there while the $15k a year rolls in. Not exactly true. I have some in conservation reserve. It has to be maintained according to a set schedule you agree to, you have to make sure that is done: planting required types of cover, mowing--you can't just let trees and brush spring up or you lose that money. I have a binder 4 inches thick with the paperwork for my 30 acres of CRP just from 2015 to now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

I also work hard, save and invest. But I have to pay taxes. I would love a step up in basis for my capital gains. Why do heirs and heiresses get one and not me?

Every tax you pay was also paid by the decadent. And your children are able to inherit on the same tax basis as everyone else.

That still doesn't explain why society should give up a step up in basis to heiresses. Why not me, right now, a living person who works for my money? What is the benefit of that? What are estates taxed differently that ordinary income?

The same rationale underlies the capital gains tax being lower than income tax. And gains on sale of a primary residence being mostly exempt from capital gains tax Both of which you do benefit from. So, you want to keep the policies you personally benefit from only, which is not how the tax code works.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

As the very kind tax professional told me, this is what happens when people are working with incomplete knowledge. Complete knowledge, it turns out, is incredibly important when you’re dealing with the tax code.

Meanwhile, incomplete knowledge is kind of the human condition. Tax professionals cost money, which can be prohibitive for many people, especially those who’ve received a windfall but worry they’re about to be staring down some enormous bills.

Both parties, but especially Republicans, have made the tax code more complex.

Complexity advantages the rich, who have money to hire advisors.

Simplify the tax code. Raise the estate tax. No one deserves to be born with a silver spoon in their mouth. Make the playing field equal.

People whose parents were prudent with money dont “deserve” it but their parents deserve to pass on what they earned and saved and planned for their kids.

Sounds good. But let's update the tax code so that the step up in basis is eliminated. It's isn't right that people can make millions of dollars and never pay taxes on it.

That money has already been taxed at least once, possibly multiple times.

It's extremely clear that you don't know what the step up in basis is. No, that money has never been taxed.

You are strident, but not that bright. Say the asset is stock. Parent buys stock with salary , which is taxed. Any dividends accrued on stock while held are taxed, If heir sells stock, that is also taxed

Dividends have nothing to do with it since yes, they are taxed. And if reinvested, the basis for those shares is what they were worth when purchased. Then I inherit the stock. If there are dividends I get taxed. If I reinvest them and eventually sell I am taxed on the gain from when I inherited it (not prior gains) except for what I purchased, which has its own basis.

So, pp was correct, the capital gains have never been taxed. Dividends are not the same.

If they get rid of the step up for inherited assets (has been talked about prior to election), how are they going to figure the 120 acres I got from my mom, who got when my dad died, who got from his dad, who got from his dad, who homesteaded it. What the heck is the basis?

(Reason my sibs and I got land is we kept mom out of a nursing home through 15 years of decline including loss of ability to walk and several years on dialysis.)

This is a good question! And if we eliminated the step up in basis, this would only be a problem once (since moving forward we would know that the value of the property the day you acquired it was your basis). This is a solvable problem. Again, why do I have to pay capital gains on my appreciated assets, but you don't?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:From the article:

"But Wolff also says, surprisingly, that inherited wealth isn’t a huge driver of inequality in America — it actually has had an equalizing effect. And there’s no indication that the next decades will be any different.

The reason is deceptively simple: While much (much!) more money flows among the rich, for middle- and low-income people who receive gifts or inheritance, they represent a larger percentage of wealth. So large, in fact, that for some people, a gift from mom or dad is the thing that will keep them middle class."

I'd like to see the data to back this up. Otherwise, I'm calling BS.

But ultimately, I don't care. The current estate taxes (lack thereof) is crazy. We are incentivizing bad things.

Working hard, saving, and investing money are not “bad things.” They are actually good things that society should encourage. Which is why the tax code does so.

I also work hard, save and invest. But I have to pay taxes. I would love a step up in basis for my capital gains. Why do heirs and heiresses get one and not me?

Every tax you pay was also paid by the decadent. And your children are able to inherit on the same tax basis as everyone else.

That still doesn't explain why society should give up a step up in basis to heiresses. Why not me, right now, a living person who works for my money? What is the benefit of that? What are estates taxed differently that ordinary income?

The same rationale underlies the capital gains tax being lower than income tax. And gains on sale of a primary residence being mostly exempt from capital gains tax Both of which you do benefit from. So, you want to keep the policies you personally benefit from only, which is not how the tax code works.

This is false. If we wanted to incentivize "investing" everyone would pay the same capital gains rate. The step up in basis on death is not an incentive for anything. It is a giveaway to the wealthy.