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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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. [b]I’m in favor of something like an inheritance tax.[/b] 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. [/quote]

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. [/quote]

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.[/quote]

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. [b] if you have more than 1-2M in net worth you need to.[/b] 
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[/quote]

DP
So much misinformation!  Currently, unless you have more than 12.92M (in 2023) you don't pay estate tax.  Most people don't pay estate tax in this country. That said, we did set up a trust, but not to avoid tax - to avoid probate.  We own property in different states and if ownership doesn't change hands, then we don't go through probate, so we streamline the process.  Most people don't need a trust either.[/quote]

You missed the post the PP was responding to.

It was not about federal estate taxes, but DC estate taxes.  They kick in at $4 million, and there is no portability between spouses. [/quote]

Yes, they did not read.  It's not DC, but another state with estate taxes, where it kicks in at $2M (so even worse).  There are 12 states currently I believe with state estate taxes.  Also the PP mentions the $12.92M but that is sunsetting in 2026 to ~$5.5M.  So if your family net worth is over $10-11M (or will approach that by the time you die) it would behoove you to set up plans now to protect it.  Congress could make that number even lower over time (or it could go back up).  Not misinformation, just being aware of the many ways estate taxes could hit you.  We had trusts in place when we were worth only $7-8M because we knew "the sunset could happen" and that most likely we would be worth way more when we hit 50-60 yo.  [/quote]

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