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[quote=Anonymous][quote=Anonymous][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.  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[/quote]

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

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.  
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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.

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

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.[/quote]

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.

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