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[quote=Anonymous][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]

[b]First---that income was fully taxed when earned.  No reason it should be taxed again when we die. [/b] 
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.  
[/quote]

Why shouldn't it be?  [b]Money is always taxed at transfer. [/b] 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?[/quote]

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.

[/quote]

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!   :roll: [/quote]

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. [/quote]

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