Real world tax discussions at the top brackets...

[Woolleybugger]

If you want a landed gentry and a class based society, keep deluding yourself that estate taxes are immoral. Me, I would prefer a more egalitarian response which is what we enacted as a backlash to this in the late 1800s. As for your comment about who gets to decide what is the right amount to leave untaxed...that would be our elected officials who can and have changed this amount many times over the last 100 years. When my side wins, heirs get taxed a lot. When your side wins, they get to skate. It's really not that complicated. As for the argument I made about money being an extension of the state...it is Trap. Nothing you can say or write will make it anything but a currency propped up by the state. That is the definition of a currency backed by the full faith and credit of the USA or the EEU or China..name your currency, it is a function of the state and thus must protect the interests of the state to preserve itself.

 

[degsme]

And so somewhere -- his parents, his grandparents, someone was successful and passed the wealth on to future generations -- committing a life's work to their prosperity. yes, I suppose we should condemn the idea that we can leave something behind.

Where does the notion of "condemning" come from? all that is being said is that AS A SOCIETY - we value INDIVIDUAL EFFORT rather than freeloading on previous generationsl You make this arguement frequently when talking about Social Security. Yet somehow when genetic similarity comes into play you suddenly ignore this.

You are also basically saying that you support a FISCAL POLICY that would in the long run, relegate people like you to a life of penury with negligible ability to change that circumstance. And yet time and again you have objected to that sort of priviledged class (be it in your perceptions of Affirmative Action or in comparing the opportunities of say the Obama kids to your own life)

Recognizing the adverse consequences (A Society of Gentry+Serfs) of a fiscal policy (intergenerational wealth concentration), and putting in place economic and fiscal policies that prevent that distortion is hardly 'condemning' anyone's work.

Who gets to decide how much is "comfortable." According to Degme, NBA players aren't rich -- only NBA team owners are rich.

At least have the decency to get the quote right. NBA Players ARE RICH... NBA Owners are WEALTHY
"If Bill Gates woke up tomorrow with Oprah's Money - he'd jump out the Window slitting his throat on the way down!"
[video=youtube;4m37JkkGjAY]http://www.youtube.com/watch?v=4m37JkkGjAY&feature=related[/video]

But the amount of money now being created and accumulated is so enormous that it serves no economic purpose to allow it to sit around and not be recirculated. Get that dough back in the economy so we can spread it around. If you don't, then the Fed is going to have to create more fake money to replace it anyway.

That makes what sounds to me like an a priori assumption -- that the "dough" belongs to the fed or the economy first, and to the dough's owner-of-record second.

And who sets the notion of "owner-of-record" into being in the first place if it isn't The Feds? The answer is that it is the Feds in the first place that set the rules that allocate that "owner of record" notion.

Take the example you offered above -- it sounds to me like that inherited dough was in the economy, sponsoring slo-pitch teams, buying good Dodger's seats, etc.

And the EFFICIENCY of that expenditure SUCKS. It has a fiscal multiplier of LESS THAN 0.7. Compared to Government FM of between 1.5 and 2.5, and industry infrasructure creation of 1.5

WHY DO WE WANT TO ENCOURAGE THAT?
Why do we want to reward freeloading?

Just as the high corporate and income tax rate of the 1950s encouraged Bill Boeing to REINVEST PROFITS (so that they are not taxed) thereby creating the Commercial Passenger Jet Age, so too, treating inheritance as the unearned income it is to the next generation, ENCOURAGES THEM to actually WORK to grow it. Particularly if the tax rate on the inheritance is such that you can ONLY grow the wealth by actually working productively.

Remember if you let them simply invest in the market, then each generation gets about 30 years of appreciation free. The Market ROI is 9% on average. So if you just put it in an Index Fund for 30 years. you increase the asset base by 1300%. So if we ran a 93% Inheritance Tax rate, then generation to generation would have a 6% net appreciation of assets

And no one is suggesting 93%. We are suggesting simple income treatment. That means that even if you pulled out 1/2 of the annual appreciation as a personal usage, at 35% tax rate you get.

0.65 I[sub]nheritance[/sub] x 1.045[sup]30[/sup] => 2.43 I[sub]nheritance[/sub]

Furthermore after 10 years of this sort of appreciation, the original inherited value is recovered. (meanwhile the heirs have been EARNING 3.6% of the ORIGIANL inheritance in annual payments )

That's hardly catastrophic.






That makes what sounds to me like an a priori assumption -- that the "dough" belongs to the fed or the economy first, and to the dough's owner-of-record second. Take the example you offered above -- it sounds to me like that inherited dough was in the economy, sponsoring slo-pitch teams, buying good Dodger's seats, etc.[/QUOTE]

 

[Woolleybugger]

He makes a great point about true wealth which is almost impossible to spend. The math is so easy to understand once you grasp the idea that truly wealthy people have already bought everything they need by the time they get to be around 30 or 40. There simply is nothing left to buy with all that money they passively earn year in and year out. If your estate is worth 100 million and you park it in dividend accounts, you can expect to get anywhere between 2-5 million a year in dividend income which is taxed favorably thanks to Bush. Imagine spending that every single year without touching the principle. EVER.

I have buddies who are newly rich. They are indians belonging to a tribe that runs a casino in the valley. 20 years ago, they were all broke. Now, every single one of the 170 full members of the tribe gets between 35 and 45 grand a month for doing absolutely nothing. This has been going on for about 10 years. What do they do all day long? Play golf, coach teams at the high school, learn how to make boats the ancient way, live in Tahoe, travel, etc. For the rest of their lives as long as that casino is standing, they will get this kind of income for doing nothing. But this income pales in comparison with the wealthy person with 100 million who makes 5-8 times this every single year.

 

[Woolleybugger]

I am OK with that too.

 

[Lukey]

Well on this we agree. I'd be amenable to that. But notice Trapdoor's resistance to that. He wants us to subsidize those sorts of farms where the Cap Gains tax would force a sale of the assets so that they don't have to sell the assets. He wants us to interfere in the marketplace and subsidize below market ROI farms.

Yeah, well, in a free market economy, if you can't make enough farming your land to pay the cap gains tax on the transfer, then you don't deserve to be in that business any more than KB Toys did in theirs once Walmart started selling toys...

 

[Lukey]

I am OK with that too.

LOL! It's a FIRST! But, well, it just makes too much sense so we'll never do it...

 

[lupehernandezdepedajack]

Inheritance taxes on real estate should be

levied on the original purchase price of the property. Taxing real estate on inflated value just ain't right, The taxes can be collected if and when the heir sales the property and actually has a capital gain, in the form of capital gains taxes.

 

[Lukey]

levied on the original purchase price of the property. Taxing real estate on inflated value just ain't right, The taxes can be collected if and when the heir sales the property and actually has a capital gain, in the form of capital gains taxes.

What is the (fundamental) difference between a change in ownership due to a sale and a change in ownership due to a death and inheritance? A change in ownership is a change in ownership - pay the tax, get the stepped up value as your new tax base. Presumably the property will be paid off by the time of the inheritance and, if so, getting a mortgage for the tax due seems like a pretty minor impediment to continued family ownership.

 

[degsme]

levied on the original purchase price of the property. Taxing real estate on inflated value just ain't right,

Why?
Essentially this is "social engineering" via taxes as well. It encourages assets to be partked for a lifetime regardless of how economically productive or unproductive they are..
Why is that something that "just is right"?

 

[degsme]

Yeah, well, in a free market economy, if you can't make enough farming your land to pay the cap gains tax on the transfer, then you don't deserve to be in that business any more than KB Toys did in theirs once Walmart started selling toys...

Or alternatively, if you do think it is ok to use Fiscal Policy to encourage Yoeman farmers - then you cannot legitimately gripe about the use of Fscal Policy to encourage home ownership, hybrid car purchases, Green Energy production over carbon fuels etc. etc.

 

[Lukey]

Or alternatively, if you do think it is ok to use Fiscal Policy to encourage Yoeman farmers - then you cannot legitimately gripe about the use of Fscal Policy to encourage home ownership, hybrid car purchases, Green Energy production over carbon fuels etc. etc.

Um, I never think using fiscal policy to encourage ANYTHING is a good idea. That's what free markets are for...

 

[degsme]

Um, I never think using fiscal policy to encourage ANYTHING is a good idea. That's what free markets are for...

Sure you do. You advocate using fiscal policy to transfer wealth from the lower three income tiers to the upper quintile. Tha's social engineering as much as anything else is.

FISCAL POLICY encompasses every known and predictable aspect of the policies you advocate. IN your case protecting the property of the wealthy, protecting the contracting rights of the wealthy and allowing maket distortions, regardless of how inefficient, that bias in favor of the wealthy, ignoring what we know about Marginal Utility of Income, IS the use of fiscal policy to encourage wealth transfer to the wealthy.

You have that right. But don't pretend its not advocacy of a particular social and poltiical outcome managed via the Fiscal Policy you advocate.

 

[gabriel]

I find it incredible how everyone goes back and forth about tax rates and brackets and never once questions the mortgage interest deductibility.

 

[degsme]

I find it incredible how everyone goes back and forth about tax rates and brackets and never once questions the mortgage interest deductibility.

Its an interesting point. Particulary by folks like Lukey. Bottom line is that ifyou don't allow for that deductibilyt, you crash the housing market an additional 20%. And that would break the economy's back right now.

 

[Lukey]

Sure you do. You advocate using fiscal policy to transfer wealth from the lower three income tiers to the upper quintile. Tha's social engineering as much as anything else is.

FISCAL POLICY encompasses every known and predictable aspect of the policies you advocate. IN your case protecting the property of the wealthy, protecting the contracting rights of the wealthy and allowing maket distortions, regardless of how inefficient, that bias in favor of the wealthy, ignoring what we know about Marginal Utility of Income, IS the use of fiscal policy to encourage wealth transfer to the wealthy.

You have that right. But don't pretend its not advocacy of a particular social and poltiical outcome managed via the Fiscal Policy you advocate.

You appear to be referring to me wanting to NOT use fiscal policy to prevent wealth from accruing to those who are the smartest or work the hardest or make the best product or provide the best service or who are just luckier than the rest of us. Yes, I certainly do not want to use any such anti-capitalist fiscal policy. I certainly don't advocate any policies that would subsidize the endeavors of the wealthy (in ways that are not available to everyone). I don't see how you can claim that NOT using fiscal policy to thwart such wealth transfers that result from people freely choosing to engage in economic transactions is in any way shape or form advocating the USE of fiscal policy to transfer wealth in ANY direction.

 

[Lukey]

Its an interesting point. Particulary by folks like Lukey. Bottom line is that ifyou don't allow for that deductibilyt, you crash the housing market an additional 20%. And that would break the economy's back right now.

Why don't you ask me? I support doing away with ALL tax deductions and credits in favor of a low, flat tax rate on all income. That would most certainly include the mortgage interest deduction.

 

[degsme]

Why don't you ask me? I support doing away with ALL tax deductions and credits in favor of a low, flat tax rate on all income. That would most certainly include the mortgage interest deduction.

And of course, a flat tax is a wealth redistribution policy upwards. and crashing housing values by 20% is another attack on the middle class assets. No big surprise here.

 

[degsme]

You appear to be referring to me wanting to NOT use fiscal policy to prevent wealth from accruing to those who are the smartest or work the hardest or make the best product or provide the best service or who are just luckier than the rest of us.

Why should we reward luck? How does that optimize allocation of resources in an economy. After all, even Adam Smith's understanding of the "invisible hand" was as a way of optimizing resource allocation?

Note that your claims about the smartest or hardest working or best product - is clearly not something the Free Market rewards. We have far too many counterexamples:

• Betamax was the BETTER PRODUCT, but it lost money
• Netscape had the smartest idea for a browser but it lost out to entrenched monied interests of Microsoft
• John Stanford clearly did not work as hard as any of the "coolies" that built the rail lines, yet precisely because he was willing to be corrupt, he accumulated enough wealth to charter a whole university.

And we can find innumerable other examples.

I don't see how you can claim that NOT using fiscal policy to thwart such wealth transfers that result from people freely choosing to engage in economic transactions is in any way shape or form advocating the USE of fiscal policy to transfer wealth in ANY direction.

Of course you don't see. Because you don't care about market inefficiencies, or democracy, nor do you recognize the "choiceless choice" aspect of unregulated markets. Well you do kindof. You advocate regulation of markets that promotes a social welfare policy of enriching the wealthy, eliminating the middle class and stagnating economic growth.
'
Why you seek that is rather obscure.