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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsAmericans will inherit $764 billion this year, mostly tax-free
One way the rich get richer is through inheritance, and theyre barely paying taxes on it.
Americans are projected to inherit $764 billion this year and will pay an average tax of just 2.1% on that income, New York University law professor Lily Batchelder estimates in a paper published Tuesday by the Brookings Institution.
By contrast, the estimated tax on work and savings is 15.8%, more than seven times higher. Many higher-income workers pay far more, with the top marginal rate now 37% plus payroll taxes.
If anything, we should be taxing income from inheritances at higher rates than income from work, Batchelder, a former adviser to President Barack Obama who has advised several Democratic presidential campaigns on tax policy, said in a phone interview.
https://www.msn.com/en-us/money/markets/americans-will-inherit-dollar764-billion-this-year-mostly-tax-free/ar-BBZoh1k?li=BBnbfcN&ocid=hplocalnews
Wounded Bear
(58,755 posts)they inherit it from their parents.
Yavin4
(35,453 posts)SWBTATTReg
(22,183 posts)passed an idiotic and unneeded tax break in 2017 (mainly to make their donors happy). As stories have verified that have appeared, the effectiveness of the 2017 tax cuts and jobs bill has been lackluster and pathetic in accomplishing anything worthy of the name. They should have correctly named the bill 'The 2017 Tax Cut Bill for Republican Donors'. Blatantly one-sided and blind to the vast majority of everyday Americans.
magicarpet
(14,189 posts)..... that terminology DEATH TAXES was brought to us by Frank Luntz. This wording was chosen because it had the most negative connotation for the term inheritance tax.
Originally when the inheritance tax was imposed it was to recognize that inherited wealth really did nothing to add to the long-term benefit of the country. Inherited wealth contributed nothing to the the common good and was counter to a principals of a meritocracy and the inherent benefits it offered to society and economics.
Un-taxed Inherited wealth brought a danger to American society that vast fortunes could be accumulated and then handed down to succeeding generations. Where as extreme wealth would be confined to limited individuals and families so that the end result of this astounding wealth would usher in the inevitable and eventual royal class. A class of wealthy individuals who attained their self sufficiency not through labor, the hard work of establishing a viable business operation that would employ others, or technological innovation that benefited society - but rather most of their financial needs were provided through their inheritance to cover their monetary needs with little to no benefit to the commons.
America was established with the knowledge that a royal class was to be avoided so that in this new land we did not recreate the royal houses and royal families that brought so much power to the select few. And that consolidated financial power if unchecked inevitably results in the building of a powerful royal class. As this royal class amasses more and more financial power then they begin to pervert political power to further enhance the blessing of the royal elite.
This is exactly what America intended to escape from in Europe and purposely avoid in the new land - perversion of the financial and political systems by a royal class where fairness and justice for the common man is severely diminished and often fully curtailed.
This is why up to (1960) and during Eisenhower's time the inheritance taxes were as high as c.f. 90%. Back then the concept of keeping the royal class in check was taken much more seriously.
Then later, the rich kids of the royal class Koch's and Walton families came along - loaded to the gills with inherited funds from their daddies - had more than sufficient funds made available to them. Then used their wealth and excess funds to revamp, manipulate, warp, and pervert our government and its taxation regulations to their favor - to the explicit exclusion of the common man. The royal class essentially sneaked in the back door and smothered our Democracy until it became dead. So that this royal class could then enhance their financial/political/economic well being by means of taking over and fully capturing the systems of governance to their benefit to the exclusion of the commonwealth.
The 90% inheritance tax was designed and specifically put in place to keep any potential royal class in check and prevent the power of their wealth from bringing such detriments to our country/government/society/common good.
So the terminology DEATH TAX is the negative and vile name Frank Luntz put upon it so they could beat the drum and beat the drum until the tax became so hated, and then near eventually fully repealed.
With the inheritance tax gone we now have our royal class firmly in place - they are rapidly dismantling the middle class - while more and more of the financial benefits of our economic systems are disproportionately going to the royal class 1%.
The only death realized by the elimination of the inheritance tax was the death of our Democracy. We are now dangerously close to becoming monarchy/royal family state - governed by a despot they have appointed to run our governmental affairs as a Fascist Dominionist Theocratic Oligarchy to keep the unwashed commoners ignorant, unquestioning, compliant, and in line.
Yo_Mama_Been_Loggin
(108,320 posts)We kicked royalty out nearly 250 years ago but a few idiots want to bring it back.
Hoyt
(54,770 posts)junk one usually hears when estate taxes are proposed.
PJMcK
(22,059 posts)Consider this scenario:
A man lived his life, worked and paid his taxes. He saved and invested so that when he died, he had $3,000,000 in assets. These were distributed equally among his three children.
Professor Batchelder suggests that the money-- the income of which was already taxed-- should be taxed a second time when the money is distributed to the heirs.
Is that fair? If so, please explain.
Thanks, in advance.
Big Blue Marble
(5,155 posts)The only exception to your argument is the increased value to capital assets that is passed free of tax to the
heirs (stepped up basis). In wealthy families this portion of the estate value can be significant.
llmart
(15,559 posts)Captain Stern
(2,201 posts)Money isn't taxed. The transfer of money is taxed.
And, in your example, none of the man's three children would be taxed on their one million dollars of inheritance. But, that doesn't make the whole 'unfair' argument any less silly.
In my opinion, it's silly to make an argument that money can (or should) only be taxed once.
I get paid for some work I do, and I pay income taxes on that money. Then, I go buy something with that money (omg..sales taxes on that same money!), then the place I gave the money to has to pay taxes too! Then, that place pays their employees with that money, and those employees have to pay taxes on it. And then those employees go spend that money and spend sales taxes yet again...and on, and on, and on.
magicarpet
(14,189 posts)(This was directed to #2 & #5.)
Your response is detailed and informed with interesting points.
roamer65
(36,747 posts)You buy a powerball ticket with post tax dollars, yet you pay taxes if you win.
If you get a forgiveness on mortgage debt, it is considered taxable income.
Inheritance income should be taxable. The rates should be small at first, then greatly increase as the amount increases.
Something like Rupert Murdochs estate should be taxed at 70 percent.
moondust
(20,017 posts)for positions of power who can pick up where the current batch leaves off!