Inheritance tax: Make the case for and against

[oxcoug]

I'm kind of ambivalent.

On the one hand: As someone who's business has only been able to grow and take root because we have a couple of ultra-rich investors who could afford to be patient, I recognize the value of getting capital into the hands of people who know how to invest it productively.

On the other hand: When I hear that Hank Steinbrenner and his brother will avoid something like $500M in taxes because of the lapsed inheritance taxes I have second thoughts because (a) the Steinbrenners are such idiots and (b) I pretty much despise the Yankees.

http://fora.tv/2010/07/22/Monitor_Br...tate_Tax_Lapse

The question for me is: When Hank and bro score a $500M windfall does that money really get productively invested as we generally hypothesize? Or does it - in this cash poor age - sit in a vault for the next five years?

Here's what I'd be in favor of: No inheritance "tax" per se, but a requirement that the money that would have gone to the federal government will be invested in new businesses of the inheritors' choosing.

Won't ever happen - but that would achieve positive outcomes for everyone.

[Indy Coug]

The inheritance tax is so late 18th century France.

[Mormon Red Death]

I'm kind of ambivalent.

On the one hand: As someone who's business has only been able to grow and take root because we have a couple of ultra-rich investors who could afford to be patient, I recognize the value of getting capital into the hands of people who know how to invest it productively.

On the other hand: When I hear that Hank Steinbrenner and his brother will avoid something like $500M in taxes because of the lapsed inheritance taxes I have second thoughts because (a) the Steinbrenners are such idiots and (b) I pretty much despise the Yankees.

http://fora.tv/2010/07/22/Monitor_Br...tate_Tax_Lapse

The question for me is: When Hank and bro score a $500M windfall does that money really get productively invested as we generally hypothesize? Or does it - in this cash poor age - sit in a vault for the next five years?

Here's what I'd be in favor of: No inheritance "tax" per se, but a requirement that the money that would have gone to the federal government will be invested in new businesses of the inheritors' choosing.

Won't ever happen - but that would achieve positive outcomes for everyone.

Personally I think if the money has already been taxed then the inheritance tax is wrong. For example if someone has a business like the yankees and is paying yearly taxes on profit and the ownership changes to a son why should they have to pay taxes on the value of the business? They should just continue to pay taxes on the profits of the business like their father.

[Uncle Ted]

We have death taxes to thank for the entertainment of watching rich people, like Mark Cuban, trying to dispose of all their money before they die. Apparently Cuban is now trying to blow some good money on the insolvent Texas Rangers.

[il Padrino Ute]

Personally I think if the money has already been taxed then the inheritance tax is wrong. For example if someone has a business like the yankees and is paying yearly taxes on profit and the ownership changes to a son why should they have to pay taxes on the value of the business? They should just continue to pay taxes on the profits of the business like their father.

Exactly. The inheritance tax is just the federal government justifying stealing from citizens. Again.

[PaloAltoCougar]

I mildly oppose the tax, but would go along with such a tax above certain levels (say, $5 Million, and indexed for inflation). Your use of the term "Inheritance Tax" as opposed to "Estate Tax" is interesting. Are we really taxing the dead guy or the people who are receiving the leftovers? It reminds me of an interesting article in the UK supporting the tax, along with equally interesting counterarguments in the comments section.

"No taxation without respiration!"

[Sullyute]

One of the best things to come from the inheritance tax is the amount of money put into private foundations, given to charity, or donated to schools. If we did not have the inheritance tax then I believe many rich people would just pass the funds onto their children which would devistate the not-for-profit industry.

Also it is technically not an inheritance tax but a transfer tax. It is the tax that the estate has to pay for the privelege of transfer wealth to the next generation.

[Moliere]

The question for me is: When Hank and bro score a $500M windfall does that money really get productively invested as we generally hypothesize? Or does it - in this cash poor age - sit in a vault for the next five years?

Having money sitting in a bank is an investment. It adds to a banks capital and is then loaned out to people who put it to use. Back in the day when Bush was cutting stimilus checks to Americans every year or so I would always put mine in a savings account and felt good about investing in America.

And on inheritance taxes, they are anti-monarchratic (I think I just made that word up) and I'm all for them as long as there is a reasonable non-taxable cap (between $2 million and $3 million is where I'd put it) that grows with inflation.

[Color Me Badd Fan]

I mildly oppose the tax, but would go along with such a tax above certain levels (say, $5 Million, and indexed for inflation). Your use of the term "Inheritance Tax" as opposed to "Estate Tax" is interesting. Are we really taxing the dead guy or the people who are receiving the leftovers? It reminds me of an interesting article in the UK supporting the tax, along with equally interesting counterarguments in the comments section.

"No taxation without respiration!"

The GOP calls it a "Death Tax." Libs call it an "Inheritance Tax." The correct term is an estate tax.

I've seen otherwise politically conservative estate planning attorneys root against the abolition of the estate tax. You've got the bread and butter trusts and wills, but the high net worth clients are the ones that require quite a bit ongoing estate planning work and you can charge big fees for things like structuring buy-sell agreements of family owned LLCs (set up purely for EP purposes) that receive valuation discounts of the assets owned by the LLC.

The reality in 2000, prior to the passing of the Bush estate tax cut, the estate tax exemption was too low. A lot of families that weren't particularly wealthy were getting nailed. A better equilibrium would be something around $3 million or so for a married couple.

[Jacob]

I agree that it is morally wrong both as a double, and sometimes triple tax on the same income and as a tax against frugality.

But I can get over that if the tax only applied to the absurdly wealthy, and even the regular wealthy (estate in excess of $5m).

Its a shame that the estate tax is such a windfall/subsidy for the insurance industry and estate lawyers.

As for the fear that rich people won't use the money how Oxcoug wants--there is no basis for such a fear. The ultra rich either invest it or spend it. But more relevant is that the heirs, almost without fail, spend it and spend it quickly. they didn't earn it and they aren't good stewards. They live lavishly and t is mostly gone by the next generation. Whether they spend it or invest it, it is put to better use than whatever the feds would have done with it.

[Indy Coug]

But more relevant is that the heirs, almost without fail, spend it and spend it quickly. they didn't earn it and they aren't good stewards. They live lavishly and t is mostly gone by the next generation.

Link?

[Moliere]

Link?

[ame="http://en.wikipedia.org/wiki/Louis_XIV_of_France"]Louis XIV of France - Wikipedia, the free encyclopedia@@AMEPARAM@@/wiki/File:Europe_map_1648.PNG" class="image"><img alt="" src="http://upload.wikimedia.org/wikipedia/commons/thumb/d/d0/Europe_map_1648.PNG/220px-Europe_map_1648.PNG"@@AMEPARAM@@commons/thumb/d/d0/Europe_map_1648.PNG/220px-Europe_map_1648.PNG[/ame]

[Clark Addison]

I am not necessarily a big proponent of the estate tax, but it seems to me that the "double tax" argument is a red herring. All sorts of monies are taxed multiple times as they flow through the system. What makes this one more abhorrent than the rest?

[Sullyute]

Whether they spend it or invest it, it is put to better use than whatever the feds would have done with it.

So is the beef with the tax or that the government is not a wise steward with tax revenue?

There is the old adage that you can't take it with you, or that you won't need it where you are going or something to that affect.

Either way, why should the next generation live of the hard work of the parents or grandparents. The wealthy should spend their money while they are living or give it to charity (a better choice in my opinion) and the next generation should have to work to support themselves.

Or just put your children on the board of your foundation and give them lavish paychecks for doing next to nothing. Whatever makes you happy.

[Indy Coug]

Louis XIV of France - Wikipedia, the free encyclopedia

http://cougaruteforum.com/showpost.p...40&postcount=2