"Death tax" loopholes are killing our economy.
The super rich have skipped out on paying $100 billion dollars in estate taxes since 2000. And, that incredible number doesn't even factor in the billions that they saved using loopholes like capital gains, or by stashing their money in tax havens around the world. A new report from Bloomberg News says that special tax loopholes used primarily by the super rich have made the estate tax system “essentially voluntary” for those at the top.
By funneling money into and out of various trusts and other legal structures, the wealthy have managed to eliminate taxes on money they pass down to their heirs, and even make a tax-free profit while doing so. Basically, billionaires like Shelly Adelson and the Walton family set up special trust funds, like the Walton-created “grantor-retained annuity trust” or GRAT, in which they stash millions of dollars worth of stock. Once those GRATs expire – typically after two years – the billionaires cash out the stock, keep their original investment, along with a profit, and pass on the balance to their heirs. All the while, avoiding taxes on the whole scheme.
By using these completely legal, but highly unethical, tactics, the super wealthy have stashed away $100 billion in a little over a decade. That amount is enough to pay for every child in our nation to go to preschool for ten years, and it could wipe out the entire first round of sequester cuts. One hundred billion could have provided a substantial benefit to our nation, and it's only one of many tax loopholes that the super rich use to get out of paying their fair share.
Republicans and the super rich like to call estate taxes “death taxes,” but, as this new report shows, trust-fund schemes like this that are actually killing investment in our nation. If billionaires want to do business in our great nation, it's about time that they start contributing to the commons that make it possible.
Thom's article and Paul Craig Roberts' articles are excellent. Thank you. I will dog-ear both.
As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.
Here I part ways with Thom Hartmann. First, I don't think the government has any business profiting from the death of someone. Money that is earned by a family member for a family should stay in the family and not be touched by any other entity after death. There are many other ways to earn revenue for the federal government through taxing live people. We must fully exploit those methods and no others.
Secondly, tax loopholes through trust accounts are readily available to anyone. As I've pointed out before, trust documents can be set up by--or for--anyone by paralegals for under $200. The estate is transferred directly to the trustee--or successor trustee--at the time of death without taxes. For low wage earners this is a much better asset to keep on the books than it is for the excessively rich. It is poor people that are harmed more from an estate/death tax than the extremely wealthy are.
Though Mr. Roberts is a (genuine) conservative ("genuine" meaning "not a fascist"), his analysis of the dire consequences of post-JFK U.S. foreign policy is astute and most often correct. The potential consequences of the transformation of the U.S. into the de facto Fourth Reich is evident in the fact the USian Empire is now behaving toward Russia and China much as the Third Reich and its Berlin-Rome-Tokyo Axis did in the events that led to World War II.
Meanwhile the ever-more-obvious USian intentions of conquering the world are as suicidal as Mr. Roberts suggests. Obama's aggressiveness toward China and Russia could indeed trigger World War III and bring about the extinction of most earthly life save cockroaches. Given the end-times dogmas of the Christian fundamentalists who dominate the USian Ruling Class -- see Jeff Sharlet's The Family -- it is entirely possible Obama is deliberately fostering their fulfillment.
Moreover, those who do not take the Russians seriously when they assert they will not allow the subjugation of Rodina --Mother Russia -- are obviously ignorant of history. The Persians under Darius the Great invaded Russia in the 5th Century BCE, when the land was known as Scythia and its occupants Scythians. The Persians had assembled what was probably the largest and best quipped military machine in the world at the time but were defeated by what Herodotus (The Histories) described as the most formidable horse-archers in the world, many of whom were women. The Mongols believed they had conquered Russia in the 13th Century, but 200 years later all that remained of their presumptive triumph were the 50-foot piles of Mongol skulls erected as monuments by the Russian resistance. Bonaparte made the mistake of attacking Russia in 1812 and lost his entire army. Despite the deliberately discouraging way history is taught in the USian education system, most of us know what happened to Hitler, who invaded Russia in 1941 and killed himself in 1945 as the justifiably unforgiving Red Army was knocking on his door.
But the lesson -- make war on Russia and lose -- does not appear to have influenced Bush II or Barack the Betrayer. Nor does the Betrayer seem influenced by the warning never to become involved in an Asian land war. Perhaps he listens only to his air farce generals, who arrogantly assure him wars can be won without ground troops when in fact military history proves the opposite to be true. May the Goddess if she exists save her children, including the human race.
What Mr. Hartmann does not say -- perhaps because he is too polite -- is "death tax" is a perversely accurate description. By refusing to pay it, the One Percenters inflict death on all the rest of us.
It's sort of like "death panels," which are real in the sense the insurance barons use cancellations, coverage exemptions and prohibitively expensive premiums to determine who lives and who dies.
In either case -- unpaid taxes that inflict death and impossibly expensive insurance that is equally deadly -- what the One Percent is saying is that it doesn't need us anymore and in fact wants us dead.
Dan -- You also part ways with Thomas Jefferson. He wanted no transfer of wealth from one generation to the next (i.e. a 100% death tax). Jefferson feared transfer of generational wealth more than about anything else, or at least a close tie with theocracy. Jefferson thought this generational transfer of wealth would keep the 1% in power forever. At least it was a key ingredient in every autocratical government in wester civilization.
If you have enough of an estate to leave that much money to your heirs, and they have lived a very privileged life because of your wealth, and not figured out how to support themselves, then the money should be taxed. Actually, it should be taxed, anyway. Access to our 'commons' is what allowed its accumulation.
Well said DAnne. What could possibly make anyone think they should get a dead persons money before the family. it blows my mind that anyone could go that low. They made it, paid taxes on what they made and what is left over is there's to do with what they want.
Marc, we'll just have to disagree on this one. I think any inheritance that exceeds a million dollars should be taxed. Period. I am sick and tired of these rich, do-nothing, idle bastards getting a free ride while everyone else has to dig deep into their pockets and sacrifice their meagar earnings to taxes every year; money they've earned, that wasn't handed to them on a silver platter! For those of modest means, I've no problem with inheritances being tax-free; but if they're getting a million or more bucks of unearned wealth, they can just pay up and quit their whining! I've had my fill of trust fund babies and all their lame-ass crybaby rhetoric about "death taxes"... Boo-hoo-hoo! It bugs the hell out of me how most of us have to struggle so hard and work our friggin' butts off, while these pampered lazy bums can do absolutely nothing and still have their little needs taken care of, and all their little toys ad nauseam, and travel the world and enjoy a nice life of leisure! Meanwhile we working class suckers keep on grinding away at our boring, crappy jobs... if we're lucky enough to have a job! Screw it. This has been a thorn in my side, all my working life. The existence of an idle rich class of freeloaders makes a total mockery of the work ethic, and any concept of "bettering oneself". Every time I hear these spoiled brats complaining about "death taxes", I could throw up. - Aliceinwonderland
Quote hartmann:... pay for every child in our nation to go to preschool for ten years
But do we really want our children to be stuck in preschool for ten years? I think playing with clay and watercolors for ten years would put a damper on educating them. Duuuuh! Just sayin'! ;-}
PD, You're such a wise ass.
Quote Aliceinwonderland:Marc, we'll have to disagree on this one. I think any inheritance that exceeds a million dollars should be taxed.
Aliceinwonderland ~ You make a very good point. If there is to be a cutoff value that value is negotiable. One Million dollars might be extended up to 5 Million dollars. It doesn't really matter. What matters to me is that a family home may be taxed beyond the ability of the family to afford the property tax and the death tax at the same time. The result is super tragic. Not only does the family lose one of the most valuable members in one year; but, they are also forced to sell the family home to pay the taxes and relocate. That is not what I consider to be the American way. Sure there are rip off artists who take advantage of laws to game the system. Yet there are also legitimate victims who--as far as I am concerned--need to be taken into account first and foremost. After all, they lost someone in their family! Don't they deserve a bit of remorse from the rest of us--especially if they have contributed the most during their lives to the commons? My father did; and, never complained about it. Should the death of such a man snatch money that he would have left for his children to carry on his legacy? I don't think so. There should be a cut off. Can't we isolate people who's worth doesn't threaten their home or way of life?
Nevertheless, any tax on death I don't believe in. Imagine the Federal Government profiting off of death. The same federal government that has drone technology. The same federal government that has biochemical warfare weapons. The same government that controls the FDA. We should deeply contemplate the amount of power we give to our elected officials and how we allow that power to be used. As far as I am concerned, profit on death is a no deal, the way to go is profit on profit. Anything else is asking for problems that don't yet exist. If Thomas Jefferson disagreed with that it just goes to show that no one is perfect.
No, but seriously folks...
Actually, I very strongly agree with Aliceinwonderland #11! Many of those filthy rich spoiled brats, themselves, inherited their wealth. And they have all gotten a "free ride" ever since the Reagan days....robbing the poor to pay the rich...reverse Robin Hood! It's time we got really ticked off and stop these obscenely wealthy few from continuing their economic war against us. And it is a war...people are dying from it! Since the Democratic Party is really no better than the Republican Party...we've got to do something radically different. Otherwise, we'll all die early deaths trying to make ends meet...trying to survive. Things WILL get worse..much worse! It's a matter of dying on your feet or dying on your knees!
Aliceinwonderland: Thank you..many people have often told me that I was wise beyond my "daze"...or is that "ears"? I just don't know anymore...time just keeps slippin' slippin' slippin' into the future!
To begin with, any economic system that allows billionaires to "happen" is a flawed one. Whenever I hear the words super rich my thoughts immediately shift to the problem of unregulated capitalism. Seeing how there appears to be no political will to regulate the fascist hogs, then the only solution that I see is a return to the pre- Reagan tax rates. However this can only happen when a congress willing to honor the will of the vast majority is voted in.
Of course when the idiocy of a white Santa argument is more important than the fact that your red state representative has voted yes more than once to the Paul freaking Ryan budget plan, then I guess the hope that this voter will pull their head out of their ass in time for the midterms is slim to none. Merry Holidays.
Apropos "spoiled brats," your comment sharply focused my alleged mind on the pale underbelly of our political system: we are in fact governed by a politics of tantrums -- a tantrumocracy -- in which the idle rich throw the tantrums of screaming, kicking, diaper-soiling 2-year-olds whenever they don't get everything they want. (Yes, "diaper-soiling" is a metaphor for what the rich threaten to do to us if their wishes are not regarded as commands -- and what they then do to us anyway merely out of moral imbecility and sadism, as in 1929 and again beginning in 2007. ) Makes you wonder if our Teutonic cousins were not sending their children a message when they invented a sausage called "bratwurst."
Marc, I appreciate your bending a bit on this issue. But when you refer to this as a "death tax" you are using the language of the elite spoiled brats, thus supporting their propaganda against what can be more fairly - and accurately - referred to as an inheritance tax. The kinds of situations you cite are legitimate reasons why there needs to be a cut-off point. Some have suggested three million dollars; others, five million. I think it should be one million. That's enough money, if managed wisely, for a working class individual to buy a nice (nice; not opulant!) house and enjoy a modest-but-stable retirement. I would never begrudge anyone such good fortune. But I don't believe a class of idle rich should even be allowed to exist. Why should anyone be allowed a free ride?! I'm always hearing people bitch and complain about poor folks on government assistance, but nobody ever gripes about the idle rich, and that drives me crazy. - Aliceinwonderland
Oh boy, this one really ticks me off. After my father died, I paid the taxes on my inheritence and my father's liquidated estate, a meger inheritence, but an inheritence all the same. Just knowing that these rich pigs get away with not paying their fair share of taxes, like everyone else, really bugs me to no end. They are nothing but the worst kind of traitors and it's way past time we as Americans did something about them.
DAM -- So you want the 1% to keep their money so they can keep buying politicians: politicians who make sure that the FDA does not pass any restrictive FDA laws; those politicians that make sure are defense spending never decreases. Just remember this if we had a 100% death tax their would be no Koch brothers.
AIW -- The idle rich own all the places you would hear about the idle rich.
Amen Johnnie, "chuckle", PD and "Mister 10K"! And Loren, I love your bratwurst wisecrack! My dear Marc, we've got'cha outnumbered this round.
Johnnie, I am puzzled as to how you wound up paying taxes on your dad's estate if it was a meagar one. I don't recall us paying taxes on anything we've inherited.
Like I say, I'm fine with tax-free inheritance to a point. But if someone inherits millions- enough to become independently wealthy and join the ranks of the idle rich- they can pay up and shut up. From my perspective, it's all about simple fairness. As Gary Reber and "dollymajig" both pointed out, it's about giving something back to a society that has been (overly) generous to you! - AIW
"It is poor people that are harmed more from an estate/death tax than the extremely wealthy are." And that is what must change. I'm always blown away by argument to keep wealth in the family made by those who believe they 'earned' everything themselves and others must exhibit 'personal responsiblity' and earn their own money too. But, they want to give their own progeny a leg-up, an advantage over the rest of we fools who did not choose the right (wealthy) parents. This is how the 1% is created. This is how Oligarchy begins. I should think that true and honest conservative thinking would include leveling the playing field so that every born child starts out with the same advantages. Only then could you measure the success or value of that individual in this, our meritocracy. I read about one wealthy man who did just that. He gave all his wealth to charity upon his death, and left his kids to earn their own.
In truth, I'm not opposed to leaving things to the kids, but what is 'enough'? When is it too much? And what about giving back to the country that laid the groundwork for all that wealth? As I get older, I realize that I do want my child and grandchildren to have something of me, that I worked for. So I continue to work to get that home paid off because they love it so much. At the same time, I would not want to grace them with so much wealth that they may just be spoiled brats (that is, if I had that much wealth myself to leave)!
It is poor people that are harmed more from an estate/death tax than the extremely wealthy are. - See more at: http://www.thomhartmann.com/blog/2013/12/death-tax-loopholes-are-killing-our-economy#comment-formIt is poor people that are harmed more from an estate/death tax than the extremely wealthy are. - See more at: http://www.thomhartmann.com/blog/2013/12/death-tax-loopholes-are-killing-our-economy#comment-form"
Thom indicates that since 2000 the super rich have avoided $100 billion in estate taxes. This is just one more reason to install a revenue loss clock right next to Tea Party house member Tom Reed's debt clock.
Aliceinwonderland: I can't speak for Johnnie, but when my father passed away in 1992 I paid about $7000 in tax on my inheritance. It was because I inherited land, not money..... it was 90 acres of mainly woodland, not an estate or something. Payment of this tax was to create whats called a cost basis, to help offset gains on a future sale. The laws may have changed since then?
More importantly, I currently pay about a 50% tax rate on my income, as many working class folks do, if you include all taxes, such as property tax, sales tax, etc. Nothing makes me more angry than when the rich piss and moan about the rest of us not paying enough Fed income tax. I want to see people like Mitt pay 50%.....he'd still have plenty left over to stress about. Also I actually work for my income..... I don't rip off pensions.
chuckle8 ~ You are turning everything I said around. A modest inheritance tax on estates over $1-$5 million is something I might approve of. Of course I feel the 1% are very excluded from any such restrictions. However, a 100% tax on anyone is preposterous. Could you imagine the effect such a ridiculous tax would have on the family of four if the only breadwinner suddenly died? They would automatically be homeless, penniless, hopeless and doomed.
As far as Thomas Jefferson is concerned I wouldn't be the first to disagree with the man. Wasn't it Jefferson who called for limited government and then, when in office, expanded government farther than any other President in history? I don't blindly follow anyone when they have a stupid idea. Who in their right mind would save a dime during their lifetime knowing that it would all be forfeited to the government at death? Everyone would sell everything they own--most likely to their own children for next to nothing. A 100% death tax is a ridiculous idea that opens the door for more loopholes for the rich; while, creating greater hardships for the poor. How can the lower class ever move up if they are stripped of their savings at death? Your damn right I'm at odds with Jefferson on this one too.
One's family is the main reason people contribute to society in the first place. If that is where they want their money to go they have the human right do see to their wishes. We, as a society, have the simple responsibility of respecting their wishes. Now if you want to discuss a 35%-50% inheritance tax on the 1% then I'm listening. Anything else is pure fascism on steroids. Just where do you fit in the so called "American Dream" where everything you acquire in your lifetime belongs to the Federal Government when you die? Doesn't that make you a lifetime slave of the Federal Government? Is that really what you want to be?
Aliceinwonderland ~ Don't worry, I have no problem with being outnumbered when I'm right. Even the fact that Kend agrees with me doesn't bother me. Even a stopped clock is right twice a day. This whole idea of "idle wealth" and the resentment that everyone seems to have with it reeks of pure jealousy and envious resentment. What is wrong with someone being able to retire and enjoy life after a parent passes? Doesn't it occur to anyone that this may indeed have been the reason that the parent worked and saved their entire life--so that their children don't have to? I don't have any problem with anyone living solely from dividend checks as long as A) They pay their fair share of taxes on Capital Gains, and B) They don't use any excessive wealth to influence politics. Quite frankly the only reason #B exists as a real problem is because We the People are allowing it to happen by allowing big money to be used in our political system. Vigorous Campaign Finance Reform is the pill to cure that ill. For every Koch brother there are a thousand other wealthy people who just want to enjoy their lives and not be bothered. The vast majority of people living from "idle income" are not our problem. If there is something wrong with aspiring to become independently wealthy and enjoy life then kindly explain to me what used to be "The American Dream?"
The problem we have in this nation is lack of proper taxation of living people. The terms "Inheritance Tax" or "Death Tax" makes no difference to me. One implies that you are taxing a corpse, the other implies you are taxing heirs. The plain fact of the matter is that you are taxing a corpse. The money doesn't fall into anyone else's hands until the taxes are paid; therefore, you are taxing a corpse. Make no mistake about it. Like the old Beatles song went...
Quote The Beatles:Now my advice for those who die
Declare the pennies on your eyes
Cos I'm the taxman, yeah, I'm the taxman
And you're working for no one but me
DAM -- Even Thom disagrees with Tom on the 100% death (I like death because it has fewer letters than inheritance) tax thing. Thom mostly agrees with your version of a death tax. The 100% is just to illustrate how history (for 7000 years) has shown that transfer of wealth from generation to generation is the strongest deterrent to democracy. You seem to picture the federal government as some separate entity. It is just a "tool" that we want to keep in the hands of the 99%.
If our society had a 100% death tax (just an exaggeration), I think that society would also take care of that family that lost its breadwinner.
Marc, I don't have a problem with anyone retiring after a life of hard work, whether the source of that retirement is inheritance, Social Security, pensions or whatever. I do have a problem with those who never have to work, getting a lifelong free ride. I always thought the American dream was about owning your home, enjoying the comforts and conveniences of a middle class standard of living and actualizing your potential as a human being. I never thought the American Dream was about having a permanent vacation from cradle to grave. Like I say, it makes a mockery of the work ethic. Long as our system perpetuates that kind of inequality and double standard, this whole idea of "bettering oneself" is nothing but a a friggin' joke. And that's all I have to say about it. - Aliceinwonderland
chuckle8 ~ Thanks for clarifying that. I think we as a species need to do what we can to lift people out of poverty and make them as upwardly mobile as possible. That is why I'm a big believer in passing on a family's wealth. That makes the next generation stronger than the previous one. That is some strong motivation to work hard your entire life knowing that because of it your children will have a better life.
Quote chuckle8:If our society had a 100% death tax (just an exaggeration), I think that society would also take care of that family that lost its breadwinner.
I couldn't disagree more. When love isn't involved people tend to take advantage of each other. A family's fortune belongs with the family and not with the state under any circumstances. That fortune represents the love of the person who just died. It is, in fact, the only thing left on earth from that person and that is what should take care of that family, not social programs. Social programs should be reserved only for people whose loved ones died unexpectedly or penniless and left them dependent and/or in debt.
Big wealth comes with big responsibilities. It takes a lot of work to sustain a financial empire. You snooze you lose. Let the big boys have their cake--if they can keep it. What I'm concerned about is how much good a decent small inheritance can do to improve the life of people. Education, business opportunities, and personal growth experiences like travel all add to the character of people. The better off the majority is the better off society is. A high death tax would not only discourage people from working hard and saving; but it would permanently create a class of Serfs who never have any hope of improving their lot in life. We might as well just bring back slavery.
I guess we'll just have to agree to disagree on this one.
D.A.M. -- The statement I disagree with the most is "I guess we'll just have to agree to disagree on this one". When I read that statement I just read, "I have run out of time and energy to find the facts that support my statements", If you say it that way, I can accept it. If I find the time and energy to find the facts to support my statements I will continue to harass (LOL) you with those facts, and even truthiness.
Do you think Jefferson was wrong that generational wealth transfer was the key factor in keeping a ruling elite (1%) in power?
Do you think the Walton family does a lot of work to sustain their financial empire? I think they just use all the inherited wealth to hire the best sociopaths to run their business. I think the Mexican gardener in LA works much harder.
Quote chuckle8:D.A.M. -- The statement I disagree with the most is "I guess we'll just have to agree to disagree on this one". When I read that statement I just read, "I have run out of time and energy to find the facts that support my statements", If you say it that way, I can accept it.
chuckle8 ~ Not at all! The truth of the matter is that I have already make my statement on the matter. In fact, I am at the point of repeating myself. I do not like to repeat myself. Therefore I am though. What more could I possibly state to support my statements that I have not already stated. This is a matter of upward mobility. I don't care about the Waltons or the Koch brothers adding to an already opulent fortune. Really, what is a Trillion Dollars compiled upon 45 Billion to anyone? Do you seriously think it is going to make them any stronger or right in their agenda? Do you really think it is going to make us any less formidable in ours? Face facts my friend, it means nothing. It is the $100K that if distributed amongst 4 siblings that is going to make the difference between 4 burger flippers and 4 professionals in the future.
Quote chuckle8:Do you think Jefferson was wrong that generational wealth transfer was the key factor in keeping a ruling elite (1%) in power?
chuckle8 ~ For the fourth time, yes I think Jefferson was wrong. At the time Jefferson made that observation--in the pre Emancipation Proclamation era--the statement held a different significance. Today, when we are on the verge of Vigorous Campaign Finance Reform, the statement holds no water whatsoever. Don't you realize that once Move to Amend and Campaign Finance Reform are enacted that regardless of whether you earn $25K/year or $60B/year, everyone will be a full fledged member of the ruling elite?
Quote chuckle8:Do you think the Walton family does a lot of work to sustain their financial empire? I think they just use all the inherited wealth to hire the best sociopaths to run their business. I think the Mexican gardener in LA works much harder.
chuckle8 ~ All very good points. However, I must say that yes, the Walton family does need to do a lot of work to sustain its fortune. I'm sure you had a chance to check out the old movie "Brewster's Millions" with Eddie Murphy. Eddie (Brewster) was charged with spending several millions of dollars in a short period of time. It was very difficult. All he had to do was waste the money. That is nothing compared to having to maintain the money and make more money. The Walton's have there hands full. They have been successful by contemporary standards; yet, by humanitarian standards they have failed miserably. Hiring sociopaths to maintain a fortune is a very real outcome of such an inheritance... for what it is worth. Do you really think that anyone you hire when you are that wealthy is going to be trustworthy? If you cannot hold a short leash on your help at that level you are nothing more than a fool and his money; and, you know how that turned out...
Of course I agree that the Mexican gardener in LA works much harder; and, deserves much more respect! Therefore, when that gardener works extra hours and socks away extra money I don't believe that any of his savings should be used for anything else then his final wishes. If that Mexican gardener wants to spend his earned money to push his children into the law profession, the engineering profession, or the medical profession that should be left to the wishes of the worker and his family. In no respect should the fortune of a family like the Waltons or the Kochs in any way affect the inheritance of that Mexican gardner.
Have I made myself clear?
Marc says "It is the 100K that if distributed amongst four siblings that is going to make the difference between four burger flippers and four professionals in the future." Fair enough, Marc, if all inheritances were so modest. But when it comes to inheritances involving millions or billions, this is where we part company. I would also like to add that if education was part of tax-supported infrastructure in this grrrreat country of ours, no one would be condemned to a lifetime of burger flipping, inheritance or no inheritance. - Aliceinwonderland
Aliceinwonderland ~ Agreed!
Marc (if is fun to change your name on each reply and you are such a good sport in responding) -- You say so many things that I enjoy responding to. Please do not give up on repeating yourself.
Too bad Brewster is not trying to get rid of that million today. With the electronic trading he probably could have got rid of that money in a few milliseconds. Of course, the repugs would probably bail him out.
Jefferson was pre-Emancipation, but he also was post "Emancipation". He was looking at 7000 years of Western Civilization. He was looking at Greek democracy and the Roman republic. He noted that the generational wealth transfer was the key cause of the demise of those societies in which the 99% had some power. This battle between the 1% and the 99% has gone on for that 7000 years and continues. The move to amend action is the 99% trying to get back the power they once had until the billionaires took it away. I was listening to the second hour of Thom's radio broadcast (on podcast) of Dec 11 today. Thom was reading from a 1949 article by Albert Einstein, an article which Thom had been unaware of until a caller earlier in the hour told him about it. Einstein describes how the 1% destroy a democracy.
Do you want me to describe to you how the wealth of the "Koch brothers" (inherited from Daddy Koch) very much determines the fortune of the Mexican gardener?
Quote chuckle8:Do you want me to describe to you how the wealth of the "Koch brothers" (inherited from Daddy Koch) very much determines the fortune of the Mexican gardener?
chuckle8 ~ Now we're talking apples and oranges. When I speak about wealth transfer it is in reference to the vast majority of Americans--the 99% if you will. You can even call it 95%. I am not talking about excessive wealth in the Billions of dollars. In fact, anything over $5M I could consider to be excessive. As I stated before, the 1% have to be treated specially. Now if you want to limit wealth transfer in that group to say $5M per heir then I agree. Tax the rest, it would be good for the heirs and good for the country. I just don't think you should tax regular citizens anything. Everyone should have the ability to climb the same tree that the Koch family did. This rule does not apply the people who occupy the top of the tree. There should always be room at the top.
Marc, now you are making more sense. But I still think five million is too high to be at the low end of "excessive". I would bring it down much lower than that; like maybe between one and two million. Anything in excess of what can be reasonably expected to cover a comfortable, stable retirement should be taxed, in my opinion. If our tax system were the same as it was prior to Reagan's presidency, we might not even be having this conversation.
Let me repeat a point I made earlier: that with few exceptions, modest inheritances are not taxed. My husband and I were blessed with inheritences, from both sides of our family, and have not paid one thin dime of it to the IRS. So a situation such as Marc described, with $100K divided among four siblings, isn't even an issue. No one is proposing that such inheritances be taxed. - Aliceinwonderland
Quote Aliceinwonderland:Marc, now you are making more sense. But I still think five million is too high to be at the low end of "excessive". I would bring it down much lower than that; like maybe between one and two million.
Aliceinwonderland ~ Like I said before, the cut off is negotiable. $1.5M sounds fine. Of course you realize that any amount will have to be adjusted over time due to deflation and inflation of the dollar. Hell, if the Grantor could not see fit to grant a greater amount during his lifetime to said heir, that says much about the situation, doesn't it? My simple philosophy is put the money where it will do the most good; encourage, don't discourage, poor or middle class people; and provide everyone a shot at upward mobility. Let everyone have a slice of the pie; and, like you said before, spend that taxable mega inheritance on free public education. That would be a fine way to start.
I personally know of several people who have decided that they don't want their personal fortunes to go to their own families for personal reasons. They would prefer to leave that money to charity. Two of my oldest friends decided long ago that that charity would be the National Animal Wildlife Federation. I see nothing wrong with any charity that betters the situation for humanity or the planet. If that estate is so huge that falls under the jurisdiction of the Federal Government to decide that is fine. Just leave the 95% alone is all I ask; and, we are in full agreement.
And we are, Marc. Have a great weekend. - AIW
You too! Happy New Year!
DAnneMarc -- I responded too fast to your last blog. I agree with you. I was only trying to express how terrified Jefferson was of accumulated wealth and its generational transfer. Did you know that the 1%percentile in wealth in the US is $12 million.
For entertainment's sake and to illustrate how non-linear this problem is I have a question for you. Do you think a $5M inheritance tax free with cost basis at time of inheritance is more fair than a $12M inheritance tax free with a cost basis of zero? Do think inheritance above the limit should be taxed as ordinary income or have its own special rate (I like 92%; Jefferson likes 100%)? All I can say is that the people (congressional staffers) who have to write the tax code must go crazy.
chuckle8 ~ I'm sorry. I must say I do not fully understand your question. If you are asking whether or not a $5M inheritance should be as free as a $12M inheritance tax I believe I already answered that. Neither should be free of an inheritance tax. Of course, the $12M should be taxed higher. Again, 92% tax on anything is ridiculous. A 50% tax on $12M is more than fair. Let's leave it at that and keep the inheritance tax on less than $2M at 0%. If you have an argument against such a scenario please state it and I'll answer when I can. I plan on being very busy in the next few days.
All right guys, we've badgered Marc enough already... haven't we? (Just kiddin'.) - AIW
Another thought just occurred to me, pertaining to this discussion, reminding me to never underestimate the power of the corporate media! Because in retrospect my friends, this whole debate seems pointless. The plutocrats, the kleptocrats & the trust fund babies are whining about this so-called "death tax" because (DUHH!) they're the ones inheriting a big enough free pass to be touched by it. But no matter. They'll make it sound like it affects everyone who inherits anything, just to get us all worked up... over nothing.
These pesky wedge issues! Don't you see, comrades?! It's just a device -- one of many -- that serves as a handy tool for the elite, to keep us "99-percenters" distracted and clueless, too busy bickering amongst ourselves over the latest wedge issue (Abortion? Guns? Gay marriage? Voter "fraud"? "Death" taxes? The "war on Christmas"?) while they continue stealing our homes, our money, our livelihoods, our government, our soverignty, privacy and so on, and while they keep plundering the landscape, poisoning the water and air, killing everything that gets in their way. Time to wake up. - Aliceinwonderland
It has just been posted...Quote Aliceinwonderland:Another thought just occurred to me, pertaining to this discussion, reminding me to never underestimate the power of the corporate media! Because in retrospect my friends, this whole debate seems pointless.
She then goes on to say...Quote Aliceinwonderland:These pesky wedge issues! Don't you see, comrades?! It's just a device -- one of many -- that serves as a handy tool for the elite, to keep us "99-percenters" distracted and clueless, too busy bickering amongst ourselves over the latest wedge issue (Abortion? Guns? Gay marriage? Voter "fraud"? "Death" taxes? The "war on Christmas"?) while they continue stealing our homes, our money, our livelihoods, our government, our soverignty, privacy and so on, and while they keep plundering the landscape, poisoning the water and air, killing everything that gets in their way. Time to wake up.
Aliceinwonderland ~ I doubt that I've heard more sober and correct words yet uttered on this thread. They who hold power do so by sowing discord; and, they are masters at that! Thank you so much for pointing that out!
My pleasure, Marc. Always. - AIW
dam -- My main point was that the details are almost not understandable, so you certainly got my point.
With regards to the 92% tax rate, That was the top tax rate from FDR to Kennedy/Johnson. The economy as a consequence was the best the world has ever seen (see Larry Beinhart on taxes). Kennedy/Johnson cut the top rate to 78% and the economy slowed. Reagan lowered the rate to 35% and the economy collapsed. Those are the numbers. We can argue about the causal relationship. My first volley in that argument, is that no one is supposed to pay the 92%, instead they are to invest in America to avoid the tax (AKA a loophole).
AIW -- I concur; very succinctly said.
chuckle8 ~ I completely agree with your assessment about the income tax rate. In fact, the same could apply to the death tax; except, with lower income people. By and large their savings were already taxed enough when they originally earned them. Taxing them again after death isn't going to force reinvestment in anything or appreciably stimulate any economy. Increasing the income tax on high income is fine with me. Corporate tax rates could be driven up to 95% as well. I have nothing against taxing high profits or living people. It generates much needed revenue and forces reinvestment. That is, a high Corporate tax rate is a job creator.
DAM -- Don't be confused since I agree all inheritance below $5 million should be tax free. However, as a point of information, I disagree that by and large that the inheritance wealth was taxed enough. I am basing that on my own personal experience. When my mother passed, I inherited a duplex worth $200,000. My mother bought it for $50,000. If I sell the duplex, my cost basis wil be $200.000. There is a difference of $150,000 in capital gains that will never be taxed.
Quote chuckle8:When my mother passed, I inherited a duplex worth $200,000. My mother bought it for $50,000. If I sell the duplex, my cost basis wil be $200.000. There is a difference of $150,000 in capital gains that will never be taxed.
chuckle8 ~ So... My friend... What is your problem again???? Your mother made the mistake of not putting your duplex in a living trust. Then the cost basis would be the value of the property when she died. You would never have to pay the taxes that she would have had to pay if she sold the property before she died.
By the way, whatever you do, don't sell the duplex... ever!! Not only is it what your mother wanted you to have, it is worth more than money. Even if the value of the dollar dropped to zero tomorrow, your duplex will still have intrinsic value that is far beyond the value of money.
Thom: This article by Paul Craig Roberts seems to me a very important look at what the USA is actually focusing on - which is, sadly, not our economy. I hope you can take a look at it. And I'd like to know your opinion. The article is below and here: http://www.paulcraigroberts.org/2013/12/14/washington-drives-world-towar...
Washington Drives the World Toward War — Paul Craig Roberts
December 14, 2013
Washington has had the US at war for 12 years: Afghanistan, Iraq, Somalia, Libya, Pakistan, Yemen, and almost Syria, which could still happen, with Iran waiting in the wings. These wars have been expensive in terms of money, prestige, and deaths and injuries of both US soldiers and the attacked civilian populations. None of these wars appears to have any compelling reason or justifiable explanation. The wars have been important to the profits of the military/security complex. The wars have provided cover for the construction of a Stasi police state in America, and the wars have served Israel’s interest by removing obstacles to Israel’s annexation of the entire West Bank and southern Lebanon.
As costly and destructive as these wars have been, they are far below the level of a world war, much less a world war against nuclear armed opponents.
The fatal war for humanity is the war with Russia and China toward which Washington is driving the US and Washington’s NATO and Asian puppet states. There are a number of factors contributing to Washington’s drive toward the final war, but the overarching one is the doctrine of American exceptionalism.
According to this self-righteous doctrine, America is the indispensable country. What this means is that the US has been chosen by history to establish the hegemony of secular “democratic capitalism” over the world. The primacy of this goal places the US government above traditional morality and above all law, both its own and international.
Thus, no one in the US government has been held accountable for unprovoked aggression against other countries and for attacking civilian populations, unambiguous war crimes under international law and the Nuremberg standard. Neither has anyone in the US government been held accountable for torture, a prohibited crime under US law and the Geneva Conventions. Neither has anyone been held accountable for numerous violations of constitutional rights–spying without warrants, warrantless searches, violations of habeas corpus, murder of citizens without due process, denial of legal representation, conviction on secret evidence. The list is long.
A person might wonder what is exceptional and indispensable about a government that is a reincarnation of Nazi Germany in every respect. People propagandized into the belief that they are the world’s special people inevitably lose their humanity. Thus, as the US military video released by Bradley Manning reveals, US troops get their jollies by mowing down innocent people as they walk along a city street.
With the exception of the ACLU, constitutional rights groups and independent Internet voices, the American people including the Christian churches have accepted their government’s criminality and immorality with scant protest.
The absence of moral denunciation emboldens Washington which is now pushing hard against Russia and China, the current governments of which stand in the way of Washington’s world hegemony.
Washington has been working against Russia for 22 years ever since the collapse of the Soviet Union in 1991. In violation of the Reagan-Gorbachev agreement, Washington expanded NATO into Eastern Europe and the Baltic states and established military bases on Russia’s borders. Washington is also seeking to extend NATO into former constituent parts of Russia itself such as Georgia and Ukraine.
The only reason for Washington to establish military and missile bases on Russia’s frontiers is to negate Russia’s ability to resist Washington’s hegemony. Russia has made no threatening gestures toward its neighbors, and with the sole exception of Russia’s response to Georgia’s invasion of South Ossetia, has been extremely passive in the face of US provocations.
This is now changing. Faced with the George W. Bush regime’s alteration of US war doctrine, which elevated nuclear weapons from a defensive, retaliatory use to pre-emptive first strike, together with the construction on Russia’s borders of US anti-ballistic missile bases and Washington’s weaponization of new technologies, has made it clear to the Russian government that Washington is setting up Russia for a decapitating first strike.
In his presidential address to the Russian National Assembly (both chambers of parliament) on December 12, Vladimir Putin addressed the offensive military threat that Washington poses to Russia. Putin said that Washington calls its anti-ballistic missile system defensive, but “in fact it is a signifiant part of the strategic offensive potential” and designed to tip the balance of power in Washington’s favor. Having acknowledged the threat, Putin replied to the threat: “Let no one have illusions that he can achieve military superiority over Russia. We will never allow it.”
Faced with the Obama regime’s murder of the nuclear weapons reduction treaty, Putin said: “We realize all this and know what we need to do.”
If anyone remains to write a history, the Obama regime will be known as the regime that resurrected the cold war, which President Reagan worked so hard to end, and drove it into a hot war.
Not content to make Russia an enemy, the Obama regime has also made an enemy of China. The Obama regime declared the South China Sea to be an area of “US national security interest.” This is akin to China declaring the Gulf of Mexico to be an area of Chinese national security interest.
To make clear that the claim to the South China Sea was not rhetorical, the Obama regime announced its “Pivot to Asia,” which calls for the redeployment of 60% of the US fleet to China’s zone of influence. Washington is busy at work securing naval and air bases from the Philippines, South Korea, Vietnam, Australia, and Thailand. Washington has increased the provocation by aligning itself with China’s neighbors who are disputing China’s claims to various islands and an expanded air space.
China has not been intimidated. China has called for “de-americanizing the world.” Last month the Chinese government announced that it now possesses sufficient nuclear weapons and delivery systems to wipe the US off of the face of the earth. A couple of days ago, China aggressively harassed a US missile cruiser in the South China Sea.
The militarily aggressive stance that Washington has taken toward Russia and China is indicative of the extreme self-assuredness that usually ends in war. Washington is told that US technological prowess can prevent or intercept the launch of Russian and Chinese missiles, thus elevating a US pre-emptive attack to slam-dunk status. Yet the potential danger from Iran acquiring nuclear weapons is said to be so great that a pre-emptive war is necessary right now, and a massive Department of Homeland Security is justified on the grounds that the US remains vulnerable to a few stateless Muslims who might acquire a nuclear weapon. It is an anomalous situation that the Russian and Chinese retaliatory response to US attack is considered to be inconsequential, but not nuclear threats from Iran and stateless Muslims.
Not content with sending war signals to Russia and China, Washington has apparently also decided to torpedo the Iranian settlement by announcing new sanctions against companies doing business with Iran. The Iranians understood Washington’s monkey wrench as Washington probably intended, as a lack of Washington’s commitment to the agreement, left Geneva and returned to Iran. It remains to be seen whether the agreement can be resurrected or whether the Israel Lobby has succeeded in derailing the agreement that promised to end the threat of war with Iran.
American citizens seem to have little, if any, influence on their government or even awareness of its intentions. Moreover, there is no organized opposition behind which Americans could rally to stop Washington’s drive toward world war. Hope, if there is any, would seem to lie with Washington’s European and Asian puppets. What interests do these governments have in putting the existence of their countries at risk for no other purpose than to help Washington acquire hegemony over the world? Cannot they realize that Washington’s game is a death-dealing one for them?
Germany alone could save the world from war while simultaneously serving its own interests. All Germany has to do is to exit the EU and NATO. The alliance would collapse, and its fall would terminate Washington’s hegemonic ambition.