This Person Needs to Pay More Taxes

Fucking royals indeed.

I get rewarding people for a job well done. Raises and all that. Big returns on sound investments. Building up a fortune over generations. Sure, makes sense.

But there just has to be a point where it just gets to be too much. Where it becomes ok for us as a society to say, "You know what? You really don't need any more. Mind if we skim some off the top and maybe, I dunno, feed some poor people or make sure our bridges don't collapse for no reason or whatever?"

It's one of those fuzzy I'll-know-it-when-I-see-it lines, but I'm pretty sure somebody who has a house just for napping has crossed it.

How much do you take away . . . all of it? Or just enough that the public can keep sucking away at someone's assets like a vampire indefinitely.

Better yet, you're probably a proponent of a 100% estate tax. Why should anyone get the fruits of their ancestor's labors? Just a bunch of "Fucking Royals", right?

What I really like is Joshua's comment, because it lays it out bare for all to see--he gets the rational arguments regarding patience, sound investments and cumulative investments, but fuck it . . . the emotional side in him says that nobody ought to live that much better so we should get to take it away.

btw nice reading comprehension, as that house looks like an excellent place to entertain guests for personal or business gatherings as well as taking naps.

Well to play God's advocate, why should anyone get the fruits of their ancestor's labor?

Because if I have money, I should be able to leave it to whom I choose. Maybe that is my children, maybe it isn't. But is is my money, my call.

Because if I have money, I should be able to leave it to whom I choose. Maybe that is my children, maybe it isn't. But is is my money, my call.

Why? You're dead. What moral grounds does a dead person have to decide anything? Why should you have any rights after you're dead and buried? If you want to give your assets to your kids, do it. Don't go trying to take it with you and decide things from beyond the grave. [Please note that I'm not against inheritance at all, but it seems to me that you're taking an arbitrary moral position for no reason other than the fact that it seems right to you.]

Of course, I don't have a problem with a healthy estate tax either. If one makes the assumption that taxes need to be collected in one form or another and adds to that the assumption that taxes should be collected in a way that minimally affects the economy, taxes on large estates seem like a no-brainer. They provide no real disincentive to production, they don't put anybody into poverty, and they can generate a reasonable sum of money. The worst that can be said is that a dead person's "rights" were trampled or that a few people got a smaller unearned cash windfall than they might otherwise have. I don't have a problem with people inheriting a chunk of money that they did nothing to earn, but why on earth should they not pay taxes on it like the rest of us do with money that we do earn?

Uh, how exactly is keeping money until you die, then giving it to whom you want "trying to take it with you"? You're not trying to decide things from beyond the grave--these are decisions you made during your lifetime, and your gifts are transferred upon death (the length of time to probate an estate being a legal requirement that delays the actual transfer of monies). Legally are you not considered to "own" the property after your death. It is held, temporarily, in the legal creation of an estate to settle claims and ensure the wishes of the decedent are followed, but again that is not considered ownership by the decedent.

You try to minimize the harm of this taxation by claiming that no one's "rights" were trampled by trying to wedge in between the ownership of the gift giver and the ownership of the gift recipient, but there is no space to wedge. Either you are taxing someone's assets while they are still alive, or you are taxing the gift of the recipient. Someone is being taxed, because the death of the giver is the trigger for the gift.

And the reason someone should not have to pay taxes on the gift is because the government has already taxed that money, or had the opportunity to tax it, when it was income with respect to the gift giver. How many bites of the apple should the government be entitled to?

You try to minimize the harm of this taxation by claiming that no one's "rights" were trampled by trying to wedge in between the ownership of the gift giver and the ownership of the gift recipient, but there is no space to wedge. Either you are taxing someone's assets while they are still alive, or you are taxing the gift of the recipient. Someone is being taxed, because the death of the giver is the trigger for the gift.

And that's exactly the point I'm trying to make. It should be looked at as a tax on the recipient. It's a tax on your descendants because they get the money. It's not a tax on you because you're dead. The simple question is, why should I have to pay taxes on money that I work to earn but not on money that Mom and Dad earned for me?

And the reason someone should not have to pay taxes on the gift is because the government has already taxed that money, or had the opportunity to tax it, when it was income with respect to the gift giver. How many bites of the apple should the government be entitled to?

The question is whether you're looking at it as a tax on a dead guy or a tax on an income windfall received by the recipient. It's a tax on a transfer of assets, just like income tax. My problem with the estate tax is that it's technically not treated that way since the government taxes the estate before distributing it. As I see it, income from an inheritance should simply be treated as income, perhaps with some exception for a single home or business. In that sense, it's not many "bites at the apple" any more than my paying income tax on income paid to me by my employer (who has presumably already paid taxes on those dollars).

More to the point, though, it's less a question of moral imperative and more one of simple utility. We all agree that some amount of tax revenue should be raised. I can bitch and moan all I want that I "should" be able to keep the money I earn or that I "should" be able to pass it on tax free or that I "should" be able to buy products without paying sales tax or that I "should" be able to cross a bridge without paying a toll. The reality is that taxes need to be collected. The only question is, from where?

To listen to the Club for Growth types or the nuts who think that we're always pegged out at the top of a steep Laffer curve, you want any tax revenue collection to have the minimum impact on the economy. "Taxes stop growth!" is the mantra. So, let's take a hypothetical estate that the government could collect $1M from. Let's say the average household pays $10K in income tax. The simple question is, does it hurt the economy more to take $10K out of the pockets of 100 households (whose members worked and contributed to our GDP to earn it) or to skim that $1M out of a multimillion dollar cash windfall being given to somebody who did nothing to earn it? Sure, it would be nice if we could all avoid paying taxes, but a tax on unearned wealth transfer seems significantly more practical than distributing that burden elsewhere. Of course, the people who complain about the drag taxes have on the economy are also complaining twice as loudly at schemes that minimize that drag, so I don't really know what to say.

"The simple question is, why should I have to pay taxes on money that I work to earn but not on money that Mom and Dad earned for me?"

Because they already paid tax on it. It should be theirs to bequeath as they see fit. That was supposed to be the magic of ownership, but nobody seems to care about that much anymore.

"The simple question is, does it hurt the economy more to take $10K out of the pockets of 100 households (whose members worked and contributed to our GDP to earn it) or to skim that $1M out of a multimillion dollar cash windfall being given to somebody who did nothing to earn it?"

So disrespect the wishes of the person who earned the money by taxing the crap out of the recipient. Who cares how hard the donor worked, they're dead. I think that is an excellent incentive.

Or, you could just be more honest about it and take it from them while they're still alive. Perhaps have an IRS agent patrolling the hospices with a cat that can detect the dying? You could extract a check from them right then. Call it a "Your lucky day tax."

No, no, here's a better way--as they are dying, have them write out in check form what they are giving to their beneficiaries, then tear it up in front of their face and say "No, *that's* not right." Then laugh and make them write a check for at least half that amount to the government. Hell, why half? Take it all! The recipient is just a fucking royal (per the author of this blog), right? They should be *thanking* you for making their children start from scratch. Why should anyone have inherited wealth to for any purpose?

I think that is also an excellent idea for lotteries, since that is unearned income. Tax the winnings at 100%. Everyone wins!

Fundamentally, does anyone here believe in property rights anymore? That if I earn something, I generally should have the right to dispose of it as I see fit? Or is the premise that everything is the property of the government, and I'm just borrowing it for my greedy little purposes?

So, uh, if I want to fit in here, I should say something about how awesome the decision in Kelo v. City of New London was?

Because they already paid tax on it. It should be theirs to bequeath as they see fit. That was supposed to be the magic of ownership, but nobody seems to care about that much anymore.

No, their parents paid tax on it. The recipients didn't. That's my point. Should I be absolved of income tax because the company I work for already paid taxes on the dollars that I earned? Are those dollars now untaxable because they've been taxed once? Certainly not. The fundamental question is, what's the practical difference between me earning a paycheck and having the government take a chunk of it and somebody else having a check cut to them for free and not having the government take a chunk of it? Why not simply treat income as income, regardless of whether you worked for it or had it dropped into your lap?

So disrespect the wishes of the person who earned the money by taxing the crap out of the recipient. Who cares how hard the donor worked, they're dead. I think that is an excellent incentive.

The tax has to come from somewhere. No matter how painful that fact may be for you to acknowledge, it's a fact. What you're trying to argue is that even though taxes need to be paid, there's something special and magical about the income people get when dead people give it to them that should make it tax free. Why is dead person money immoral to tax when live person money isn't? My simple point is that if you're at all concerned about the negative effects of taxation on the economy (as most anti tax activists claim to be), the estate tax is probably one of the lowest impact tax schemes you can come up with. For some reason, any time somebody points this out, a bunch of people completely pop a cork over it.

Fundamentally, does anyone here believe in property rights anymore? That if I earn something, I generally should have the right to dispose of it as I see fit? Or is the premise that everything is the property of the government, and I'm just borrowing it for my greedy little purposes?

There's a difference between arguing against the correctness of an estate tax (hint: that's what's going on here) and arguing against all taxes in general (hint: that's what you appear to be doing). If it's your position that all taxes are wrong and we should all just use our own earnings to build compounds where we'll be safe from marauding bands of thieves, then yes, the estate tax is terrible stuff and your "property rights" argument makes sense. If you actually think that the government needs to collect taxes and should do so in a way that doesn't cripple the economy, then an estate tax is worth considering. Think about it. How many of the arguments that you're throwing out against the estate tax don't apply to essentially every other tax in existence?

It never ceases to amaze me how quickly a discussion on a particular type of tax always turns into, "All taxation is THEFT!" and, "You're all a bunch of COMMIES!" And of course, my favorite, "Property rights!" ALL taxes violate property rights to one extent or another. The simple question is, why should the property rights of a transfer between a dead person and somebody who did nothing to earn the property somehow be more inviolate than the property rights of people in an employer/employee relationship that keeps the whole economy running?

Jim -

I agree with you, estate taxes are a horrible idea, tantamount to theft. I think that Troublesome Frog does too, so we're all together on that. The difference lies in TF and I, believing in income tax.

Because they already paid tax on it. It should be theirs to bequeath as they see fit.

Ok, so when I go and lay a new vinyl floor in someone's house, they give me money. Why should I have to pay a tax on that? After all, they already paid taxes on that money. Of course I do, that's how I have an income. So why shouldn't their kids pay an income tax on the monies mom and dad provide them with? It how they have an income. Assholes like me, who actually work for our income pay taxes on our income, in spite of the fact that others have paid taxes on the money they pay us with. Why should anyone be exempt from paying income tax?

I get what you're saying, and perhaps the estate tax issue rubs me the wrong way because, as a former estate planning attorney, I am keenly aware of times when estate taxes took the majority of larger estates away from beneficiaries, when estate taxes forced multi-generation family farms to be split up and sold off because families couldn't pay the estate tax with the cash flow generated by the farm. I know that taxes have to come from somewhere, even in a minimalist libertarian framework there have to be some taxes, and unearned wealth is an easy target. It just rubs me completely the wrong way that if I am ever fortunate enough to build enough wealth to help protect my children and their children from financial uncertainties that it would be difficult or impossible to do because such giving is seen as the low-lying tax fruit.

I also think I should make it clear that I don't share Mike's contempt for "royals" at all. Sure, people don't start out on equal footing and some people work harder for less, but there's a lot of wealth out there (I would guess most of it) that was achieved through a combination of hard work and risk taking, and I think it's unjust to punish people for it simply out of spite.

That being said, I support progressive income taxation for two reasons: 1) It gets the job done. 2) It reflects the diminishing marginal utility of money. I don't see a good reason to make the estate tax either ridiculously high or eliminate it entirely. As I said before, I think that by making sensible provisions for family businesses, we could simply roll it into a progressive income tax and be done with it.