The money they made was already taxed once as income. I don't see why it is so surprising to think that they did not pay again.

With that said we need an estate tax to prevent an oligarchy but the legal and moral standing of double dipping on their income is sketchy.

@1: It's being transferred to someone else in their will, innit? If I give a friend of mine five thousand dollars (I should be so lucky to have $5k!), the government can tax that because it's a payment from one person to another (with a few exceptions).

I learned about this from a ripped from the headlines episode of Law & Order. (RIP)

"prevent an oligarchy": yeah, I mean it's not like there is one now, right?
"double dipping": hmmm... Right, better the billionaries pay no taxes on their mondo estates, after a lifetime of tax breaks and avoiding taxes.

It's been a tough couple years for billionaires. Give 'em a break. They'd have had even more billions had the economy not tanked.

If you don't like the idea of being "doubly taxed" (what about sales tax?), just consider it a return on some of the money hidden in foreign bank accounts, or saved by exploiting obscure tax loop holes found with the salaries of expensive accountants.

But if you tax the rich too much, they won't be able to create all those jobs for us. Like all the jobs they created when Bush cut their taxes 10 years ago. That's why unemployment is so low right now. If you tax the rich too much, we'll probably have the largest spike in unemployment since the great depression.

@6: Indeed. And of course those extra billions would have trickled down to the rest of us in the form of jobs and innovation and everything. And jobs.

Taxed more than once!?

Don't tell these 'tards about property tax, OK? Let it be our little secret.

The estate tax only taxes money once per owner. What's wrong with that?

@2: Actually, a gift of $5,000 would go untaxed. You can give up to $13,000 to as many people as you want without having to worry about the gift tax at all. After that, you still have the unified credit to use before you actually have to pay money.

http://www.irs.gov/publications/p950/ar0…

Personally, I'd rather see a reform of income tax so that an estate tax would no longer seem necessary.

with the right minimum floor and rates an estate tax does make sense. i like the idea of the first million or two not being taxed and i think the rates need to stay near the highest marginal rates (i.e. around 35% or so) and not go any higher.

what seems broken ( and someone correct me if i'm wrong here ) is the problem where if a person's estate is completely tied up in their business then when they die if their heirs don't have enough money to pay the estate tax then the business has to be completely or partially sold/liquidated to pay the estate tax. that seems to suck.

@1, that bogus argument makes me almost as mad as the lack of an estate tax. They should change the name, and call it an inheritance tax; the name "estate tax" maybe gives people an idea that it's the estate that's being taxed, not the recipient. The recipient has NOT been taxed on this windfall money before, which he did nothing to earn.

There is no other economic policy that perpetuates the inequality of opportunity more than the lack of an estate tax. When people say "the rich get richer", this is exactly what they're talking about.

The new proposed tax, which is part of the big tax bargain struck last week, would only affect 0.3% of all estates -- almost no one, in other words, except the absolute richest of the richest, who will barely even notice that the tax has been taken. Giving up a few measly millions from an inheritance of hundreds or thousands of them is no hardship.

How can you loot a country with the willing assistance of the victims?

Loot America - cause that's what Billionaires want.

You can never have too much cash or too much misery.

Or too many foreign wars of adventure!

There is definitely something to these scientific studies that show generic differences in social liberals and freedom lovers. I can't even comprehend the mentality that assumes the State has any right to the wealth of a dead person with living heirs.

*genetic differences

@16 That's right, we hate freedom. I don't think I'll call myself a socialist anymore. Nope, I'm a freedom-hater. Feed your head to a wood chipper, please.

@16 there is also something to the scientific studies about social conservatives and the completely hypocritically delusional.

that aside, i do think in principle it's a weird form of tax. it strikes of a bit of desperation to me. but im not expert. someone during the income tax debate pointed out that the real money that should be taxed is the money that does nothing, essentially that sits there and doesn't get spent by entrepreneurs. this would sound like that kind of money, but i don't know if this is the point at which to tax it.

in any case if we just cut back on military spending and wars and authoritarian violence that "freedom lovers" love, this wouldn't be so important.

@16. If, by freedom, you mean to gather as many resources as you possibly can, by hook or by crook, in a world with finite and dwindling resources, hoard them and give them to your kids without sharing any, and when there are billions who can barely scratch out enough resources just to stay alive, then put me down as a freedom hater. How can a world have so many fucking solipsists in it at the same time? Jesus Fucking Christ.

@12: I REJECT YOUR REALITY AND SUBSTITUTE MY OWN.
...
Thanks for catching me I guess.

Oh hell, I was just working myself into a fine foamy lather over @16 when I decided to hit refresh and discovered that @19 and @20 had already razored him like Sweeney Todd. Big wet smoochies to both of you.

Forgot to mention @18, who earns extra points for succinctness.

Also, @16, you appear to have fallen down the evolutionary scale below the many social animals who engage in reciprocal grooming and other forms of sharing every day of their far more meaningful lives.

@16, the state isn't taking the wealth of a dead person. It's taxing the wealth of a living person who just had a billion dollars he didn't earn drop in his lap.

@1 and @16: Here's the reason for the estate tax. It's precisely because the vast majority of the money made by the deceased WASN'T and WILL NEVER BE taxed. Most people don't realize this, but if Great-Granddad bought $100 of shares of Standard Oil in 1930 and leaves you those ExxonMobil shares that are now worth (guessing here) $1 million, NONE of that increase in the value of those shares will EVER be taxed. EVER. If Great-Granddad never sold them, he never had any capital gains, so he never paid any taxes. And here's the clever part: when he dies and leaves them to you, under the Internal Revenue Code, the only time you would have to pay taxes is if you sell the shares and the price is higher than on the day you inherited them. (In technical terms, the "basis" of the shares "steps up" on the day you inherit them, and the increase in value prior to your inheritance is NEVER taxed. EVER.)

So go ahead and get rid of one or the other: the basis step-up or the estate tax, but getting rid of both is just another way for the rich to pay far, far, less taxes than the rest of us (remember the capital gains tax rate is already less than half the tax rate on most earned income).

@24, 25-

having been the inheritor of about $50k in shares a few years ago, i am familiar with this issue and have some personal emotion in it. im not saying my emotion matters, but i've just gone through something where i didn't know if i would be taxed on this. the whole, "but it's MY money" thing goes through your head, as family money may go. some of this shit we put up with with our family members just to stay on the will is earning it. anyway, looking at it rationally, as i try to with taxes, i see that this money is part of a product of a well functioning society of which i think taxes, however inefficiently, contributes to as much as the market. but at what's the low point we are talking about with the estate tax? any amount? or like the 1% amount, over a couple million? i still feel somewhat that inheriting money doesn't always mean it just fell in your lap, but somewhere there is a point at which that money should be taxed appropriately if it's a shit ton. but the shock of say being taxed a few million, no matter how rich you are, is a peculiar shock. but emotions aside, we can probably do something more reasonable. what do they do in uh sweden?

How can you guys so nonchalantly begin a conversation with the assumption that the State owns all our wealth and only lets us keep whatever percentage it decides? The moral argument you're making is that the golden rule of "don't steal from people" doesn't apply when it comes to "spread the wealth" to help the common good. That's bullshit. Theft is theft is theft and it leads to all the consequences that come along with that.

@27. Theft is also taking money that was earned only with the help of a stable, supporting society, with the infrastructure, laws, and culture that make it possible to gather and keep resources and not pay the society what it is due for helping you gather and keep those resources. Nobody earns money by the sole virtue of their own sweat. and in the case of inheritance, the heir didnt do a damn thing except outlive the benefactor and kiss his or her ass sufficiently.

@27: There is no assumption that the State owns all our wealth. There is an assumption that in a democracy where we through our representatives agree to spend money on stuff like a defense, education and infrastructure, that we should pay for those things on an equitable basis. Taxing unearned income either not at all or at lower rates than the rate on earned income is not an equitable basis: it favors the rich at the expense of the poor. This is not complicated stuff. It is also not theft.

@28 - I'm not arguing against a stable society with infrastructure, laws, and culture. You certainly need those things to generate wealth. What I'm objecting to is the idea that the ONLY way to help the disadvantaged amongst us is with centrally planned social programs. If we didn't live in a world of forced charity through State theft we might actually find more efficient ways to solve these problems. You think the rich are greedy because they don't give their money away to help others. I think the rich appear greedy because there is no incentive to be more compassionate when a system is in place to force it.

@27 Oh Holy Galactus, nowhere has anyone stated that our government, which takes it's mandate to govern from the consent of its people who at least in theory have the voting power to change how it operates if they disagree with its laws, owns all our wealth. Wealth is created by people, taxes and tax loopholes are created by people.

But yes, "theft" of the kind we're speaking, leads to horrible consequences like a more equal playing field for the poor that results in a society with less poverty, crime, & disease. Consequences to be feared, agreed.

@30. Fortunately, we have the benefit of having seen a society operate in nearly the manner you propose. It's called Victorian England. I propose that you read about it extensively and report back to the class to tell us about the generosity and innovative charity schemes of wealthy folk unburdened by a rapacious government.

@30 Small problem, no one here was fucking advocating that the ONLY way to help the disadvantaged amongst us is with centrally planned social programs. Also, suck on this tidbit, back when our tax system was actually decently progressive, with the highest tax rates around 90%, the rich donated much more of their money to charity since it was tax deductible and they preferred their favorite charities over how the government would spend their money. Again, more money went to charity when we had higher taxes on the rich.

Also, I know the rich are greedy when they don't spend their money to help others, BECAUSE THAT'S THE FUCKING DEFINITION OF GREED, MORON.

Also, weird how Bill Gates, Warren Buffet, and many, many others give away massive amounts to charities when they have, if you’re correct, no incentive whatsoever to do so.

@32: You took the words right out of my post.

@32 - I'll try to make some time for that. Seriously.

@27 how can you nonchalantly assume that 'your' wealth was amassed in a complete vacuum, you just earned it and there were absolutely no other factors involved say like relatively stable public insitutions, relatively sound infrastructure and other such things that exist due to something called taxes (as in estate tax). The position of you 'freedom lovers' is fundamentally ludicrous even before you consider that the more unfettered capitalism is the less freedom there is for the 99% who are not on top of the food chain.

@36 - I'm not sure what you are saying. Are you saying unfettered capitalism leads to a power class that will enslave others?

@30,
If you look at history, or even modern societies where taxes are almost non-existent (e.g., the UAE), you'll see that the rich do not use all that extra untaxed money to help the middle class or poor.

The reason we're "forced" to give taxes for social programs is that if we weren't forced, we wouldn't do it. History has borne that out.

Trickle-down economics doesn't work. It hasn't worked anywhere, at any time.

@30, very little of your tax money goes towards "the disadvantaged". I know you tea party nitwits think that the budget is entirely spent on hookers and blow for welfare queens, but it's not. It's spent on running a modern state -- the kind of modern state that makes it possible for modern life to exist. You want to go back to 1910? I don't. I know my history. Or maybe you'd enjoy life in Somalia, where there's no state to rob you, just regular old robbers.

Your argument is so stupid it's hard to believe that so many people believe it.

cliche your position was basically gutted here.

#1 Taxes matter: "I'm not arguing against a stable society with infrastructure, laws, and culture. You certainly need those things to generate wealth."

#2 Trickle-down economics doesn't work: "Are you saying unfettered capitalism leads to a power class that will enslave others" / enSerf

Am I missing something? At this point we can only argue about tax rates for the wealthy. Anything else is just ideology.

Fnarf @ 14: It is the estate being taxed, not the inheritors. You can tell because the exemption is applied to the whole estate, not to each inheritor. If I distribute $1B to 1000 heirs, the estate is taxed, even though the $1M they would each get falls below the exemption line.

@37 I am saying that it is a complete fallacy that unfettered capitalism equals 'freedom'. The more wealth that is concentrated at the top (and such concentration follows inevitably from unfettered capitalism) the less freedom there is for the vast majority of the population - freedom for self-realization, freedom to change living/employment situations, just plain free time.

For one example, there was an article in the NYT the other day that pointed out that our disfunctional, profit-driven health care system is actually counter-productive to the sort of innovation and risk-taking the right is so fond of. This is due to the simple reason that large numbers of people, especially people with families, are forced to hold on to jobs that they might otherwise leave to strike out on their own, innovate, take risks, because of the fear of losing their health insurance and the high cost of purchasing independent insurance.

@27- Nice straw man attempt.

@38- Just an addendum: When you use taxes to force a redistribution of the wealth, the actual total of wealth GOES UP. It's not a zero sum game, the larger the middle class, the better off the poor are and the while the top end may not be AS rich as they might have been, they'll still be filthy rich.

Dwight @ 43: It may interest you to know that economists have studied the effect of taxation on aggregate wealth, and have reached rather more nuanced and less ideologically simplistic conclusions. If you count everyone's dollars equally, taxation induces deadweight loss and thus decreases aggregate wealth. If you instead try to measure "utility" by counting a rich person's dollar as worth less than a poor person's dollar, then you can indeed create utility by transfering dollars. The touble is, there is no clear, objective way to compare utility across persons.

Rhizone @ 42: Right-wing policy wonks recognize this problem and have proposed a solution: eliminate employer-sponsored insurance so that everyone simply pays for their own medical care or insurance. This could be done simply by eliminating the tax-deductability of employer-sponsored insurance, since that is the main incentive for employers to comensate employees in insurance instead of directly in cash.

As a gay man who's been & is still a stay at home dad (2 are now in college & 2 are in pre-school) and is therefore completely dependent upon his partner for financial well-being, I must comment. To those who think the estate tax should return at a punitive tax rate & with little or no excluded amount, from the bottom of my heart I say, "Fuck you, you stupid bigoted mindless assholes."

Unlike married, heterosexual assholes & non-assholes, I can't inherit the home I live in without paying estate tax. Only because of very expensive legal documents can I avoid paying estate tax on that goddamn life insurance that I'd inherit. You know the money I'd need to continue feeding & clothing my children.

Having been out of the work force for 8 years, my resume looks odd. Women can have gaps in employment because it's socially acceptable for them to take time off from employment to raise a family. But when a man has a long gap in employment, employers think you've been in prison or something.

So, when you breeders give up the right (which you've always had even when the estate tax was at its most punitive) to transfer your estate, tax-free, to your spouse, then I'll support an estate tax. Or, fucking include all the married, civil unioned, or domestic partnered folks you have no problem fucking over when their spouse/partner/boyfriend dies. Then I'll support your estate tax. Otherwise married breeders ought to shut the fuck up about a tax that you avoid, making the rest of us pay to support your lifestyle choices.

And for those who think Gates & Buffet have done something charitable by leaving their estate to their foundations, research how the Ford family retained control of Ford for years via its foundation.

All those two guys have done is avoid a lot of estate tax liability by creating a foundation that benefits/supports their heirs.

It's a loophole afforded to the ultra-wealthy.

@44- Look at the economic patterns of capitalist economies with higher taxes or look at the last century of American history. Higher taxes on rich people=growth. Yes, this is simplistic and not ALWAYS true, but we are speaking in generalities.

I'm ok with the threshold for this being much higher, like 50 million or something. Definitely at least half though, to be taxed after that, so like, 100 mil = 25 mil taxes and 10 bil = 4.975 bil taxes. Problem solved (save for the crazy people who think they'll be billionaires, they're just cute). This shouldn't be seen so much as a revenue stream, as it should giving people a shot. It should effect as few people as possible, we can never balance budgets with it.

@45: The proceeds of life insurance are not taxable, nor are they considered part of an estate that would be subject to taxation. If someone is telling you differently (particularly if that someone is an expensive lawyer), you should call them out on it. The estate tax kicks in after several million dollars, so I doubt that if you're middle class you'll have to pay it. However, it is true that same sex couples (even if they are legally married) are subject to all kinds of taxation horror that straight couples are not. However, that is a function of DOMA, not the estate tax.