History of the Estate Tax
 

Just a survey.

In your own words what good comes from the inter vivos gift tax/estate tax regime?

There must be something or else it would not have been voted in in the first place. It also would not have survived in earnest until today (the federal estate tax was turned off for one year -- 2010)

I'm just curious as to the board members' abilities to see both sides of an issue and at least agree that there are pros and cons. Which side they want is of course subject to differ and can only be resolved civilly by vote.

The Republican vs Democratic shouting match gets old fast. That stuff is available anywhere.

I guess you're allowed to cut and paste from your own posts. ;) Actually, a couple of good thread-starters.

I know everyone wants to be able to pass something on to one's family. Passing on one's wealth (and sometimes titles) has been a practice for thousands of years. I can see where being able to maintain a family business would be difficult if estate taxation drained all of the capital out of it.

On the other hand, doesn't the perpetuation of wealth in the hands of those who have not earned it stifle the innovation that is supposedly valued in our system? The children of wealth have already had tremendous advantages in the education they have been able to afford, in the contacts that they have made through their family, and in being able to retain a sizeable chunk of the family fortune. If they have been given the tools to succeed, do they also need to have ALL of the wealth passed on to them. It seems fair that some of the wealth that has been accumulated should be returned to the society that has made it possible.

Regards,

D-Ray

When you're really good you get to sig yourself. hehehehe.

The estate tax makes sense to me, at least after passing a reasonable threshold (e.g., $1 million). Otherwise, it helps perpetuate a ruling class instead of a meritocracy.

Dammit Finn. I hate it when you make my point with greater efficiency. :p

Regards,

D-Ray

Brevity is where it's at.;)

Anyone from the economic hard right going to chime in and say something good about the system they grew up with? You don't have to agree with it anymore. Just show that you can see both sides.

If you can't dance with others then IMO your party is no longer fit to be trusted with writing the sheet music. Same thing if you are too paranoid to get your back off the wall. I won't play gotcha games with you.

The Walton heirs are the major promoters of killing the estate tax. The "death tax" label was their idea. The sad fact is the the Walton heirs own more wealth then the bottom 40% of all Americans in this country.

http://www.politifact.com/truth-o-me...ealth-bottom-/

When a Walton asks a politician in DC to jump they ask how high. It is a pitiful thing when an individual has so much money that there is no way they can spend it in their lifetime.

Welcome to the new gilded age.

wgrr,

Thanks for the history of the phrase "death tax".

Here is my reason for starting the thread and why I am posting now.

Since the economic hard right decided to keep their backs to the wall I guess this thread is almost done. The idea for this thread came from arguments in the progressive income tax history thread. Some people, one person, whatever, argued that the incredibly wealthy provide a societal benefit by building things that are incredibly expensive. Examples might include museums, research hospitals, parks, and the like.

While that is true it is also true that the wealthy don't all do those things for the same reasons. After all there are different kinds of wealthy people. Some of them got rich because they were gifted souls. We've talked about Steve Jobs being a great industrial artist. Henry Ford might be considered a gifted pioneer in the assembly arena. We all know the political drum beat and none of us wanted to take away their worldly rewards without good reason. After all we would like to pass similar gifts to our children if we were so gifted. Similarly those kinds of rich people might tend to give to schools or other good causes such as museums.

On the other hand there are people that were also gifted but not in an area of creation or invention. Instead they were gifted in manipulation. They had the gift of gab and were good at getting people to do their bidding. The modern dead master might be Kenneth Lay of Enron fame. In older days William Randolph Hearst might be an example. As voters with morals we have to ask ourselves if those are the kinds of blood lines that we want to have an easy head start with each generation. If we look at their gifts they might tend to give to political research organizations that further their manipulative tendencies.

At the beginning of the Industrial Age our grandparents or great grandparents already had to face those questions. A majority of them decided to throttle back on wealth accumulation so that no bloodline got a head start by mere virtue of being born from blue blood. The voting majority used the age old tool of estate taxes to try and throttle rich dicks back. They were dicks because they weren't happy enough with having big houses on each coast and shopping Europe each season for a wardrobe of handmade clothes. No. The dicks wanted to be kings.

Unfortunately the good rich people and their bloodlines also got caught up in the estate tax trap. I think that is what makes us feel sorry for people like Steve Jobs. There can be such things as good kings after all.

All of this comes back to the modern rhetoric of incredibly wealthy people helping with incredibly expensive causes. Some of you might remember The Giving Pledge Project that Bill and Melinda Gates started during the financial crisis. Warren Buffet helped spearhead the effort. That was simply a gesture of two wealthy families working together to whip other rich people into line. They knew that if the rich didn't police themselves then voters, the 99% was the buzzword du jour, would move toward turning the estate tax back up and taking the wealth from them to kill their wealthy blood lines.

It's no different than a bunch of bummed out players in a game of Monopoly. You've wanted to smack the shit out the guy that got arrogant upon owning the side of the board with Park Place and Boardwalk. Admit it. :D

Going back to the Giving Pledge Project. Have you noticed that we have not heard much from it in the past few years? The fact is that Bill, Melinda, and Warren did a good job of public relations. They showed that they understand both sides of the situation. The Giving Pledge Project is still alive but they have not made much press. Now they are simply covering their asses by making press releases shortly after tax day, April 15. Check it out.

http://givingpledge.org/#enter

Again I don't want to persuade people to one side or the other. I'm hoping to help fill in the grey between the black and white of campaign rhetoric.

But for the record, so long as the Republican party stays brain dead and glued to one side I can't vote for them any more. Are you listening? Hello? :mad:

Interesting post EB. I think that the perspective that you have communicated through your posts so far demonstrates that the pendulum has indeed swung so far to the right that we are in danger of receding as a society. For me, the pendulum had swung too far once it moved a tick past the center, but whatever we believe to be the proper arc, I think we agree that it has moved well beyond where it should rest.

With respect to the accumulation of wealth, I read an interesting article in the last couple of years about one of the motivations for the very rich to establish charitable foundations. Many of the founders were highly competitive by nature - which most likely contributed to their financial success. The foundations have become another outlet for the competitiveness. They want very visible foundations because of the status they bestow on the founders, who besides their money also give their names to the foundations.

While we need not snub our noses at the charitable work done by the wealthy, such largess should not be a substitute for their paying a proportional tax contribution as well. While they are free to determine what they want to do with their own money, we must rely on the democratic process to determine what priorities should attach to the public treasury. These exercises in self-aggrandizement should not be allowed as an excuse from the responsibility to pay taxes.

Regards,

D-Ray

Yes, the right is brain dead.

The pendulum only swings wide when it's coming back the other way D ;)

I understand that the estate tax can help prevent a feudal system. I also know that it is (or was) wrong to take other people's stuff.

So balance becomes vitally important. Right now the rich are under attack, from the campaign anyway (the Dems did extend the tax cuts after all), someone needs to speak up and point out that it is much preferable to live in a wealthy society than a poor one.

Keep in mind I was responding to a suggestion that wealth be capped at a couple mil. That is radical!

You can't get rid of the wealthy anyway - they'll just move. And the balance of power will move with them. It's a cold cold world :)

Pete

Did not our founding fathers agree on extreme wealth not able to pass to the next generation. They ere well aware of the consequences.

The middle and lower income classes are the ones under attack, the rich are doing just fine!


As for moving away then let them go just keep the assets earn here!









Barney

Makes sense to me. I agree, the threshold should be high. Somehow, I don't see inheriting $1,000 and a beer cap collection from a dead uncle as "...perpetuating a ruling class"....

I don't know what the Founders did re: estate tax. Did the US split their property between all their children back then, or just the eldest son?

Pete

Yes, the rich are under attack.......And I'm loving it.

As I've stated in another thread, and in a different context;

"Turnabout is fair play."

One of the issues that eb raises in his extensive (and helpful) discussion of the estate tax is the matter of philanthropy. Most of us, I think, donate to causes and organizations in which we have an interest and who represent our views. When corporations develop their community involvement/corporate giving policies it generally inheres to what many characterize as 'strategic philanthropy.' In other words, corporations donate to causes and organizations that they believe, in the long run, will benefit their business. There's nothing inherently wrong with this; it's their money and they can do with it as they choose.

The same can be said of individual giving writ personal. Although individuals are more likely to give to personal causes that offer a benefit to them that is at the very best indirect.

My point in mentioning this is that one of the industries hardest hit by the 'Great Recession' is the nonprofit sector. Corporate giving is down; individual giving is down. How much of the reduction in individual giving can be attributable to the 'wealthy' from what I understand is relatively small. In other words, the wealthy continue to donate.

What has the foregoing got to with the estate tax? Only this (and this is my opinion): Taxation, unless it reaches a point where it becomes punitive (perhaps greater than 50%; a point made I believe in the income tax history thread) doesn't negatively impact the wealthy to any significant degree.

The question then is: Is the estate tax 'fair?'

My view is that perhaps above a certain relatively modest threshold ($1 million?) yes.

What should be the level of taxation? Perhaps best determined by better minds than mine.

Sorry for the ramble.

In order to avoid estate taxes rich individuals put good chunks of their money into trusts because the trusts live on after they die. That is normal estate planning, so it is a ruse for some of the people that signed The Giving Pledge to say that they were always into philantropy. That's not exactly true.

It is also important to see what the trust charter requires the trustees to do. For example the pledge might say that they give to an organization that teaches the importance of economic ideals to school children. OK, wtf is that in English? Oh, the trust pumps schools full of Ayn Rand books. Thanks dick face.

Hearst could have said that he gave all his money away and it would be true. He gave it to a trust. The trick is that the trust's goal is to let him run his company from the grave. He's dead. He should get over it and let somebody else play. Luckily there is a law that requires his trust to expire when the last heir dies that was alive at the same time Hearst.

The egos of some of these pricks is unimaginable. They truly are mentally ill. How the Tea Party wants to be under their thumbs befuddles the hell out of me. Or maybe the Tea Partiers think they have a chance at taking a seat at the blue bloods' table. What a joke.

There are plenty of Democrat leaning foundations. I'm seeing less and less of a centrist here ;)

Pete

I can see both sides and that is a centrist quality. But in the voting booth there is no middle button. I have to pick a side. No?

Agreed :)

Pete

Dinna worry, Atlas Shrugged will bore them to death midway. They must have beenpaying her by the word as it could have been condensed to 50 pages, 75 at most.

We have to hope so. BB&T CEO Allison ordered that the bank take Rand's obj, uh, assholism into classroms under the guise of charity. It's ironic that he also took $3.1B of bailout money but hey, what's a little money between subjects and their king.

http://www.npr.org/templates/story/s...oryId=90104091

Now that the weasel is retired he has taken a role at the Cato Institute. Now there's a bunch of rocket scientists.

These kinds of assholes sure aren't the ones that invent stuff like Rearden Metal. All they have ever invented is ponzi schemes and Atlas Shrugged is their advertising material.

So you are testing the members here?

I'll be reviewing your posts to gauge your abilities to be a valued poster here.

Because once you start thinking about these things objectively, sans patriotic and pseudoreligious hullabaloo......You start to realize just what a total ripoff modern conservatism, as advanced by the rightwing machine, really is.

Beautifully stated, and full of truth, my friend.

Dave

Be nice! He's been posting up some doosie's regarding the Tea Party...heh, heh!:D

Do what you need to do.

I'm not testing. It's just that after years of doing this stuff I have learned a few things about discussing politics. One of them is that it is more fun if people talk from their heart and top of their head.

For me at least it is lame as hell reading posters that just battle each other with cites to opposing viewpoints. The problem with that is that it lets the major parties script the dialog and reduces the debaters to useful idiots that further the parties' agendas. The good stuff in the middle gets driven over as the discussion crashes back and forth between the left and right guardrails.

I have also learned that its no fun to debate with people that can't at least see both sides of an issue. That's like wrestling with the proverbial pig that likes the mud.

If you want to see if I am worthy it might be best to debate me instead of reading my few old posts in a vacuum and judging me. I could judge you too but what good would that do? And even if we disagree it's no big deal. It's not like our two votes out of hundreds of millions are going to change anything overnight. We are just pawns in a bigger game being played over a much longer time horizon.

Cool.:cool:

We just do what we can. :cool:

Regards,

D-Ray

I, for one, would rather not judge anyone and do my best not to. I take what's posted here at face value, assuming that individuals mean what they say. On occasion, I've had my trigger tripped (pun intentional) when discussing firearms issues but, for the most part, try not to become so emotionally invested in the discussion that it elevates my blood pressure. That said I enjoy a spirited discussion and welcome views that differ from mine. Makes for an interesting break from work and helps get the juices flowing early in the a.m.

With respect to trying to understand the point of view of others, I'm not always successful in my attempts to do so but would like to think that I at least make the effort.

My 2 cents adjusted for stimulus.

Right, that's something I have been pondering for years. We are told that these guys are "innovators" and "creators"...............

What is so innovative or creative about embezzlement? Legalized embezzlement, I'll grant you, but embezzlement nonetheless. Engineers, scientists and researchers are innovators who create new technologies and processes. The managers and accountants are simply supposed to manage the money. If they are "managing" the money in such a way that does little more than direct more of the money into thier own wallets and away from the innovations that create opportunity......They haven't "innovated" or "created" anything but thier own artificially elevated financial status.

And, what good is that to the business, or the greater society?:rolleyes:

If you really want to fix what is wrong with American industry, this is the key.
EVERYONE, not just the people at the bottom will HAVE to start doing more what is healthy for the group and LESS of what simply serves personal ambition and greed. A CEO is an EMPLOYEE and there is no sensible reason for one employee to make 350 times what his fellow employees make. That is utterly ridiculous. Should he/she have reasonable financial incentive? Absolutely. The question is; What is reasonable?

For my part, I don't trust the magic hand of "market forces" to address this. Principally, because I don't believe this notion that "the market" has a mind of it's own, not entirely, anyhow. Internal corporate politics, the buddy system, quid pro quo, corrupt oligarchs...there are too many ways for these guys to be disproportionally and unjustly compensated to the detriment of the business and society as a whole.

Problem is; How do we fix this?

Dave

The problem with the 'market forces' approach to anything is that it is much to vulnerable to manipulation. Moreover, I often wonder how those who are screaming for less government interference would react were they to lose the favorable treatment that they enjoy under our present tax structure.

Right. If you go to a flat tax or some new system that has no loopholes or exemptions, no way around paying the tax.....watch what happens. My guess is, the whole process of lobbying for loopholes and expemptions will get a new life and we end up right back where we are anyways.

Remember, these folks are always trying to make more money, and/or pay less out regardless of their contemporary situation. So, do you really think that if we gave them what they want today, that they are going to stop complaining and trying to get out of paying that, no matter how small it is?

Dream on.

Dave

If history is any lesson, that's exactly what would happen (as it did after Reagan tweaking the tax code).

That is a question I pondered a few years ago and came up with some ideas. I tossed them out on a board and got exactly zero replies. Nothing but crickets. Here is a quick rehash. Unfortunately my old post is gone and I can't retrieve it.

Profit motivation theory, or self-interest theory, or whatever people want to call it, works best when the the person making the money also has a risk of losing it all. That's the way small businesses work.

The problem with a publicly traded corporation is that the executives inside of it don't risk any real loss. At best they risk reducing their income to zero fi thins go totally down the toilet. This is because the corporation is a legal structure similar to a trust. Once it runs out of money the debt collectors can't cross over and get money from the executives or employees. That is assuming of course that they operated above the board and a merely lost the game in the marketplace. If they behaved badly then the courts can "pierce the corporate veil" and go after the people. That is rare and almost always fruitless. After all the people don't have enough money make diddly squat of a difference.

The other problem with giant corporations is that they are capable of making messes so big that only the government, which in the end is us taxpayers, are capable of cleaning up.

With that background here are the ideas I came up with and the problems that I see they might create.

First, CEO pay is limited to the President's pay. That is because if corporations and government are capable of making the same size messes with other peoples' labor and no risk of repercussion then their bosses pay should be capped likewise.

The obvious unintended consequence would be that congress would ratchet the President's pay up to $50M/year and their own up to $1M a year or some shit like that.

Second, we need an opportunity for real innovators to have access to capital but not so much that they can make a giant mess. Those people would be given the opportunity to run closely held corporations and make as much money as they can. They would not be subject to the income limit. Examples of such corporations include Bose, Patagonia clothing, etc.

The problem is that another example is Koch Industries of the famous Koch brothers. Those guys wouldn't be so bad if they could keep their cotten pickin' fingers out of the political process. The old rules served them quite well. That they want to erase those rules so they make even more money is unconscionable IMO.

I think that was about the extent of my ideas.

They way I see it is we have been brainwashed with math. We've been taught to look at CEO salaries as dismissible percentage of the big picture and fair compensation. That's an easy argument to make. The problem is that it never accounts for executives that moved enormous amounts of money by digging a big hole for taxpayers to fill.

There is good book about the science brainwashing of America. It is called "The Closing of the American Mind". It's dry as hell but I found it interesting.

Interesting ideas. If I may add but one? Through whatever legitimate process is available under our system of government reverse the determination that a corporation has the same standing as a human being. Will it have the same business ramifications as it does political? I have no idea but the Citizens United decision just pisses me off.

Just ordered that book. It seems right up my alley.

I like the idea of caps, but can only imagine the political backlash as EIB, Clear Channel and Fox send their tools into the streets to protest on behalf of their masters. The Tea Party would be livid, I'm sure.:p

And, I think you're right. If we set the cap at Presidential pay, the next thing we know we would be paying the president $1,000,000,000 a year.:rolleyes:

Dave

+1. That was a brain dead decision, particularly considering the justices had the benefit of hindsight by seeing the effects of Kelo v New London and Pfizer walking out of town just a few years later. What a mess.

The power of Pfizer's penis pills is amazing. They must make men think with their little heads instead of their big ones. Speaking of which, think I'll go watch Fox News and rub one out to their blondes with high split skirts.

Balls.

:D

Eminent Domain indeed! How that was determined to be 'in the public good' is also beyond my cognitive reach. I live a short drive from the area Pfizer laid waste. Pretty pathetic.

About the only redeeming worth Fox has are the looks of those babes (certainly not their brains) and NFL coverage.

Pretty, blonde and dumb is one thing (and attractive to many). Pretty, blonde, and manipulative is another thing altogether.