<<… can’t tax inheritance at cost ‘cause “death tax”.
That phrase is a wonderful piece of spin.
Agree or disagree, I remain in awe of whoever penned and promoted it.
A similar phrase is “death panel”:
https://en.wikipedia.org/wiki/Death_panel#:~:text=%22Death%2….
Frank Luntz
Frank Luntz
Just read up on the guy.
He sounds skilled.
The Leni Riefenstahl of our generation!
: )
Jim
What seemed like rich people unfairly avoiding taxes was, it turns out, just a delay in paying taxes.
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Except when the assets are passed on intergenerationally, in which case the step-up basis makes it tax avoidance. So we can’t tax unrealized gains ‘cause … complicated, and we can’t tax inheritance at cost ‘cause “death tax”.
I’m not familiar with the intricacies of the US tax code, but there is a distinction to be made between taxing inherited after-tax money and taxing capital gains on which there is still a tax obligation (a government tax-free loan that was being provided to the deceased individual.) If society decides that parents should be allowed to pass on their wealth to their children without any tax due, that is one thing. But if there is to be a step-up in the cost basis of the inheriting child, then it seems logical to me that the tax on all of the gain from the old basis to the new step-up basis should be paid.
For non-liquid holdings, this might sometimes cause the same problem for the inheritor as it would for the original owner. In that case, the inheriting party should have a choice: either immediately pay, from the estate, the capital gains tax that was owed by the parent, or pay it over a 5-10 years, as this new legislation is proposing, so that the inheriting party has some time to liquidate the asset. I agree that the exemption should not be able to be passed on indefinitely, but if it is taxation of inheritances that a is the problem, then that is what should be fixed, not capital gains for everyone else.
dtb
Biden plan RIP:
https://www.businessinsider.com/joe-manchin-biden-billionair…
The wealthiest Americans shouldn’t be taxed on “things you don’t have,” he said, per Bloomberg.
It may spell the end of the road for the White House’s latest plan.
Well, that was quick!
Glad there is an independent thinker and voice of reason who will not cave to political peer pressure. Seems extremely out of line imo to tax unrealized gains and have government controlling corporate buybacks/ capital allocation.
The top 1% paid about $615 billion in U.S. federal income taxes in 2018, which accounted for about 40% of all federal income taxes paid. When will it ever be enough?! I fear the growing momentum of Sen. Warren and “capitalism is evil” crowd. Will be interesting to see what direction the populace goes in November.
< The top 1% paid about $615 billion in U.S. federal income taxes in 2018, which accounted for about 40% of all federal income taxes paid. When will it ever be enough?!>
This is the reason frequently cited by the ROP against raising tax on the rich. Large percentage of the population didn’t pay tax because they had not earned enough, while the super rich has earned too much. It’s an indication of unfair wealth distribution, not unfair tax burden tilt against the rich. Why should a CEO on average earn over 300 times more than a worker? A few decades ago, the ratio is less than 10. Which one is the problem?
< A few decades ago, the ratio is less than 10.>
Correction: in the 1960s, the ratio is about 21
The top 1% paid about $615 billion in U.S. federal income taxes in 2018, which accounted for about 40% of all federal income taxes paid. When will it ever be enough?!
It will be enough when income shares of the bottom 60% of the population are back to the levels of the 1960s. I’m frickin’ tired of seeing my friends in their 20s-40s struggling just to be able to afford a room in a shared housing situation. Happy to pay considerably more taxes so long as others are doing the same for the general good of the country, and I’m nowhere near the 1% - just another beneficiary of being born at the right time in the right country with the right genes and education and parents to take advantage of it, like Warren.
The top 1% paid about $615 billion in U.S. federal income taxes in 2018, which accounted for about 40% of all federal income taxes paid. When will it ever be enough?!
So the government takes in about a trillion dollars in income tax. And it spent over three trillion in 2020. I understand it was about the same in 2021. So nothing will ever be enough until we reduce unnecessary expenditures. Apparently, we are even borrowing to pay the interest on the national debt. I.e., we are a third-world country as far as our economy is concerned.
Hard for me to see this as entirely workable in any respect.
The proposed tax is essentially a requirement that what corporations now carry on their books as “deferred income taxes” be at least partially paid off each year.
If companies have actually been tracking their deferred taxes, this seems pretty much like proof of workability.
Further, in terms of generating cash to make the payments, the cap on each year’s payment against deferred taxes is the amount by which your tax on your actual income falls below 20% of your actual income. So if you keep your appreciated assets and only realize $100,000 in cash to buy mac and cheese and used clothing and cars and stuff, and you pay $10,000 regular federal income tax on your $100,000, you will have to pay an additional $10,000 federal income tax which would be credited to your deferred income tax.
It seems way simpler to work with than stuff like AMT and deductions that vanish gradually as income rises.
Be clear, I don’t know if I like this tax, but it is certainly on the easier to understand side and easier to implement and track side.
As to having to value your 1985 K-car each year, there are probably a lot of assets that just by law don’t get included in this calculation, just as there are now. Currently, if you bought your k-car for $6,000 and sell it in 2022 for $100, you don’t get to book a $5900 capital loss against your stock winnings, presumably whatever simple mechanism keeps your K-car out off your schedule D now will continue to work in the future.
R:
"…until we reduce unnecessary expenditures.
What is unnecessary?
Benchmark data to assess one’s status:
https://dqydj.com/average-median-top-net-worth-percentiles-b…
https://economics.princeton.edu/working-papers/top-wealth-in…
The Princeton research is an interesting read.
"…until we reduce unnecessary expenditures.
What is unnecessary?
If I tried to answer that, this would get too political for this board.
If someone has the nerve, (s)he could make a poll with the 4 most likely items, and either “all of these” or “none of these” as the last choice.
"…until we reduce unnecessary expenditures.
…
What is unnecessary?
Read “Parliament of Whores”.
It has a whole chapter on that, if I recall.
You’ve heard of “tough but fair”? This is “tough but hilarious”.
Like the Ig Nobel prizes, “it makes you laugh, then it makes you think”.
(I’m not advocating his positions, you understand, just recommending the read)
As I recall, one recommendation was to take the Omnibus Farm Bill out behind the woodshed and kill it with an axe.
Jim
@RaplhCramden
Your post is confusing, are you intending to say your in your example that this person owes no more than $20K for the year regardless of how large their unrealized gains were during the year? because that does not match the press release.
The press release lays it out fairly simply:
"If a wealthy household is already paying 20 percent on their full income – standard taxable income plus unrealized income – they will pay no additional tax under this proposal. If tax-free unrealized income allows a wealthy household to pay less than 20 percent on their full income, they will owe a top-up payment to meet the 20 percent minimum. "
It’s this term “full income” that’s confusing. It includes standard taxable income, and unrealized income (basically the appreciation of assets).
Bet you guys some serious cash that we eventually do tax the rich. When will be the question.
We already do “tax the rich”, have been for decades.
I read that last year 57% in US paid no income tax. And the top 10% pays the vast majority of income tax.
The top 1% paid about $615 billion in U.S. federal income taxes in 2018, which accounted for about 40% of all federal income taxes paid.
Because they accounted for about 40% of the income. That part always seems to get left out in the talking points.