427 replies to this topic

[Traveler]

So when the patriarch dies, everything is rebasised, right? And then taxes are paid on that? Sounds like a huge chunk all at once to me, so I wonder how well that will go down here. What I think should be done at a minimum is that the heirs do NOT get the new basis, which is how it works here. Instead the basis remains the same as when the asset was originally acquired, so they pay the full cap gains tax when they liquidate. This way, they still have their cake, but they cannot eat it too. Once they eat it, they pay. A lot easier to stomach than having to pay the whole wad at death. For instance, what about folks with assets mainly in land? To have to sell immediately to pay seems unfair.

[indy]

What if you inherit a privately held company? Note I'm not talking about Koch's company here either. There are lots and lots of them that aren't worth that kind of money. There is no market for the securities and no way to raise the money to pay the tax except selling the company, probably at a discount to some opportunist in order to meet the tax obligation.

[LFC]

Traveler, on 20 October 2017 - 08:14 AM, said:

So when the patriarch dies, everything is rebasised, right? And then taxes are paid on that? Sounds like a huge chunk all at once to me, so I wonder how well that will go down here. What I think should be done at a minimum is that the heirs do NOT get the new basis, which is how it works here. Instead the basis remains the same as when the asset was originally acquired, so they pay the full cap gains tax when they liquidate. This way, they still have their cake, but they cannot eat it too. Once they eat it, they pay. A lot easier to stomach than having to pay the whole wad at death. For instance, what about folks with assets mainly in land? To have to sell immediately to pay seems unfair.

Wealthy families get to defer taxes for generation after generation. I don't agree with this. Also proper handling of basis across 5 generations is pretty daunting. (I've spoken to high end estate attorneys as part of my job and they say this is completely unworkable in multiple estates they've handled.) Imagine a family farm, the "gay wedding cake" example against paying estate taxes. The amount of money put into the farm as investment and not annual expenses accrue across all of those generations. Of course those from 4 and 5 generations ago are now worthless due to inflation. Or you could just inflate the potentially hundreds of investments. So every year you have to have full documentation and then inflate each figure to create the sum. That's going to be brutally complex and very hard to audit. On top of that how does the IRS know the entire 5 generation trail of heirs, what percentages they received, the basis is parts were sold, the basis if parts of all of these individual percentages sold over multiple generations, and on and on. Basically this becomes an estate tax shitshow and a recipe for fraud.

We tend to tax at the time of transfer. This is true of income, capital gains, and estate tax. You might say we shouldn't tax on transfer but I still have not heard a very good reason why some people should be allowed to defer taxes for generations simply because they don't need the money right now while those families that do need the money must pay their taxes. It's a gift to the 1% and a huge gift to the 0.1%. And I sure as hell haven't heard of a system that handles the multi-generation / multi-heir / multi-lifetime transactions nightmare.

[cmk]

I'll just interject my standard quip here: "Do you believe that success should be based on hard work, talent and merit? Or do you support huge estate tax exemptions? Choose one."

The same people who think the poor are "failures" due to being lazy and stupid think it's fine to have their kids start out life with millions of dollars.

[D. C. Sessions]

cmk, on 20 October 2017 - 09:38 AM, said:

The same people who think the poor are "failures" due to being lazy and stupid think it's fine to have their kids start out life with millions of dollars.

Or billions. Gates could pass his founders' shares etc. to his kids and they wouldn't have to pay a dime in taxes on them (they're basically penny stocks -- at founders' prices.) To his credit he says that they're not getting huge inheritances because it wouldn't be good for them, but the legal possibility is certainly there. As long as the law remains as it is, quite a few Gates generations could live very, very well on the dividends and pass the capital along untouched.

[AnBr]

Warren Buffett said that wealth belongs in the hands that created it, not by lottery of the womb. It does the economy far more good.

[cmk]

Yep. I guess my larger point is the hypocrisy of people who scream "death tax" out of one side of their mouths and brag about how they are supposedly "self-made successes" out of the other.

Gates's position on his wealth has been well-known for decades; he said early on that his kids would receive a comfortable inheritance (more than any of us will see in our lifetimes I am sure) but not more than that.

One of the most bizarre facets of American culture is that Bill Gates -- who's basically devoted himself to helping others for much of the last quarter century -- is seen as some sort of villain, while Steve Jobs -- who by all accounts basically was a giant dickhead to everyone around him for his entire life, including his own daughter -- is some sort of hero.

[indy]

A large part of the problem is that the return on capital is far too high. Wealth becomes self-perpetuating in that environment. If return on labor could be pushed up and return on capital pushed lower, some of these generational issues would go away. Our political class is drawn mainly from the wrong socioeconomic group for that to happen though.

[indy]

I also see the GOP is eying a change that caps contributions to pre-tax retirement plans at a level far lower than currently allowed and any additional retirement funds would be after-tax like a Roth type plan so they can pay for their tax cuts.

I don't see how anything could go wrong here.

[cmk]

I think the main distortion here is due to the rich manipulating the middle class and poor to vote against their own interests. This has removed one of the most important checks and balances between the power of the masses and the power of the wealthy. It's been accomplished through a shrewd combination of slick dishonesty, religious manipulation, appeals to greed and deliberate attacks on education and intelligence. And it's been extremely successful.

The old saw is that a politician is someone who takes money from the rich and votes from the poor to protect them from each other. Now the politician gets both and only has to protect the rich -- and the poor celebrate it.

The wages of ignorance are suffering.

[LFC]

indy, on 20 October 2017 - 12:38 PM, said:

I also see the GOP is eying a change that caps contributions to pre-tax retirement plans at a level far lower than currently allowed and any additional retirement funds would be after-tax like a Roth type plan so they can pay for their tax cuts.

Awesome. Collect the taxes today and put off the impact of the loss of revenue (since Roth funds are not taxed upon withdrawal) until after you're out of Congress and possibly dead. Sounds like they've come up with a great system pushing the cost of their plans onto future generations, something the Republican Party excels at.

[indy]

LFC, on 20 October 2017 - 02:08 PM, said:

Sounds like they've come up with a great system pushing the cost of their plans onto future generations, something the Republican Party excels at.

Oh, I don't think it pushes it out even that far. It's more like they are stealing the future retirement savings of the current generation (i.e., our kids) in order to further line the pockets of the people who already have more than they can use, and just to add insult to injury, they are trying to figure out how to cut their social security too.

[AnBr]

indy, on 20 October 2017 - 12:20 PM, said:

A large part of the problem is that the return on capital is far too high. Wealth becomes self-perpetuating in that environment. If return on labor could be pushed up and return on capital pushed lower, some of these generational issues would go away. Our political class is drawn mainly from the wrong socioeconomic group for that to happen though.

This is exactly what TR recognized and why in part that he advocated a stiffly progressive inheritance tax.

[LFC]

A GOP Rep is dutifully defending his lords and masters.

Quote

Rep. Steve Russell (R-OK) said Monday that maintaining the top marginal tax rate for Americans earning $1,000,000 or more yearly would be “class warfare.”

In an interview, CNN “New Day” co-host John Berman asked Russell about a report from Axios, which did not cite its sources, that Republicans on the House Ways and Means Committee were considering cutting the top marginal rate for individuals earning between $418,000 and $999,999, but keeping the existing rate for those earning more than that.

“I don’t think we ought to continue to divide our country into class warfare,” Russell said of the proposal. “One of the sad things since leaving the military and coming to Congress is to see how we have divided our nation on almost every level: socioeconomic, gender, race, and now we’re going to divide on class and divide on wealth? When is it that we unite on things that we actually could agree on?”

Co-host Poppy Harlow pressed: “How is it class warfare to ask whether or not Americans making over $1 million a year, who now pay nearly 40 percent in income tax, should continue to pay that?” she asked. “How is that class warfare in any way? You’re an elected representative who will have to vote on this thing, so? Which way would you go?”

[golden_valley]

LFC, on 23 October 2017 - 11:29 AM, said:

A GOP Rep is dutifully defending his lords and masters.

Now I understand class warfare...shutting down services and money to programs designed to help the lower socio economic class is not class warfare or is maybe a permissible form of it, but taxing the upper 1% is class warfare and is strictly impermissible.

[LFC]

Perfect. You can now help write the Dictionary of Republican Definitions.

[Progressive whisperer]

Yeah, it’s been long enough since the .01% felt fear of torches and tumbrels that they are to trying to gather in all the wealth for themselves. I suppose they’ll dole out enough to the militarized police, at least a few of the will. Others will assume that somebody else will keep the peace keepers happy.

[LFC]

Sen. Bob Corker keeps beating on Trump. He says his coming to Capitol Hill is just a "photo-op".

Quote

As Senate Republicans prepared to meet with President Donald Trump on Tuesday during their weekly caucus lunch, Sen. Bob Corker (R-TN) told NBC News on Monday that the meeting is just a photo op.

“Tomorrow’s a photo op. Nothing more, nothing less, and I think to read anything more into it would be spending a lot of time on something that shouldn’t be spent a lot of time on,” he told NBC News.

“It’s going to be up and down for the next three years,” he added. “That’s just the way it’s going to be. I don’t read anything anymore other than a photo op. ”

Corker told NBC News that Congress must take the reins on tax reform.

“You got to remember, tax reform is our agenda. It’s the Senate’s agenda. It’s a House agenda. This was something that’s been on our agenda long before the President ran for president. So, to act as if it’s his agenda, it’s our agenda,” the senator said. “You understand? I mean, that’s — tomorrow’s a photo op. Okay?”

The senator, who is set to retire at the end of his term, has recently spoken out against Trump, lamenting that the President undermines his staff. Trump in return has criticized Corker, claiming that the senator decided against seeking another term because he could not win Trump’s endorsement. Corker has disputed that narrative.

Corker also made the rounds on morning news shows Tuesday morning, reiterating his concerns about the President’s approach to foreign policy. On NBC’s “Today,” Corker said that Defense Secretary James Mattis, Secretary of State Rex Tillerson and White House Chief of Staff John Kelly work to “contain” Trump, but that Trump “kneecaps” Tillerson.

Of course Trump threw a childish tantrum on twitter.

[LFC]

The meeting between Trump and Republicans was a success! Read on for the definition of success.

Quote

“It was a very positive meeting,” Kennedy said, per BuzzFeed reporter Paul McLeod and Yahoo News reporter Liz Goodwin. “Nobody called anyone an ignorant slut.”

[AnBr]

"Jane you ignorant slut!"