From the New York Times comes yet more evidence of the growing concentration of wealth in America, this time from an analysis of inheritances.
http://www.nytimes.com/2006/03/26/we.../26porter.html

There are several reasons for shrinking inheritances, starting with basic demographic changes: parents are living longer and spending more of their money themselves, and most people do a lousy job of saving for retirement at a time when fewer and fewer people can rely on pensions and other traditional sources of retirement income. So what money they do save gets spent.

But simple demographics cannot explain the increasing concentration of wealth reflected in the statistic that 7 percent of estates account for half of the money being passed down.

The story notes that wealthy heirs are seeing more and more money:

Add this to all the other evidence of wealth concentration in America, and other measures of disparity such as CEO pay, which now averages 500 times the wages of average workers. 15 years ago the ratio was 140 to 1; 40 years ago it was 40 to 1.
http://www.sptimes.com/2005/04/06/Co...o_days_o.shtml

I don't believe in "punishing the rich" simply for being rich; I'd like to be rich someday, after all. But I do think that it's fair to tax someone's second $300,000 at a higher rate than everyone's first $300,000. And I think we all have an interest in the ill effects of excessive wealth concentration.

Tie up too much wealth in the hands of the few and you damage the economy, limiting opportunity and driving social unrest. For extreme examples look at France during the runup to the French Revolution, or Victorian and Edwardian England, or parts of South America today, where the wealthy live in fortresses, drive armored cars and employ bodyguards while the poor scavenge for food in city dumps. This is how revolutions are born.

Which brings us to the estate tax -- or, as Republicans like to spin it, the "death tax." Along with the Bush tax cuts that provided disproportionate relief to the wealthy, the gradual repeal of the estate tax plays a large part in increasing the concentration of wealth.

Republicans cast it as simple fairness: why should someone's money be taxed twice? It's a fair argument, but it ignores several things:

1. A lot of money is taxed twice, through sales taxes, for example. Or consider the gift tax. Give someone more than $10,000 a year and it's subject to tax. Why, then, does it make sense to exempt a gift from taxation simply because the giver has died?

2. The estate tax brings in about $70 billion a year. In a time of war and budget deficits, is it really good policy to blow another gigantic hole in the budget for a law that only benefits the very very rich?

3. What is the social benefit of allowing heirs to receive millions of unearned dollars tax-free?

4. The government taxes nearly every transfer of money. What is the rationale for refusing to tax this transfer of money? What separates it from all the other transfers of money that we do tax?

It makes no sense to worsen our budget situation in order to provide a tax benefit to the least needy -- especially when doing so actively harms society and the economy. I'll give Bush the benefit of the doubt and call it a case of following a principle out the window instead of simply pandering to wealthy supporters. But it's a move we simply cannot afford -- in any sense of the word.

If you like this and want to link to it, you can use this link:
http://midtopia.blogspot.com/2006/03...state-tax.html

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Man up.

it's a tax enacted when you die, thus a death tax. There is spin in that article by saying it provided disproportionate relief to the rich. On a percentage basis the middle class got a larger cut than the rich. Of course on a dollar basis the rich got more, since they pay nearly all of the taxes to begin with.

As far as the arguments:

1) If anything, that is an argument for cutting the gift tax (actually it's $11K not $10K). Once my money is taxed it's not the business of the government, the citizens, Big Brother, or anyone else what I do with MY money.

2) If something is unfair it is unfair, a tax doesn't suddenly change from unfair to fair simply because there is a war or something else to pay for.

3) No social benefit needed, there is no social benefit to me buying a boat, a vacation home, or my own island in the Bahamas if that's what I choose to do with my money. The constitution doesn't require a social benefit to what I do and don't do with my money.

4) Such as? We'd need specifics to address this and the answer would depend on the specific transfer. I could go into how if someone wants to pay for their child's tuition along with their books, living expenses, etc that it is not the government's business. Or if someone wants to give their child a $12K car instead of a $11K car it is no one's business. But the bottom line is that it is money that has been taxed (and taxed and taxed) and if they want to pass it onto their children then it is not your business, my business, the government's business or anyone else's what is done with their money.

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All you need to know about the energy crisis:
ANWR Exploration Republicans: 91% Supported. Democrats: 86% Opposed.
Coal-to-liquid R's: 90% YES. D's: 78% NO.
Oil Shale Exploration R's: 90% YES. D's: 86% NO.
Outer Continental Shelf Exploration R's: 81% YES. D's: 83% NO.
Increased Refinery Capacity R's: 97% YES. D's: 96% NO

SUMMARY: 91% of House Republicans have historically voted to increase the production of America’s own oil and gas. 86% of House Democrats have historically voted against.

Here's a thought, if you're so concerned about increasing tax revenues, let's tax everyone. Currently, nearly 50% of wage earners pay ZERO federal income taxes. The top ten percent of wage earners pay around 90% of all income taxes. If it's fairness and increased tax revenues you seek, then you will no doubt support me in the drive to tax the poor!

Most of the inheritance wealth was accumulated by the WWII generation. Most generational families pre-WWII and post WWII pale in comparrison.

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"Victory at all costs, victory in spite of all terror, victory however long and hard the road may be; for without victory, there is no survival."
Winston Churchill

The estate tax is purely for the rich. It doesn't apply to estates worth less than $1.5 million (or $3 million for a couple). It is simply irrelevant to the middle class.

I think the gift tax exists largely to avoid disguising taxable income as nontaxable "gifts", and also to require reporting of large transfers of cash, and also to keep people from giving huge tax-free gifts to their heirs in order to avoid estate taxes.

It is not their business what you do with it, and only a few states tax you for simply having money (Florida, for instance, has an intangibles tax). But most *transfers* of money are taxed in some form. The estate tax is no different.

Agreed. But:

a) I don't think it's unfair. Why tax every other transfer of wealth, but not this one?

b) The tax has been around for decades. Why fix it now, when we really need the cash? If we're going to fix unfairness regardless of need, shouldn't we fix truly unfair things first, like the AMT?

Some social benefit should be articulated in order to justify not taxing this transfer of wealth while taxing practically every other transfer of wealth.

And there is nothing stopping them from doing so. You can spend almost anything you like on dependent expenses, none of it taxable and much of it actually tax-deductible.

One could make the same argument about all taxes and all wealth transfers. Why should I pay income tax? It's my company's money, they already paid tax on it and they can do with it as they like. Why should I pay sales tax? It's my money, already taxed once. Why should I pay property taxes? I paid tax when I bought my house; now I'm simply being taxed for having property.

Tell me what makes inheritances so different that they deserve special treatment.

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Man up.

I prefer to tax people who can afford incrementally higher marginal rates than people who are scraping by. But that's just me.

I believe it was the Wall Street Journal who described such low-wage workers as "lucky duckies" for this reason. I'm sure someone trying to support their family on $20,000 a year feels "lucky."

1. Income taxes form only part of the total tax structure. Throw in payroll and other taxes and the share paid by the wealthy decreases.

2. That percentage is only slightly higher than their share of taxable income.

3. Despite all the burdens the top 10 percent must suffer through, which group would you rather belong to? Would you really prefer to be a "lucky ducky"?

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Man up.

A 1.5 million estate is very common. That is nothing for most WWII generation families.

I say, tax the poor!

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"Victory at all costs, victory in spite of all terror, victory however long and hard the road may be; for without victory, there is no survival."
Winston Churchill

Most, huh? Then please explain how only 2 percent of American are subject to the tax, and half of all estate taxes are paid by 0.14% of Americans.
http://www.faireconomy.org/estatetax/ETWhoPays.html

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Man up.

Are you joking?! My dad's pretty (*)(*)(*)(*) well-off compared to the average Joe and his estate isn't even worth a million!

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"Man lives in the sunlit world of that which he believes to be reality. But unseen by most is an underworld, a place that is just as real... but not as brightly lit... A DARK SIDE!"
-opening from Tales From the Darkside

Right, but I was referring to the comments about the income tax cut. Although $1.5M isn't that much. If I own three tanning salons that would be about that much in Boston. I should be able to pass those businesses onto my kids if I like and not have to sell in order to pay more taxes.

I think you are right on the former, although as far as recording cash transfers the government has a form to cover that, it could be required of individuals as well. As far as avoiding estate taxes goes, can't blame them!

Buying a boat is a transfer as well. Or any time money changes hands.

I'd need to know specifically what you mean when you say every other transfer of wealth. I suspect my answer will be that they are unfair taxes as well, but would need the specifics. It's money that has been taxed and passing it on to a child is fully within my right as a parent.

To me it's been unfair for decades, but you definitely won't hear any arguments from me on AMT. It's only affected me once (I'm good with tax planning ), but I do know it has affected many. Does Minnesota have high state income taxes? If so, my sympathies. I know many here in Mass that get hit by it and it is bogus. Talk about a quick way to boost your overall tax rate.

I disagree, if I was a multi-millionaire I don't need to justify to the government what I want to do with my already taxed money. If there is no benefit to buying a $500K car I shouldn't have to justify that or any other spending. The scariest reasoning of them all, "social benefit." Very big brotherish.

Actually anything other than tuition is supposed to be included in the $11K annual gift to a child. Room, board, books, a car, etc. And tax deductabilty on college IRA's begins to phase out somewhere around $90K or so in income (in regards to the tax deductability comment).

Not really, an income tax has not been taxed. A company and a relative aren't very analogous. Sales taxes only occur if you buy something, you don't have to buy. You do have to die though. And what tax did you pay on your house? Like a sales tax, it is a tax on a discretionary purchase. Although based on my property taxes I'd be more than happy to argue a better way to collect taxes to support schools.

No special treatment, although if that was the case, the argument would be that it is money being passed onto a child. If I gift my money to my kids when I die is not anyone's business. It is a matter of privacy, fairness, among many other things.

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All you need to know about the energy crisis:
ANWR Exploration Republicans: 91% Supported. Democrats: 86% Opposed.
Coal-to-liquid R's: 90% YES. D's: 78% NO.
Oil Shale Exploration R's: 90% YES. D's: 86% NO.
Outer Continental Shelf Exploration R's: 81% YES. D's: 83% NO.
Increased Refinery Capacity R's: 97% YES. D's: 96% NO

SUMMARY: 91% of House Republicans have historically voted to increase the production of America’s own oil and gas. 86% of House Democrats have historically voted against.

Capital Gains Taxes are by far the most fair taxes a nation can have.
Because Imcome Tax and Payroll taxes are taxes on working, while CGT is tax on wealth.
If tax the first but not the second then you encourage indolence and laziness in the polulation. Why should the children of the rich invest in our economy or actually work?
Theres no tax on just passively leaving the money in the bank.
Im angered by people who encourage such free riders on the system.

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"Better to die on you feet than live on your knees" - Emilio Zapata