Richest get richer

[DKW 86 7,428]

Myth 7:  The estate tax constitutes "double taxation" because it applies to assets that already have been taxed once as income.

Reality:  Large estates have substantial amounts of "unrealized" capital gains that have never been taxed; the estate tax is the only means of taxing this income.

Income taxes on the appreciation of assets, such as real estate or artwork, are only paid when the asset is sold.  Therefore, the increase in the value of an asset is never subject to income tax if the asset is held until a person dies.  These "unrealized" capital gains can make up a significant share of an estate’s total value, especially among large estates — the ones likely to owe estate tax. 

One reason the estate tax was created was to serve as a backstop to the income tax, taxing income that was never taxed under the income tax.  That is, the taxation of this income is essentially deferred and ultimately taxed for the first time through the estate tax.

Shirley, you do not believe this!

Where did the money come from in the first place? From previously taxed income. If the house gets sold, it will stiull have capital gains on the sale, unless you use the exemption. Please guys, if those on the Left want to pay whatever in taxes, just let them cut the check. Leave the rest of us poor, hard working souls alone.

Folks on the Left always want to talk about the other guy's money tho, not his own.

[TexasTiger 12,950]

Please guys, if those on the Left want to pay whatever in taxes, just let them cut the check. Leave the rest of us poor, hard working souls alone.

So David, if you were to die tomorrow, do you think your family would pay estate tax?

[BamaGrad03 0]

Myth 7:  The estate tax constitutes "double taxation" because it applies to assets that already have been taxed once as income.

Reality:  Large estates have substantial amounts of "unrealized" capital gains that have never been taxed; the estate tax is the only means of taxing this income.

Income taxes on the appreciation of assets, such as real estate or artwork, are only paid when the asset is sold.  Therefore, the increase in the value of an asset is never subject to income tax if the asset is held until a person dies.  These "unrealized" capital gains can make up a significant share of an estate’s total value, especially among large estates — the ones likely to owe estate tax.

One reason the estate tax was created was to serve as a backstop to the income tax, taxing income that was never taxed under the income tax.  That is, the taxation of this income is essentially deferred and ultimately taxed for the first time through the estate tax.

This one is really too easy. "income taxes on the appreciation of assets such as real estate". Over a given span of time, say 20 years, what are some contributing factors of "appreciation of assets"? Id say one MAJOR factor is inflation. So my house is worth more...because my money is worth less. Basically, you are saying that I have to accept inflation as a form of INCOME...which is short sighted at best. Real Estate is a risk market. I get rewarded on my risk with a monetary raise in value. But I can also lose my ass on real estate. Does the government help me there? Do I get retroactive tax breaks for all the years that I paid over value for what my house is worth? No. If I buy a house for 100k and sell it for 50k, does the government hook me up? NO. Because its a risk. Basically then, you're saying:"if you buy something and it becomes valuable...and you give it to your kids...I deserve some of that money". "But if you buy something and lose your ass on it, I'm not gonna help you out."

The average home in 1980 that was worth 70k is now worth 280k. MOST of the increase in value is from inflation. If I paid cash in 1980 for my 70k house, it was bought with money that was already taxed. And I had to pay PROPERTY taxes every year for the last 25 that i lived in my house. Which IS adjusted for inflation. So because my 70,000 dollars that i bought my house with in 1980 would buy a nice car, but not 1/3 of the same house...remind me why I should pay a 40% tax on that 280k house when i die?

And I know where you are going with your question for david...you dont pay estate taxes unless its a net worth of like over 750k...but thats not a valid argument. Just because you have a lot of money, doesnt mean you should be subject to a penalty that makes no sense.

[CCTAU 3,327]

And I know where you are going with your question for david...you dont pay estate taxes unless its a net worth of like over 750k...but thats not a valid argument. Just because you have a lot of money, doesnt mean you should be subject to a penalty that makes no sense.

It actually does make sense if your goal is to reach a utopian socialist society. The rich should pay for everyone. Why? Because they are rich, silly.

[TexasTiger 12,950]

And I know where you are going with your question for david...you dont pay estate taxes unless its a net worth of like over 750k...but thats not a valid argument. Just because you have a lot of money, doesnt mean you should be subject to a penalty that makes no sense.

It actually does make sense if your goal is to reach a utopian socialist society. The rich should pay for everyone. Why? Because they are rich, silly.

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Neither one of you even know the amount at which the tax kicks in.

[BamaGrad03 0]

And I know where you are going with your question for david...you dont pay estate taxes unless its a net worth of like over 750k...but thats not a valid argument. Just because you have a lot of money, doesnt mean you should be subject to a penalty that makes no sense.

It actually does make sense if your goal is to reach a utopian socialist society. The rich should pay for everyone. Why? Because they are rich, silly.

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Neither one of you even know the amount at which the tax kicks in.

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"To reemphasize: Most relatively simple estates (cash, publicly traded securities, small amounts of other, easily valued assets and no special deductions or elections or jointly held property) with a total value under $1,000,000 and a date of death in 2002 or 2003 and $1,500,000 and a date of death in 2004 or 2005 do not require the filing of an estate tax return."

So whats your point? I dont care if its 9 million. Its still a communist/socialist unfounded tax.

The argument that they have so much more than the average joe is not sufficient when discussing why YOU deserve some of THEIR money.

[DKW 86 7,428]

Please guys, if those on the Left want to pay whatever in taxes, just let them cut the check. Leave the rest of us poor, hard working souls alone.

So David, if you were to die tomorrow, do you think your family would pay estate tax?

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With the street value of this website, oh yeah we are talking big estate taxes.

BTW, I typed my response in a big hurry. I meant to say that even without Estate taxes, ultimately selling the house (usually the biggest asset, or any real asset) will still get you taxed by capital gains.

Sorry so poorly written.

[Tiger Al 0]

FactCheck

[DKW 86 7,428]

FactCheck

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I know they changed the tax recently but Al, My sisters and me were out over $200K when my father passed. We had to eliminate, sell off, assets to pay the tax. Now days, the wealthy just buy life insurance to cover the cost of the taxes now. So in actuality, the Estate tax is just another gift to the insurance industry. And we all know how they are so deprived....

[BamaGrad03 0]

From fact check:

Both the radio and TV ads call the estate tax a "double tax," which is only partly accurate. It is true that some portion of a taxable estate might be made up of cash that was taxed before, when it was earned as income. But many estates are made up of stocks, bonds, real estate or other holdings that have appreciated greatly in value over the lifetime of the person who owned them. The owner didn't pay taxes on that profit during his or her lifetime because they weren't sold and the profits weren't turned into cash, or "realized." Furthermore, heirs who inherit such appreciated assets won't have to pay tax on that unrealized profit either. The estate tax is the only tax that applies to such unrealized capital gains.

This, again, is short sighted. Real estate, as argued earlier, increases in value for many reasons...a large one being inflation. You SHOULDNT have to claim inflation as income. No way no how. Also, property taxes are reassed every year in many places...so to say that real estate was never taxed is a joke. Much of the appreciation of stocks/market money is based on company PROFITS that are also taxed.

If I invest in a company that is worth a million dollars...for 30 bucks a share. And they turn a profit of 2 million dollars, they have to pay taxes on that two million dollars. Lets say my stock goes up to 50 dollars a share...it would be valued even higher if those company profits werent taxed. Same with dividend payments. Stocks equate ownership in a company. You reap the rewards of the company profits AFTER TAXES that the company pays.

[Piglet 0]

So why have any governments at all? They just exist to impose restrictions on people's freedom and take THEIR money. Why have any taxes at all?

[BamaGrad03 0]

So why have any governments at all? They just exist to impose restrictions on people's freedom and take THEIR money. Why have any taxes at all?

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Nice rebuttal.

[BamaGrad03 0]

For the record...

this article shows that property taxes increased 85% between 80-2000 in washington.

http://www.washingtonpolicy.org/TaxLimitat...yTaxes2000.html

And nationally property taxes have increased 36% over the last five years...outpacing population increase and inflation.

So excuse my laugh when you tell me that those estate have "unrealized/taxed value" built in. Not only are we paying ridiculous TAXES on our properties every year...but we would also have to pay estate taxes based on a "value" of a house that is MUCH higher than when i bought it due to not only inflation...but also the gvmt constantly overvaluing my house for tax purposes.

[Auburn85 432]

For the record...

this article shows that property taxes increased 85% between 80-2000 in washington.

http://www.washingtonpolicy.org/TaxLimitat...yTaxes2000.html

And nationally property taxes have increased 36% over the last five years...outpacing population increase and inflation.

So excuse my laugh when you tell me that those estate have "unrealized/taxed value" built in. Not only are we paying ridiculous TAXES on our properties every year...but we would also have to pay estate taxes based on a "value" of a house that is MUCH higher than when i bought it due to not only inflation...but also the gvmt constantly overvaluing my house for tax purposes.

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and that's why I love Alabama....... low property taxes. Yet some want to raise it for the "chilledren". And they always think that they can justify raising our property taxes because they're so low. I say so what. And comparing Alabama's property tax to California or New York is absurd because Alabama is obviously one of the poorer states.

[Tiger Al 0]

You SHOULDNT have to claim inflation as income.

I don't know, BG. If you bought a house 10 years ago and its value has appreciated 30%, are you only going to sell it at 20% appreciation because that other 10% is really just inflation and not "true" appreciation? You feel cheated having to pay property tax on it, will you feel like a cheater by accepting more than your house is really worth? Cuts both ways doesn't it?

[BamaGrad03 0]

No...because ALL the houses are worth more. So if i sell the house i originally bought for 100k ten years ago for 200...i couldnt walk across the street and buy the same house for 100k.

EDIT:

not only could you not buy the same house...you couldnt take your profits and just "buy more stuff" because EVERYTHING costs more 20 years later...not just houses.

[Tiger Al 0]

No...because ALL the houses are worth more. So if i sell the house i originally bought for 100k ten years ago for 200...i couldnt walk across the street and buy the same house for 100k.

EDIT:

not only could you not buy the same house...you couldnt take your profits and just "buy more stuff" because EVERYTHING costs more 20 years later...not just houses.

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So, you think it's wrong for you to have to pay higher taxes on a house whose value has risen primarily due to inflation but have no problem making 100k on a house whose value has doubled in 10 years due to inflation. You want the value of inflated 2005 dollars on re-sale but only feel obligated to pay tax on the value of 1995's dollar. Isn't that like wanting to have your cake and eat it too? I mean, it's a great thought but it doesn't sound very realistic.

[BamaGrad03 0]

Sorry, my illustration was for the purpose of easy math...feel free to add 20 years to it for added realism.

Geez AL...you are the champion of side stepping my good points and taking some minute part of a post and picking it apart to make your points.

[CCTAU 3,327]

No...because ALL the houses are worth more. So if i sell the house i originally bought for 100k ten years ago for 200...i couldnt walk across the street and buy the same house for 100k.

EDIT:

not only could you not buy the same house...you couldnt take your profits and just "buy more stuff" because EVERYTHING costs more 20 years later...not just houses.

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So, you think it's wrong for you to have to pay higher taxes on a house whose value has risen primarily due to inflation but have no problem making 100k on a house whose value has doubled in 10 years due to inflation. You want the value of inflated 2005 dollars on re-sale but only feel obligated to pay tax on the value of 1995's dollar. Isn't that like wanting to have your cake and eat it too? I mean, it's a great thought but it doesn't sound very realistic.

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The market dictates teh value of homes, not inflation. Teh government, however, would like you to believe it so. i wish I could sell my house for the "appraise" taxable value. They need more money, they up the value of your home. We dispute ours EVERY year.

[Tiger Al 0]

No...because ALL the houses are worth more. So if i sell the house i originally bought for 100k ten years ago for 200...i couldnt walk across the street and buy the same house for 100k.

EDIT:

not only could you not buy the same house...you couldnt take your profits and just "buy more stuff" because EVERYTHING costs more 20 years later...not just houses.

163265[/snapback]

So, you think it's wrong for you to have to pay higher taxes on a house whose value has risen primarily due to inflation but have no problem making 100k on a house whose value has doubled in 10 years due to inflation. You want the value of inflated 2005 dollars on re-sale but only feel obligated to pay tax on the value of 1995's dollar. Isn't that like wanting to have your cake and eat it too? I mean, it's a great thought but it doesn't sound very realistic.

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The market dictates teh value of homes, not inflation. Teh government, however, would like you to believe it so. i wish I could sell my house for the "appraise" taxable value. They need more money, they up the value of your home. We dispute ours EVERY year.

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I know.