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Killing the IRS

DeaconCav06 said:
Okay. Let’s say you inherit $10MM of silver and there is no step up in basis and no unified credit or it’s been otherwise exhausted.

The estate owes 40% tax on the silver so you need to sell it. You owe 39.6% on the sale to the government plus 10% to the state. So after income taxes you you have $5,040,000 left. $4MM goes to the estate tax leaving you with $1.04 MM which is a combined 89.6% tax rate.
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Sounds perfect #shrug
 
ImTheCaptain said:
right...but the Estate is different entity from the inheritor. The inheritor is not paying 89% tax rate.
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But the effect is the same. The government just took 89.6% of your property for the simple reason that you died.

$10MM became $1.04MM. I’m sure plenty of people I fine with that. I just happen to fundamentally disagree.
 
DeaconCav06 said:
But the effect is the same. The government just took 89.6% of your property for the simple reason that you died.

$10MM became $1.04MM. I’m sure plenty of people I fine with that. I just happen to fundamentally disagree.
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Spread that fucking wealth around. Fuck your silver.
 
DeaconCav06 said:
But the effect is the same. The government just took 89.6% of your property for the simple reason that you died.

$10MM became $1.04MM. I’m sure plenty of people I fine with that. I just happen to fundamentally disagree.
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i mean i get the argument, it just seems like a fucked up way to view property - as having its own agency, essentially
 
DeaconCav06 said:
Is your answer different if it’s the family farm or small business?

What if it’s after a husband and wife die in an accident leaving behind 4 minor children?
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what percentage of american households are dealing with transference of assets like super-valuable paintings, silverware, etc? seems like a rich person's problem
 
Seems like people who hate being taxed when they’re alive and believe that people should work hard and pull themselves up by their bootstraps should be fine being taxed when they’re dead knowing their survivors can pull themselves up.

But alas that’s not the case.
 
ImTheCaptain said:
what percentage of american households are dealing with transference of assets like super-valuable paintings, silverware, etc? seems like a rich person's problem
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But the issue is related to killing the step up in basis. So any assets that have appreciated significantly (like stock in a closely held corporation) could be threatened.
 
Let’s say it’s a business started by a grandparent with a capital contribution of $5,000 back in the 60s that is now worth $5MM.

Again - assuming no unified credit - you owe the government $2MM.

You need to sell an interest in the company to raise that cash.

But if there is no step up in basis, you need to sell a $3.3MM interest to net $2MM after the sale and you’ve now lost control of the company. And that’s before taking into account any valuation discounts.
 
PhDeac said:
Seems like people who hate being taxed when they’re alive and believe that people should work hard and pull themselves up by their bootstraps should be fine being taxed when they’re dead knowing their survivors can pull themselves up.

But alas that’s not the case.
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Seems like the same people who spend most of the work day on the boards that want to tax people who made something of themselves.
 
stugotz said:
Seems like the same people who spend most of the work day on the boards that want to tax people who made something of themselves.
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lol we're talking about the people getting free money they did nothing to get

conservatives are so dumb
 
ImTheCaptain said:
lol we're talking about the people getting free money they did nothing to get

conservatives are so dumb
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90% tax at death is silly, and Cav's example of what happens if someone dies young with kids is a good one.
 
DeaconCav06 said:
Let’s say it’s a business started by a grandparent with a capital contribution of $5,000 back in the 60s that is now worth $5MM.

Again - assuming no unified credit - you owe the government $2MM.

You need to sell an interest in the company to raise that cash.

But if there is no step up in basis, you need to sell a $3.3MM interest to net $2MM after the sale and you’ve now lost control of the company. And that’s before taking into account any valuation discounts.
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just admit them to the partnership before you die
 
DeaconCav06 said:
Let’s say it’s a business started by a grandparent with a capital contribution of $5,000 back in the 60s that is now worth $5MM.

Again - assuming no unified credit - you owe the government $2MM.

You need to sell an interest in the company to raise that cash.

But if there is no step up in basis, you need to sell a $3.3MM interest to net $2MM after the sale and you’ve now lost control of the company. And that’s before taking into account any valuation discounts.
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While that still sounds okay to me, don't most of the proposals suggest some sort of exception level, below which you are off the hook; as well as exceptions for things like family farms if the heirs continue to run the business?

I do like the idea of switching to an inheritance tax. You obviously know more about this stuff than I do, but this plan seemed kinda good to me. https://www.hamiltonproject.org/assets/files/Batchelder_LO_FINAL.pdf
 
Instead of worrying about what a broadly good policy will do in edge cases, we should implement the policy and legislate exceptions for the edge cases. It's not that hard. Plus all these proposals exempt the first X million of assets, so either (a) there is a clear target to plan for to make sure you are under it when you die, and/or have life insurance to cover the tax liability, or (b) you are so far above the threshold you can afford to pay the tax and you are also in the top 0.01% of the wealth distribution, so society should not be too worried about knocking your fortune down a peg or three.

I'm not saying a wealth tax is a silver bullet (I like a financial transactions tax better, cause nobody like the high speed trader bros) but stop the handwringing about the poor family farmer (they don't exist any more) or the super wealthy dude who dies with small children (barely exists, and that's what life insurance is for).
 
JuiceCrewAllStar said:
just admit them to the partnership before you die
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Your interest in the entity would still be transferred and subject to the estate tax in that case. That is why a number of entities purchase corporate owned life insurance. The life insurance is not taxable and can be used to fund the estate taxes due without requiring liquidation of the company.
 
Will someone think of the children who will only inherit $10 million instead of $100 million!??!?!?!?!?!??!

Free money for me. Bootstraps for thee.
 
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