MarketWatch Warning to the 1%.. the IRS May be Coming for You!

[Levianon17]

Originally Posted by Tiny

The local newspapers published the names of the accused and some joker was selling T shirts with all 60 names emblazoned on the front. Marriages and careers were destroyed. The main lesson from this experience is never, ever give a provider or her pimp your personal info. The massage parlor kept a list of clients doing outcalls and local law enforcement got hold of it.



True but very misleading. If a person has a billion dollar estate, then close to 99% of it (the amount over $11 million) is taxed at 40%.



It's not hoarded. It's invested in companies, farms, and bonds and savings that are loaned out to government, businesses and individuals. Furthermore, in the majority of cases the money was already taxed as income. There are some instances where you've got a point. For example, if Jeff Bezos dies tomorrow, the income tax (but not the sales and property taxes) paid by Amazon would be inconsequential during his lifetime compared to the value of his stock. And if his heirs sold the stock the day after he died, they'd pay no capital gains tax because the cost basis of the shares is stepped up to market value on the date of his death. Recent proposals by Republicans to do away with the estate tax would handle this by not stepping up cost basis for larger estates.




This statement is ass backwards. Again, see the Tax Foundation link. The economy and jobs benefit more from leaving the "money" invested in businesses and savings rather than turning it over to the government. It absolutely is punishment. Why else would you impose a tax that doesn't raise net revenues? The Tax Foundation's research indicates, in the long term, the government loses revenues because of the estate tax. No reasonable person who's looked at this closely would argue that it raises significant revenue.





All true but I still don't understand what you're getting at.



So say somebody in some town goes out with a gun and robs 1/10 of 1% of the population, then takes the cash he got and burns it and gets thrown in jail for a couple of weeks. That's what's happening. The effect on the economy, and, with dynamic scoring on government revenues, is negative.

Yeah, there's a problem with inequality in America. How about implementing policies that would grow the pie for everyone, more for the poor and middle class than the wealthy. That beats making everyone worse off by shrinking the size of the pie, in a way where everyone receives less. This is what the estate tax does.

That's not going to ever happen. Unfortunately there must be a ruling class which essentially is the very rich in this country. If everyone was wealthy Government wouldn't have the power they have. If you are not in the 1% you are essentially a peasant, at least in the eyes of Government. When Politicians talk about taxing the Rich and Wealth Inequality it's just a political pitch.

[Tiny]

Originally Posted by Levianon17

That's not going to ever happen. Unfortunately there must be a ruling class which essentially is the very rich in this country. If everyone was wealthy Government wouldn't have the power they have. If you are not in the 1% you are essentially a peasant, at least in the eyes of Government. When Politicians talk about taxing the Rich and Wealth Inequality it's just a political pitch.

It's more complicated than that. Government's in the business of screwing everyone. Politicians raise headline marginal tax rates higher than they should to get more votes. At the same time they create loopholes and give out pork to special interests to get more money which they can spend on their campaigns to get more votes.

The best solution to the problem you describe is to make everyone wealthy, or, realistically, better off. Sometimes Republicans and Democrats agree on ways to do this. One example is criminal justice reform, which would keep more people out of jail and make fewer young black men unemployable. There's bipartisan support for this.

There are other examples where politics get in the way of reforms that would grow the pie and reduce inequality. For example, at the state and local level, Democrats hold up education reform to gain support of the teacher's unions. In the long term, Democrats believe open borders, leading to amnesty and citizenship for illegals, will increase the number of votes they'll receive, but that also decreases the level of wages for low skilled workers. Republicans in many states and localities (but probably not in places like Mississippi) should support a higher minimum wage, which again would raise wages for low skilled workers. Politicians on both sides should be working to remove anti-competitive practices in pharmaceuticals and the medical system but aren't because of special interests.

Just making government more efficient would go a huge way towards making people better off. We pay too much for education and Medicare for example compared to what we actually get.

[Levianon17]

Originally Posted by Tiny

It's more complicated than that. Government's in the business of screwing everyone. Politicians raise headline marginal tax rates higher than they should to get more votes. At the same time they create loopholes and give out pork to special interests to get more money which they can spend on their campaigns to get more votes.

The best solution to the problem you describe is to make everyone wealthy, or, realistically, better off. Sometimes Republicans and Democrats agree on ways to do this. One example is criminal justice reform, which would keep more people out of jail and make fewer young black men unemployable. There's bipartisan support for this.

There are other examples where politics get in the way of reforms that would grow the pie and reduce inequality. For example, at the state and local level, Democrats hold up education reform to gain support of the teacher's unions. In the long term, Democrats believe open borders, leading to amnesty and citizenship for illegals, will increase the number of votes they'll receive, but that also decreases the level of wages for low skilled workers. Republicans in many states and localities (but probably not in places like Mississippi) should support a higher minimum wage, which again would raise wages for low skilled workers. Politicians on both sides should be working to remove anti-competitive practices in pharmaceuticals and the medical system but aren't because of special interests.

Just making government more efficient would go a huge way towards making people better off. We pay too much for education and Medicare for example compared to what we actually get.

I didn't make it complicated because it isn't any more complicated than the way I put it. If a poor person becomes wealthy he got there on his own, the Government in and of itself had nothing to do with it. This idea of Law Enforcement reform is a joke too. You can't put a quota on how many Black males vs white males the police can arrest it's a totally ridiculous and unrealistic idea. Less Black males in jail won't give rise to scholars and over achievers you'll just get bolder criminals. It's obvious you are getting your information from Politicians. Politicians are mostly good at telling people what they want to hear, doesn't mean they are correct.

[Chung Tran]

Originally Posted by Tiny

So say somebody in some town goes out with a gun and robs 1/10 of 1% of the population, then takes the cash he got and burns it and gets thrown in jail for a couple of weeks. That's what's happening. The effect on the economy, and, with dynamic scoring on government revenues, is negative.

I disagree.. that very small portion of money represents money not being utilized.. it is basically excess money that is way more than the ultra-wealthy owner could ever spend or use, other than to pass down to Heirs. think of it as cream sitting on top of a glass of milk, that escaped the homogenization process

Originally Posted by Levianon17

Less Black males in jail won't give rise to scholars and over achievers you'll just get bolder criminals.

this made me laugh

[Tiny]

Originally Posted by Chung Tran

I disagree.. that very small portion of money represents money not being utilized.. it is basically excess money that is way more than the ultra-wealthy owner could ever spend or use, other than to pass down to Heirs. think of it as cream sitting on top of a glass of milk, that escaped the homogenization process

Your reasoning is like Kamala Harris' and Elizabeth Warren's in the debates this week. Elizabeth said the insurance companies make $26 billion a year in profits and Kamala said the insurance and drug companies make $72 billion. So we get rid of those profits, and tax the rich some more, and all will be hunky dory.

USA health care expenditures are $3.7 trillion per year. $26 billion (insurance company profits according to Liz) is 0.7% of that, and $72 billion (drug and insurance profits according to Kamala) is 1.9%. Furthermore, if you take all the profits away, how are the companies going to have the money to invest in things like developing new drugs?

These women either have limited math and analytical skills, or they're trying to mislead people. They and Bernie Sanders are proposing $3.2 trillion per year additional federal spending, which will require a huge tax increase on the middle class and/or huge deficits, and, except for Sanders, they refuse to admit it.

Same with the estate and gift tax. They raise a pittance in relation to the size of the budget, and amount to less than the insurance company profits. They're not the "cream on the top of a glass of milk." Primarily, they're a tax on capital, on part of the savings and investments that grow the U.S. economy.

Again, if you want to tax private planes, yachts and mansions, have at it. But don't think taxing capital, moving private sector investment to government consumption, is a free lunch.

[oeb11]

Amen
Thank You, Tiny!
One Point- my understanding current interpretation of the Constitution is that taxing income is legit, but taxing wealth/estate is not.

How estate taxes work into that - IDNK.

[Tiny]

Originally Posted by oeb11

Amen
Thank You, Tiny!
One Point- my understanding current interpretation of the Constitution is that taxing income is legit, but taxing wealth/estate is not.

How estate taxes work into that - IDNK.

No, thank you oeb. Interesting. I read it's debatable whether Elizabeth Warren's wealth tax would be constitutional but never looked into it until now. Apparently any "direct tax" except an income tax must be levied by state in proportion to each state's population. This doesn't apply to the income tax because of the 16th amendment to the Constitution, which "permits imposition of a federal income tax without regard to apportionment among the states."

So in other words if you have a lot of billionaires per capita in Connecticut and very few in Mississippi, then Mississippi gets royally screwed if you impose any federal direct tax on wealth. So the tax is impractical, if a wealth tax is considered a direct tax.

While there's no clear definition, a direct tax is considered to be a tax that applies to a state of being, while an indirect tax applies to an action. So a tax on property or wealth or income would be a direct tax. A tax on wages is considered an indirect tax, and thus does not have to be apportioned by the populations of the states, because it applies to an action, that is, to a transaction of labor for money.

A tax on estates and gifts is considered an indirect tax. Why? Here's an explanation,

What then of the combined federal estate and gift tax? Isn't that a tax on an estate's assets? The answer, surprisingly, is "No". Congress enacted the first federal estate tax in 1916. Its constitutionality was upheld by the United States Supreme Court in New York Trust Company v. Eisner, 1921, 256 U.S. 345. The opinion of the Court, delivered by Justice Holmes, was that the estate tax was not constitutionally infirm as a direct tax. Later cases made clear that the estate tax was not a tax on the property of the estate, but rather an excise tax on the privilege of transferring property at death. The triggering event, then, is the death of the testator. The current statute [3] imposes a tax on the transfer of a decedent's taxable estate.


https://gspp.berkeley.edu/news/news-...-net-worth-tax

Therefore, an estate or gift tax, which is associated with a transfer of property at death or at the date of the gift, is associated with an action, not a state of being, and is constitutional.

It would appear that a wealth tax would clearly be a direct tax.
It's not associated with a transaction or an action, but rather with a state of being. Therefore, it should be unconstitutional.

Elizabeth Warren thought about this, so she's proposing a tax on income from wealth (which is constitutional because of the 16th amendment) instead of a tax on wealth. This sounds like bull shit semantics with no substance. However, some very smart lawyers think there's a good chance this could fly, perhaps with some modifications. See

http://nymag.com/intelligencer/2019/...ealth-tax.html

Warren's wealth tax would be challenged in the courts and appealed to the Supreme Court. Given the current make up of the court (conservative), you'd guess that it would ultimately be considered unconstitutional. But it's hard to say.

John Roberts opinion, that the Obamacare was constitutional, involved this same point. He did not consider the penalty for failing to buy health insurance to be a direct tax. Maybe he was right, but it seems like it would be a lot harder to argue that a wealth tax is not a direct tax.

[oeb11]

Tiny - Thank you for the research - good read.

I must say i have reservations about anything sourced from berkeley or intelligencer.

Still - a good post and thanks for the info!