From the Economist: The Case for Death Duties

[Claude]

Estate tax is a good thing as such, but it needs to be implemented in a way that it does not harm smaller family-owned enterprises and SMEs (which - at least in Europe - create most of the jobs).

The statement that "tax is legalized theft" is incredibly naive, as tax is just one means of redistributing wealth from the richer to the poorer and compensating social injustice (and financing the governmement of course).

Redistribution from the poorer to the richer is going on all the time. Why is it that the difference between the richest and the poorest populations in the developped countries has become much bigger over the last 20 years? Is it because the rich simply work harder or because they managed to use globalization in order not to have to share profits with those who helped making them? Is this just a clever way of doing business or legalized theft?

Edited November 10, 2007 by Claude

[Morganized]

This is the most ridiculous thing I have ever read on this forum, but I can only say that I hope I live long enough to see the rise of the plutocracy because I can't wait to see how they are going to re-write the Constitution and most of the laws to ensure that no one else can get rich and powerful like them.

Naive

I think in large measure this has already been accomplsihed. Surely you do not suggest that the ruling class are stupid enough to spell it out for you directly! You really will not have to live so very long. A normal lifespan should do it.

[medjuck]

Re: Warren Buffet - I think this is bullshit. I'd like to see his tax returns. He says that he does no special tax planning and just follows the tax code. That can't be true. My accountant must be reading the wrong code when tax time comes.

Buffett must be taking advantage of multiple trusts, deferred bonuses and income and the like to claim such little tax burden. He's showboating.

Probably makes most of his money from capital gains or dividends both of which are taxed at 15% in the US.

[Dan Gould]

This is the most ridiculous thing I have ever read on this forum, but I can only say that I hope I live long enough to see the rise of the plutocracy because I can't wait to see how they are going to re-write the Constitution and most of the laws to ensure that no one else can get rich and powerful like them.

Naive

I think in large measure this has already been accomplsihed. Surely you do not suggest that the ruling class are stupid enough to spell it out for you directly! You really will not have to live so very long. A normal lifespan should do it.

If its already been accomplished in large measure, please spell out how. Please identify the people who are being prevented from becoming rich. Please explain how the super-rich are preventing the merely well-off from becoming affluent.

Then I will point to Google's IPO, the number of extremely wealthy people it created, and say that you are the stupid one.

[7/4]

There. Now I am done

My guess is...you're not.

Then I will point to Google's IPO, the number of extremely wealthy people it created, and say that you are the stupid one.

Is that any fucking way to talk to any fucking body? Fucking Dan. What the fuck.

[marcello]

Re: Warren Buffet - I think this is bullshit. I'd like to see his tax returns. He says that he does no special tax planning and just follows the tax code. That can't be true. My accountant must be reading the wrong code when tax time comes.

Buffett must be taking advantage of multiple trusts, deferred bonuses and income and the like to claim such little tax burden. He's showboating.

Probably makes most of his money from capital gains or dividends both of which are taxed at 15% in the US.

Like I said, he's showboating, letting people believe that he and his secretary are on the same playing field.

He probally has huge tax credits and tax losses that he has from his various investments to offset his tax bill. No big secret there, but you have to have the cash to buy them in the first place.

[Edward]

Loved the other arguments you made regarding avoiding a plutocracy and stuff. I won't argue anything there. In fact, I learned some things.

Wait a minute. Have you ever known a rich person who has refused to get richer because his investment might make someone else rich, too? You agree that in the future, rich people will not use their money to make more money, because they will dilute their power? After all, according to Edward,

Money is power, and I don't know why you would think that, if there were a plutocracy, a relatively few monied families would want to share that power with any newcomer. Where are all these people with big ideas supposed to find the capital for their ventures?

This is the most ridiculous thing I have ever read on this forum, but I can only say that I hope I live long enough to see the rise of the plutocracy because I can't wait to see how they are going to re-write the Constitution and most of the laws to ensure that no one else can get rich and powerful like them.

There. Now I am done, and the rest of the liberals can make as much fun as they want. You think I have a fucked up view of the world, but like I said, we have a philosophic difference, and now I know that it is so immense that I cannot believe that I am communicating with intelligent, educated human beings, Edward's apparent knowledge of tax law notwithstanding.

Wait a minute. Have you ever known a rich person who has refused to get richer because his investment might make someone else rich, too? You agree that in the future, rich people will not use their money to make more money, because they will dilute their power?

What are you talking about? How, exactly, are you attributing these ideas to me?

It is right there directly below the spot in my post that you stopped quoting! I've bolded it above, but here it is again.

Money is power, and I don't know why you would think that, if there were a plutocracy, a relatively few monied families would want to share that power with any newcomer. Where are all these people with big ideas supposed to find the capital for their ventures?

You said it, pal. Plutocrats won't "share power with any newcomer" and therefore "people with big ideas won't find capital for their ventures". Plutocrats will sit on their money because they'd rather preserve their power than expand their fortunes.

Well, that's one interpretation. Another one is that if we are talking about a true plutocracy (and nowhere have I said that that is what we have now) in which a relatively few families control the means of production, distribution, and advertising; these families will be able to exert the type of financial and political pressures that will make it difficult for an entrepreneur to preserve his/her economic independence - in other words, not to sell out. Ideas can be bought and utilized by others for their own gains.

Is your argument that a plutocracy would not emerge your sole justification for repealing the federal estate tax?

Edited November 11, 2007 by Edward

[Brownian Motion]

s.

Is your argument that a plutocracy would not emerge your soul justification for repealing the federal estate tax?

Can't be his "soul justification", because despite his apparent affection for Gene Harris, Dan is quite short of soul.

[Dan Gould]

s.

Is your argument that a plutocracy would not emerge your soul justification for repealing the federal estate tax?

Can't be his "soul justification", because despite his apparent affection for Gene Harris, Dan is quite short of soul.

I'm outta here, and fuck you very much.

[7/4]

I'm outta here, and fuck you very much.

Promise? I'll bet not.

[Big Wheel]

Then I will point to Google's IPO, the number of extremely wealthy people it created, and say that you are the stupid one.

Sorry, this is just a retarded statement. Forget for a minute that the words "anecdote" and "data" are not synonyms and also forget that the IPO made about 10 employees billionaires and only about another 800-1000 Googlers millionaires. Also forget that a Google-esque IPO or acquisition comes around maybe (I'm being charitable here) once every 4-5 years or so, meaning that the average worker in America has maybe 10 chances during his working life to identify and join such a company (assuming it's conveniently located to where he lives). Also forget that most of the people who emerged millionaires from the IPO would undoubtedly have made tidy fortunes pulling down between $100,000 and $200,000 a year as some of the most highly educated and talented software engineers in the world, even if they hadn't gone to work for Google before 2004. We're not exactly talking about rags to riches cases here.

Actually don't forget any of that, because it's ample evidence of just how little Dan knows what he's talking about. But anyway, let me point out what a stupid strawman it is to claim, as Dan is, that his opponents in this debate think that plutocracy means that it's completely impossible for someone in the second to fifth income quintiles to jump into the top 0.1 percent. Nobody claimed that it's impossible, they're just claiming that it makes it much more difficult. I fail to see how pointing to a once-in-five-years occurrence constitutes a counterexample to that.

Edited November 10, 2007 by Big Wheel

[Edward]

s.

Is your argument that a plutocracy would not emerge your soul justification for repealing the federal estate tax?

Can't be his "soul justification", because despite his apparent affection for Gene Harris, Dan is quite short of soul.

Oops! I'm sorry for the inadvertently funny typo - I've been listening to a lot of soul music lately.

Edited November 11, 2007 by Edward

[Edward]

...think that plutocracy means that it's completely impossible for someone in the second to fifth income quintiles to jump into the top 0.1 percent. Nobody claimed that it's impossible, they're just claiming that it makes it much more difficult.

Exactly - thank you for clarifiying the position of myself and others.

Edited November 11, 2007 by Edward

[Edward]

Re: Warren Buffet - I think this is bullshit. I'd like to see his tax returns. He says that he does no special tax planning and just follows the tax code. That can't be true. My accountant must be reading the wrong code when tax time comes.

Buffett must be taking advantage of multiple trusts, deferred bonuses and income and the like to claim such little tax burden. He's showboating.

Probably makes most of his money from capital gains or dividends both of which are taxed at 15% in the US.

Like I said, he's showboating, letting people believe that he and his secretary are on the same playing field.

He probally has huge tax credits and tax losses that he has from his various investments to offset his tax bill. No big secret there, but you have to have the cash to buy them in the first place.

I'm sorry, Marcello, but what kind of investment tax credits would these be? I do not mean to imply that your argument is incorrect, but nothing comes to mind.

As for carryover losses, the only way that these would affect Warren Buffett's effective tax rate is if such losses were offsetting current short-term gains, which are taxed at a rate higher than 15%. If Buffett had a $5 million capital loss carryover from 2005 and $10 million in long-term gains in 2006, then his effective tax rate insofar as capital gains are considered would still be 15%. Indeed, in this instance, utilization of the carryover loss would only serve to increase his overall effective tax rate (i.e., $10 million taxed at 15% would drive down his overall effective rate (which would take into consideration his ordinary income) much more than $5 million taxed at 15%).

Only $3,000 of capital losses may be used to offset ordinary income each year, so such losses would have a negligible effect on Buffett's other income (such as salary and interest) taxed at ordinary rates.

You may well be right, but considering Warren Buffett's investment strategy and his long-term success as an investor, I find it hard to believe that he would have amassed a substantial capital loss carryover in prior years.

[Jazzmoose]

I'm outta here, and fuck you very much.

Promise? I'll bet not.

Seventh times the charm...

[marcello]

Re: Warren Buffet - I think this is bullshit. I'd like to see his tax returns. He says that he does no special tax planning and just follows the tax code. That can't be true. My accountant must be reading the wrong code when tax time comes.

Buffett must be taking advantage of multiple trusts, deferred bonuses and income and the like to claim such little tax burden. He's showboating.

Probably makes most of his money from capital gains or dividends both of which are taxed at 15% in the US.

Like I said, he's showboating, letting people believe that he and his secretary are on the same playing field.

He probally has huge tax credits and tax losses that he has from his various investments to offset his tax bill. No big secret there, but you have to have the cash to buy them in the first place.

I'm sorry, Marcello, but what kind of investment tax credits would these be? I do not mean to imply that your argument is incorrect, but nothing comes to mind.

As for carryover losses, the only way that these would affect Warren Buffett's effective tax rate is if such losses were offsetting current short-term gains, which are taxed at a rate higher than 15%. If Buffett had a $5 million capital loss carryover from 2005 and $10 million in long-term gains in 2006, then his effective tax rate insofar as capital gains are considered would still be 15%. Indeed, in this instance, utilization of the carryover loss would only serve to increase his overall effective tax rate (i.e., $10 million taxed at 15% would drive down his overall effective rate (which would take into consideration his ordinary income) much more than $5 million taxed at 15%).

Only $3,000 of capital losses may be used to offset ordinary income each year, so such losses would have a negligible effect on Buffett's other income (such as salary and interest) taxed at ordinary rates.

You may well be right, but considering Warren Buffett's investment strategy and his long-term success as an investor, I find it hard to believe that he would have amassed a substantial capital loss carryover in prior years.

You can actually buy tax credits and tax losses from other investment trusts and REITS and others. Each deal is different depending on the term of the investment. and they are never bought $1 for $1.

There are also, as a example state and federal programs that bundel tax credits with very low and long term interest rates in exchange for considerations like developing some portion of a real estate development for moderate income people for a certian number of years. For Seniors, for example.

There are many many ways that, if you have the csah to spend and the taxes to protect, to aquire tax credits and tax losses. You can defer them to when you need them of take them all at once.

Boston Capital has long been a leader and innovator in these investments.

[Morganized]

This is the most ridiculous thing I have ever read on this forum, but I can only say that I hope I live long enough to see the rise of the plutocracy because I can't wait to see how they are going to re-write the Constitution and most of the laws to ensure that no one else can get rich and powerful like them.

Naive

I think in large measure this has already been accomplsihed. Surely you do not suggest that the ruling class are stupid enough to spell it out for you directly! You really will not have to live so very long. A normal lifespan should do it.

If its already been accomplished in large measure, please spell out how. Please identify the people who are being prevented from becoming rich. Please explain how the super-rich are preventing the merely well-off from becoming affluent.

Then I will point to Google's IPO, the number of extremely wealthy people it created, and say that you are the stupid one.

...think that plutocracy means that it's completely impossible for someone in the second to fifth income quintiles to jump into the top 0.1 percent. Nobody claimed that it's impossible, they're just claiming that it makes it much more difficult.

Exactly - thank you for clarifiying the position of myself and others.

Yes, and some folks win the lottery.....but surely you do not suggest that the lottery's benefits are necessarily distributed equitably. The obvious difference being that the lottery is voluntary while we are all stuck with the "system".. which, by the way, appears more and more to be intractable...regardless of the Party in power. Just look to the recent income and wealth distributions in this country. That doesn't happen by accident.

[Guy Berger]

And what the hell does estate tax have to do with the ability of people to get rich, or for wealthy people to become super-wealthy? Or are the wealthy just waiting for the opportunity to have no worries about the estate tax, so that they can pull that drawbridge up behind them and "keep" other people from becoming wealthy?

Well, to the degree that large inheritances allow people to inherit money which they didn't earn (in Buffett's words, they won the genetic lottery), it does make a difference. That's how aristocracies are created.

For what it's worth (and I was surprised by this), class mobility in the US is actually worse these days than it is in Europe.

My personal standpoint -- regardless of what you think government expenditures should be relative to GDP, you're going to have to somehow fund them through taxes now or in the future. I think there is a strong moral argument for shifting some of the weight from taxes on income to taxes on inheritance (and for that reason, I completely agree with the Economist article that the tax should be on how much somebody inherits rather than the overall size of the estate). I am not familiar enough with the economics of taxation to offer a judgment on the relative efficiency of these two options.

Guy

[Guy Berger]

Wait a minute. Have you ever known a rich person who has refused to get richer because his investment might make someone else rich, too? You agree that in the future, rich people will not use their money to make more money, because they will dilute their power?

What are you talking about? How, exactly, are you attributing these ideas to me?

For what it's worth, I don't think this is such a crazy idea -- in some societies with a poor underclass and a rich elite, economic growth tends to be stagnant. Resources are not diverted to productive uses. Historically this is a problem attached to agrarian societies (the #1 argument for intelligent land reform), so I don't know whether there is also a precedent in industrialized economies.

Guy

[Guy Berger]

If its already been accomplished in large measure, please spell out how. Please identify the people who are being prevented from becoming rich. Please explain how the super-rich are preventing the merely well-off from becoming affluent.

Then I will point to Google's IPO, the number of extremely wealthy people it created, and say that you are the stupid one.

As far as I can tell nobody is barred by law from becoming rich. But in a society where circumstances of birth matter for economic outcomes, laws and policies do make a difference. Change the quantity and quality of education spending and a working class baby's probability of becoming rich (or even middle class) will go up and down.

We can all come up with anecdotes -- the Google IPO -- to come up with examples of people who did well despite tough upbringings (though I am willing to be that a substantial chunk of the IPO beneficiaries were not "self made men"). That doesn't change the fact that the child of a millionaire is more likely than the child of a call-center employee to become a millionaire.

Guy