Re: Estate Taxes
Posted: Thu Oct 17, 2019 9:35 am
I see what you're saying with all of this, but I'd add a few points to consider...Kriegsspiel wrote: ↑Wed Oct 16, 2019 6:29 pmI'm back to thinking it's bad.
If you start from the assumption that income shouldn't be taxed, then it makes sense. It seems like it would be easier for everyone if the employer were taxed by the government for its product and that was it. Then they can figure out the value proposition for a worker more easily, and workers can have a clear picture of how much they're going to make. Income taxes are pretty strange when I stop to think about them.
That really depends on what you're calling legitimate functions of the state.The most common means for raising revenue in the modern world is taxing the movement of money from person or entity A to person or entity B. IMO it is also the most fair and reasonable. I dislike taxes as much as the next person, probably more. But anti-tax sentiment has reached the point where the legitimate functions of the state are not being funded except by assumption of massive public debt. This is not sustainable.
Ok, but they also pay most of the federal taxes too. The people in the meritocracy thread were concerned about the top 5% having too much power or whatever:A recent study showed that on average billionaires are now paying a lower effective tax rate than the bottom tax rate for working class Americans. That is immoral. As a monarchist who is keenly aware of the history of revolutions and where they can lead, I would caution those who applaud this modern tax code that is of the wealthy, for the wealthy and by the wealthy.
The top 5% pays almost 60% of the federal income taxes (link), and the top 10% pay about 70%. The top 10% own 84% of the stock in American corporations (link), so it's mostly them paying the corporate income tax too. I'm guessing the top 10% pay pretty much all of the estate taxes too. They pay payroll taxes too, but payroll taxes, theoretically, should go towards social security and medicaid. So they aren't really funding the federal government. So if you take out the payroll taxes, then the top 10% are contributing 70% of the federal government's revenue. That doesn't seem immoral to me.
Looking at it a different way, if taxes on the elites were increased more, and maybe we get them to pay for, say, 90% of the federal government... It seems to me that they'd become even more powerful and elite, and less accountable to others. It seems to me that saying that elites aren't paying their fair share of taxes obscures the fact that they fund most of our government. And if they fund most of our government, it seems to me that they're going to find ways to control it or use it to serve their needs. A government that does less needs less tax revenue, and could have a more balanced tax base.
Come at me bros!
Keep in mind, I'm going to set aside all state/local taxes AND payroll taxes as that's what you've also done... we can bring them back in but we can't just pick and choose when convenient to include them in a taxpayer's tax load...
1) Some of this debate is "income level x vs y and their tax load," but to me this is also very, very much a discussion of capital vs labor (not to go all Marxy on you guys). For instance, while a doctor may retire somewhat wealthy, he starts out earning from income, can't deduct his education expenses against his future income (as "basis," similar to a business owner or investor can). So if I have $300k of wages as a doctor, it's much more heavily taxed than, say, $300k of capital stock value increase, income, appreciation, etc. I'll highlight details on this more in my further points.
2) If we're going to strip out FICA/Medicare taxes, you also have to cut out a massive, massive portion of government spending. What is left-over is vastly taken up by a combination of military and interest on the debt (the latter of which mostly driven from the former, as, once-again, the biggest form of the under-funded general fund spending has been military... the "welfary-side" of the government that we're ignoring has been remarkably over-funded or PAYGO-funded depending on the decade). So the question is WHO should pay for the military.. and to me it is entirely appropriate that the wealth owners of international western capital interests (either through the publicly traded stock market or through direct ownership) should be the ones paying for the military, as its main function in reality is to defend Western capital interests.
2a) This gets into what I see to be a bit of an injustice that takes us back to capital vs labor. I think the tax on capital (an inheritor or even proprietor owning $10 million of net worth producing $500k of annual taxable income owes FAR more to the perma-war surveillance state than a doctor earning $500k per year. This is before adjusting for the fact that wages are a far-less forgiving way to express income than return on capital, to begin with. This is why I'm in favor of some combination of higher taxes on capital-income, a wealth tax, corporate income tax and a rich tax on inheritances, even if we just use the income tax regime to do it.
2b) One thing I find unfortunate and upside-down is that the corporations whose bottom lines are most-benefitted by the military (ones with lots of overseas investment and resource-flow interests) are the ones most-likely to be able to skirt the Corporate income tax through location/accounting-meddling. I don't know this for sure but it's my impression.
3) While you can manipulate your "true wages" through certain deductions from income, it's pretty limited. When you earn income from capital, there's a whole host of benefits (beyond lower rates of taxation) that help you...
3a) Certain income doesn't even show up. Capital gains aren't taxed until recognized. Life insurance and annuity gains aren't recognized until collected upon, if-ever. Retirement account assets (admittedly, not a huge portion of the capital class' wealth position, often) is allowed to grow tax-deferred until retirement. Further, businesses and property owners are allowed to take huge deductions agains their basis while the value of their assets actually go-up, and often this is never captured, as these folks get a massive step-up in basis for their kids when they inherit the rental/business... a basis that they can now take as depreciation. Keep in mind, this exists in the same world and at the same time as 1) these folks are the main beneficiaries of military protections and freebies from military to police, as opposed to doctors and first-year entrepreneurs/earners, and 2) these people, unlike people who throw tens/hundreds of thousands into education, get to deduct their basis (investment) against their income.
So I take a bit of an alternate opinion on this. I think the ongoing tax-load that (through its main expense of military spending and interest on past military spending) largely goes to pay for protection of their capital interests of folks who earn $500k from capital, either through higher taxes on capital income or a straight-up wealth tax, should be far-higher than a doctor earning $500k from a career forged through decades of hard-study and gobs of (currently) non-deductible dollar investment.
I'm less on board with someone in a $70k per year household lecturing a doctor as-to why they should pay 5x what they pay... but I'm totally game for capital interests getting soaked for the cost of our military.