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Thursday, April 19, 2012

An urgent plea on behalf of the 1%

The mailman brings us such interesting stuff. Today we got this package from Salem:

It's a petition to repeal Oregon's estate tax, which the tax-hating Republicans like to call the "death tax." The "death tax" -- oooh, it sounds so ominous. Heaven forbid that the Phil Knights and Gert Boyles of the world should pay Oregon any tax on the unrealized appreciation on their stock.

All the usual -- and misleading -- arguments are there: double tax, forcing the sale of family farms, job killing, yada yada. Dave Hunnicutt, the instigator, even got Vic Atiyeh to co-sign his cover letter. It will be interesting to see how many average Joes they can get to take the bait. Probably quite a few.

Comments (36)

Correct me if I am wrong because I am not a tax expert by any means, but I have saved a lot over the years in IRA and 401-k accounts. The total is over $2 million, even though currently I make less than $100,000 a year (saved to the max and invested well ... plus I am 60 now). Wouldn't, if I were to die today, leave my kids those accounts and they would have to pay a very large estate tax ... and in having to come up with the money for the tax ... withdraw money out of these IRA accounts and have to pay income taxes too? Seems like they would get less than 50 cents on the dollar (not that they deserve it). Is my math right or wrong on this???

Sorry Prof Jack -- Not with you on this one. Who do you think will do a better job with the distribution of Gert Boyles' estate, she and her planners or Gov Kitzhaber?

Mind if I fish that petition out of your recycling? I have a few friends that would like to sign it too.

When I'm dead the state has NO BUSINESS taking any more money from me. They scalped me while I was alive and I typically didn't get much for my money. Exactly WHAT is the state going to do for me for this forced donation??? It's a horrible and rather stupid tax that shouldn't exist, plain and simple.

Wouldn't, if I were to die today, leave my kids those accounts and they would have to pay a very large estate tax ... and in having to come up with the money for the tax ... withdraw money out of these IRA accounts and have to pay income taxes too?

On $2 million, there definitely would be no federal estate tax, and probably no Oregon estate tax unless you did nothing to plan for it.

Yes, your kids would pay income tax. Because you never did. When you work and get paid, that's income. If you don't pay tax on it and it's postponed until your kids eat it, that's a great deal.

Who do you think will do a better job with the distribution of Gert Boyles' estate, she and her planners or Gov Kitzhaber?

You could say that of any tax. You could say that of all the income tax I've paid on the money I've made. Gert can't say the same.

Mind if I fish that petition out of your recycling? I have a few friends that would like to sign it too.

Sure, make the rich richer. It's what America needs right now.

I'd rather keep it in the family. I think a there's reason enough in your post about the PWB's use of our tax $. As for the state, heavens to BETC.

One big reason for the estate tax is to level the playing field, to keep the rich from just getting richer. We already have enough trust fund kids who never need to work. As one of the 99% of course I'm for it.

Here's why: I worked two jobs for a good part of my life plus lived frugally, saved and invested. I still have a modest tree farm as an investment. My estate will be perhaps a half million dollars, far below even the $1 threshold for the estate tax next year if Congress does nothing. And Congress will raise the threshold and if you're one of the 99% you should let them know they need to keep the estate tax in place. We do have two wars and much more to pay for.

I don't think the estate tax "levels the playing field" when the tax dollars just go to big corporations and folks like Homer and Dike. Theory and reality are pretty far apart on this one.

The rich get richer either way.

I don't mind having an estate tax apply to billionaires like Phil or multi, multi millionaires like Gert, but Oregon's tax kicks in at $1 million. That's way too low, even compared to other states.

I say everyone with more than I have is rich.
And to take it from them, just because...

OK how many of you out there are worth in excess of $3 million?
Because that is what you have to be worth to be eligible for the federal estate tax, as noted by Jack above.
This so called "death tax" effects only the 1% and they can afford it or they give the money to a variety of needy causes before they die.
Their heirs will benefit from working for a living!

The trouble with setting thresholds for who's "rich" is that they're set by humans with all their varying motivations. They might be set where you "don't mind" them or not. I don't think anybody "minds" when others pay.

If equity is the goal, then the estate tax is a pretty dull tool with a high likelihood of being wielded clumsily and for baser reasons.

"Their heirs will benefit from working for a living!"

I rest my case.

That's way too low, even compared to other states.

Then let's fix it rather than repealing it.

Other states have sales taxes, too.

"Then let's fix it rather than repealing it."

Maybe the fix involves repealing it. Maybe the proliferation (and that's an insufficient word) of loopholes, deductions, credits, etc. and the sheer SIZE of the tax code warrant a total replacement. I know you know better than I what a chaotic mess it is, Jack. What about it?

More band-aids on the dying patient?

Hell yes, we won't pay less! Tax us. Tax us. Tax us.

Bill Gates' well regarded Attorney Father has publicly advocated for decades for estate tax for the wealthy.

Usually the owner has enjoyed the estate as it increased in value tax free. No tax has ever been paid on the gain until a person is done with it triggering tax at that time, (concept similar to an IRA).

The estate tax can be very unfair when it hits people with large savings. That doesn't happen too often, but the tax doesn't care what type of wealth it hits, it just hits anything in the target.

Untaxed assets that get passed on at death could be handled in a different manner without using an estate tax.

My neighbor is facing an estate tax pickle. She is cash poor, but land rich due to the urban growth boundary. When she dies her land will have to be sold to developers in order to pay the tax bill.

Andy, your neighbor could donate her land or a portion of it, to a charity of her choice, and perhaps that would lower her tax obligations.

Would all you tightwads who have figured out how to take it with you please clue in the rest of us?

This is just one puzzle piece that explains why Oregon has slipped to #45 in the country in economic outlook.

http://www.alec.org/docs/RSPS_5th_Edition.pdf

Good link "john."

The problem with the "Death Tax" is you can be asset rich and cash poor but the tax doesn't care. With the value of homes, land, goods and equipment these days you can easily get into the multi million dollar range. Meanwhile, the 'ol bank account is lucky to hold a few thousand dollars.

This is why families have to sell the farm or business they've spent years building. While I'm not fond of anything to do with the death tax I would accept a formula where the tax can't exceed the value of liquid assets available from the deceased.

I am unfortunately not surprised by the comments here. Do most of you realize you are parroting talking points fed to you by billionaires?

Darrin, facts are facts: the current threshold is exceeded by very few people. The current estimates are just under 9000 people TOTAL needed to file estate tax returns in 2011.

The "farms and businesses" claim is completely false. Both can be completely protected by simple estate planning. Estimates are that less than 50 TOTAL businesses and farms will pay estate tax in 2011, and only 10 TEN!! have gross value under 5 million.

ON THE OTHER HAND 98% of the estate tax is paid by the 10% richest estates, and 54% is paid by the top .1%. Yes, .1%. These are the super rich, folks.

Tinker, the estate tax IS a simple tax. It is not like any of the middle and upper class loopholes that riddle our system. And historically, the estate tax has been one of the major ways to ameliorate income inequality in this country.

Native Oregonian, maybe you don't realize it but tax rates are at a historic LOW. You aren't being scalped by the government--it's the Scaife's, Koch's, and Goldman Sachs that have you by the balls, and you don't even know it.

Oregon Millionaires: come die in Vancouver! We have a two million dollar exemption (double Oregon's) and no income tax while you're alive.

Given the many unfunded goals on Salem's to-do list, I encourage more wealthy retirees to move to Vancouver.

Weekly trash service, fine health care providers, and less state intrusion into your daily lives.

Mister Tee, besides your list of Vancouver's attributes, add Salmon Creek Legacy Hospital rated tops of all the region's hospitals. And waterfront condos cost less too.

"Tinker, the estate tax IS a simple tax. It is not like any of the middle and upper class loopholes that riddle our system. And historically, the estate tax has been one of the major ways to ameliorate income inequality in this country."

Well, golly, pg, if the Koch's are involved, you must be right.

The estate tax is just like the "middle and upper class" (nice touch, if a bit predictable) loopholes that riddle (rhymes with middle - I like it) our system. It's got thresholds; it's got workarounds (see Jack's comment about "planning") and it's NOT progressive.

As for its "historic(al) use to "ameliorate income inequality in this country"; from which orifice did you pull that? Hysterically, maybe, but, otherwise, pure BS. Whenever did "ameliorating income inequality" become part of this country's government's goal - other than in your manifesto?

With all due respect to parrots, you're just making things up...

...historically, that is.

Do most of you realize you are parroting talking points fed to you by billionaires?

When linking to - and liking - a report from ALEC, I would guess that many people here do not know they are.

This argument reminds me of the Measure 66/67 proponents bs claims.

These tax measures generated far less revenue than voters were led to believe, and the state had some 8,000 fewer high-income tax-filers in the first year of these measures than the state predicted. More will leave or move income sources as time goes on. Or, as important, the decrease in economic activity across the board will result in fewer estates growing to the million dollar mark leaving us all poorer.

A similar thing happens with the inheritance tax. It is mostly a way for attorneys and accountants to make a few bucks keeping client's money away from the tax.

I got the same petition, but the envelope and letter were from the Oregon 'Family' Council (i.e. the anti-gay Christianist group). Apparently, God hates gays AND taxes.

During the 1920s through the 1940s, estate taxes were used as another way to attempt to redistribute income. Tax rates of up to 77 percent on the largest estates were supposed to prevent wealth becoming increasingly concentrated in the hands of a few.

That one comes from the Heritage Foundation, tinker. Are you going to accuse that bastion of conservative economic theory a liar too?

They are talking about Federal estate taxes. State taxes are a very different thing. Moving to Vancouver is much easier than moving to another country.

In that same report:

"The estate tax has a large dead-weight loss. Because the estate tax falls on assets, it reduces incentives to save and invest and, therefore, hampers growth. Along with income taxes, estate taxes help raise the tax rate on income from assets relative to income from working. This unequal treatment of income leads to an inefficient mix of capital and labor..The estate tax is one of the most inefficient features of the current tax system. Its sheer complexity results in high compliance costs--as much as estate taxes raise by some estimates. High compliance costs along with distortions to economic activity warrant outright elimination of estate taxes"

So what is the purpose of taxation? Is it to punish people and wrest the result of their diligence from their hands or is it to generate income to pay for urgently needed things like schools, roads, planning departments, water bureaus and the like?

Do we charge postage at a different rate for drivers of Mercedes and for Buicks?

BTW, I took a quick look at that ALEC Report. Didn't have the time to read 126 pages, so I just searched for the term "Oregon." The point was made pretty quickly.

Ahh yes, the ol' keep the rich from getting richer. How dare anyone wish to leave their wealth assets to their family (or anyone they choose). We must tax them yet again.

So tell me those paragons of the people, the Kennedy family, how long was at least one of them in government service, namely Congress? I believe it was just about 50 years before the last one quit after the "lion" kicked the bucket. I'm sure they've paid all their taxes properly, like Turbo Timmy too.

I so enjoyed paying my accountants to go through all the paperwork when I inherited from family some years back. Oregon, the Feds and California. Thankfully, I had access to cash to cut them their checks by 4/15. Hell, Cali was still knocking on my door, sending me tax pamphlets 2-3 years later.

I grew up hating sales taxes in California and now I wish to abolish income and property taxes and institute sales taxes only. Then when the bozos in government want to raise money it will hit most people's wallets daily.

How is the Federal Government diminishing income inequality. The minimum wage and tax credits are the only examples that come to mind. Many of those recipients remain dependent on government support to survive: their income doesn't increase.

If the goal is "redistribution of wealth", then our Federal Government is doing a piss-poor job of achieving it.

In reality, future tax increases on the wealthy may not even keep pace with skyrocketing costs of interest on the National Debt. Especially if interest rates double.

We could tax millionaires at 90% of their and it would barely put a dent in reducing the debt (assuming zero decline in revenues), currently approaching $16 Trillion.

The private net worth of all Americans is less than $60 trillion. If the Federal Government were to try and payoff the $16 trillion debt, they would need a one time 26% levy on EVERYTHING YOU OWN. Who is going to be the first Congressman to sponsor that bill?




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