Discussion on the estate tax...could these guys be more full of $*it?

[stevebreeze]

They are discussing the book "Death by a thousand cuts" on the efforts to cut the estate tax. They just had the most tortured argument by a so called economist (on the right) that people don't pay the estate tax because they know if they save more then $2 million a portion of their savings beyond that will go to the government! I'll bet that if you asked people less then 5% or so of the population knows that the first $2 million of a married couples savings escapes the estate tax under law prior to 2001.

This just show what crock of shit balancing opinions by having some from the right and some from the left represented. YOu can lie your ass off, spin like a top, and still get TV time as long as you tell what the corporate elite want heard.

[Cary]

1. What people do is . . .

gift the money, which they aren't going to spend anyway. Or they spend it--and what's wrong with that? Or they set up an irrevocable life insurance trust.

The real effects of doing away with the estate tax are to reduce charitable giving and increase other taxes to make up for the lost revenues.

Republicans always lie when it comes to taxes and all of their schemes invariably amount to shifting the tax burden from the rich, who can pay the taxes, to the middle class. And the gap between the uber rich and the middle class just continues to grow.

[greekspeak]

2. Well, you can write whatever network this is and have them ignore it

But it will make you feel better. Keep in mind that the spin will only continue as long as it is beneficial to the media. It is becoming less beneficial by the day. This is your silver lining.

[stevebreeze]

5. l should have said it's on C-Span 2

[greekspeak]

8. Turn it off then.

Tell them why you are doing it, then turn it off.

[Mass]

3. So we should get rid of this tax because rich people cheat

That's a nice and compelling argument. REmember Bush saying that we should reduce taxes on the rich because they cheat anyway during the campaign.

May be they can take a moment and tell us how many people are concerned by that. Somebody said the number last year and it is something like 1 or 2 % of the population. Are there no problem more urgent to solve than to give them a tax break.

[Sal Minella]

9. G.aWol.B. said, "Raising taxes on the rich doesn't do any good

because they can just hire accountants and lawyers and find ways to get out of paying them." That was during the campaign, I think.

To some of us, this might signal that the tax laws are screwed up and need to be revised and made fair and then enforced fairly. But I'm just a naive old Democrat, what do I know.

[WCGreen]

4. The only fair way to deal with the problem of

untaxed accumulated wealth is too scrub the Estate tax but at the same time get rid of the bumped up basis for those whose estates are valued at $ 2 million of more....

That way, the family business wouldn't have to be sold to pay the tax...

Taxes wouldn't come due until property is sold, as it should be....

Here's what I mean. Say you go to sell some stock. You sell the stock for a tidy profit. And as you are walking across the street to get back to your car, you get hit by a bus and are killed.....

Now that money that you earned will have to be accounted for in your final tax return. You would owe taxes on that "gain"

Now if you are killed on the way to your broker and your SO goes the next day, that person will have all that gain erased. In other words, when it passes to the heir, the cost of that stock for tax purposes is what the stock was worth on the day of death and not the day of purchase....

So the grieving SO walks out of the brokerage house with no tax bill...

That is the provision called a bumped up basis. If that were erased, then I would say scrap the Estate Tax.....

[stevebreeze]

6. So Bill gates should only pay estate tax on the amount of value of

Microsoft stock on the day it went public and not on it's current value?

Of course ordinary peoples savings in 401(k)s are taxed as regular income and not at the preferred rate (the first million $ is exempt)

[WCGreen]

7. No, on his initial investment......

Not the day it went public...

Privately held stock carried the basis over when it becomes publically traded.....

There is so much wealth being transfered from one generation to the next without any taxes that we are almost, not quite yet, a capital aristocracy....

We can't have that and a representative democracy which is based on the rich and pwerful control the agenda and how the message gets to the people.....

It just doesn't work....

[1932]

10. It is so easy to avoid estate tax by forming a trust.

The trust must vest without violating the rule against perpetuities and I believe is then taxed as income to the people in whom it vests. So, basically, you can avoid paying 50% estate tax rates by giving money to a lot of people who have lower income -- which, incidentally, is good public policy. We should encourage people with a lot of money to spread it down to a lot of little people. It would be bad policy to create a society in which it's very easy to get very rich without working. We need to reward hard work with wealth, and the tax code is a great way to do that.

In any event, thanks to trusts, there's no disincentive to amassing fortunes worth millions (duh!). But if you have millions, there's a huge incentive to pay a lawyer $750 to write up trust documentation for you.

[Cary]

11. The rule against perpetuities has been modified in most jurisdictions.

Anyway a trust has no tax benefits, per se. If someone else buys life insurance and owns the policy, The benefits are not part of your taxable estate and life insurance benefits are generally not regarded as income.

So if you set up an irrevocable trust that buys an insurance policy on your life, the benefits are not taxable.

Another strategy called an A - B trust uses conditional gifts to ensure that both spouses can take their exclusion. But the trust itself does not shield anyone from paying taxes.

Certain charitable trusts help avoid estate taxes and may have income tax advantages, but still the trust itself is not what avoids the taxes.

[1932]

12. If you have an estate worth 10,000,000 and you want to avoid estate tax

you can form an intervivos trust using 8,000,000 as the body of the trust. Tell me if this is how you do this: you designate yourself and your children and anyone else beneficiaries of the trust. You live off the interest. You die. The trust simply has to vest at some point, passing legal title to the boby of the trust, and, notwithstanding modifications in the rule against perpetuities, it can happen any time up to about 21 years after the death of the last life in being at the time the trust was formed, no? When it passes, it's taxable income to the beneficiary? And they also have to pay tax on the interest they receive from the trust before it vests?

So, what you can do by forming a trust is you can reduce your taxable estate by 8,000,000 and then have it taxed at the presumably much lower tax rates for the people who received the principle and income from the trust?

No?

[Cary]

13. No.

I'm tempted to just say that, but I'll be nice. Either you make a completed gift when you fund the trust, in which case you owe gift tax, or you make a completed gift when you die in which case your beneficiaries owe estate taxes.

It gets a lot more complicated than this and our lovely Republicans have really screwed it up by "un-unifying" the estate and gift taxes, but I'm not going to write a book here. The bottom line is that you are wrong and the rule against perpetuities is irrelevant.

Sorry, but it's true.