Last I checked the California tax kicks in at 3.5 million if you're single, and double if you're a couple, so it's nothing for me to worry about. I don't personally have a problem with lowering the federal threshold a bit, but even if let's say they lower it to California's level, I don't think it's going to help as much as people think, in terms of revenue. It would be more about regular folk enjoying punishing the kids of the wealthy, rather than about getting large amounts of money that would significantly help reduce budget deficits. I wasn't addressing the current system, but those who want to change it. My comment was about the idea that all of us who are below the current threshold should pay some percentage of capital gain tax and/or Social Security, similar to what we pay on earned income.
Inheritance taxes can be a good way to help reduce income inequality. It is better that a yearly wealth tax. People do complain that this means having to sell a business or say your farm land to pay for the tax. But that is what it is meant to do, to lower the amount of wealth that can be transferred from parents to their offspring. I think 3.5 million is also too high. Maybe make it 10 times average wealth (around 68K, so 10 times that would be 680K). https://www.thebalance.com/american-net-worth-by-state-metropolitan-4135839
Note, @argentine soccer fan, this is not aimed at you, but I am using your comments as a launching point for a more general statement. Your comments reflect the majority and common, but misguided, thinking. That is simply not the case. All people face capital gains when selling an asset that has capital gains, not the "majority of people." Well over 80% of capital gains are in the hands of less than 10% of the people. Also, what difference does it make why the assets are sold? The gain is being taxed, not the underlying asset. https://www.cbpp.org/research/feder...-households-escapes-annual-taxation-or-enjoys I am sorry, but that is the most ridiculous excuse for not taxing estates I have ever heard. 1) There is NO tax on Inheritance. This does not exist. The tax is on the assets of the estate. There is a difference. One is taxing what is there, before it is distributed. This, perhaps, lowers what you get. One is taxing what you get. This does not happen. Perhaps it should. 2) The exemption on estates is now ridiculously high. It affects less than .03% of estates (and yes, that is 3 out 10,000). In reality it actually affects far fewer estates than that. The "relatively modest" estate (inheritance) of "most of us" has NOT been taxed in over 20 years. In the 1990's the exemption was around $600,000.00. The exemption from the Estate Tax is $11,580,000! Here is what has happened in the last decade: The basic exclusion amount (or applicable exclusion amount in years prior to 2011) for gifts is $1,000,000 (2010), $5,000,000 (2011), $5,120,000 (2012), $5,250,000 (2013), $5,340,000 (2014), $5,430,000 (2015), $5,450,000 (2016), $5,490,000 (2017), $11,180,000 (2018), $11,400,000 (2019), and $11,580,000 (2020). https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax Your comments do mesh with reality. They are talking points of Grover Norquist, Frank Luntz (when he coined the phrase "death tax"), anti-tax radicals and the entire Republican Party. The fact that they have been accepted and adopted by the majority of Americans, even rational and generally right-thinking people such as yourself, really makes me see red. The anti-tax radicals and the demonization of estate taxes and capital gains has been an incredibly insidious and successful bit of subversion. It terms of acceptable subversion, it ranks right up there with "Union Bad" and "Gun good (always good)."
The state estate tax and the federal estate tax are different, of course. 1. Capital gains tax should be the same as income tax. The more you "make," the more you pay. If you are below a threshold, you pay less. 2. I said paying Social Security on capital gains when used as income. Although your idea, apply Social Security to all capital gains, is an interesting idea.
That seems low. It's from the last census, so it's obviously gone up significantly since then. But that aside, the problem with calculating an inheritance tax based on average wealth is that it varies significantly based on where you live, so what seems fair in one place may not be so somewhere else. In California as a whole the average household wealth is much higher than in Mississippi, while in the San Francisco Bay Area it's of course much higher than in California as a whole. Meanwhile, the average home in Mississippi is also much cheaper than the average home in California, let alone the San Francisco Bay Area. And I point this out because the one valuable asset most people inherit from their parents is usually their home, paid up fully or partially. So, let's say you have a struggling single mother working in Mississippi, living with her kids in her mother's home because it's difficult for her to have enough money left to pay rent. Let's say the mother dies and she inherits the home. Let's say the home is close to being fully paid. Under your plan, she'd most likely manage to be able to continue living there. Meanwhile, let's look at a struggling single mother in the exact same condition, but living in California - let alone in the Bay Area. Under your plan, she would probably be forced to sell her mother's home to pay the inheritance taxes, and it will most likely significantly disrupt her life and that of her kids, and she might have to move and lose her job, and even end up on the streets. So, if you are going to use that formula, I'd at least go higher than ten times the national average, to allow for large regional differences. And, I'm sure there are a lot more struggling working people in America who may inherit their parents home and little if anything else, than rich bums who may inherit millions.
I am talking federal rate here, so where you live should not matter, so yes 10 times what ever the average wealth is for the past year is just an idea on how we can make the limit go up on a yearly basis as wealth goes up (or down in cases when US wealth decreases). Also household should not matter as you are taxing the estate of a person that died. Usually if married the estate is taxed when the last partner dies, unless there is a contract or will (but I could be wrong here) None of that should matter when calculating federal state/inheritance taxes (we have state taxes as Xtomx indicated), . Yes, she would sell her house in a high price area that she can not afford anyways, she can use that money to move to an area that she can afford to live, so this would help with the problem that we have of accumulation of wealth in a few cities. So if her moms house was worth a million dollars (and that was the only asset she left behind), then her mother estate would pay tax on 1,000,000 - 680,000 = 320,000 X 40% = 128,000. So the daughter would keep 872,000 to start her life over, that is not bad. Now the problem would be double taxation, if CA gets 40% and the fed gets 40%, then we have a problem, so I can see a deduction from federal tax the amount a estate had to pay in state taxes. Obviously none of this has any change of becoming law, it would be political suicide for any party to have this as a platform for election. People want others to pay, if you tell them they have to pay, they/we are less likely to vote for you.
So are the tax benefits. Pensions are good for employees that stay in the same job for long periods, not so great for employees that move from job to job (it can be ok if you stay long enough in each place to qualify). They are also not so great if the business goes bankrupt. 401K are limited expenses for a business, Pensions are open long term liabilities that are offered to employees in exchange of lower wages.
In the real world, for working people, that simply is the case. Of course it's a no-brainer that everybody who sells an asset will face capital gains, (as long as the asset appreciated of course). That goes without saying. My point is that most of us - let's say the majority of people who live in the US - have few assets. The biggest assets most of us might manage to acquire during our lifetime is the home in which we live, which is most likely partially paid, and then possibly some savings, maybe invested in mutual funds, that we want to save for a rainy day. Most of us are unlikely to want to sell our family home unless something significant happens. Maybe we are making more money and want a bigger house, maybe we decide to move somewhere else because of a better job opportunity, but for working people often the decision to sell is made because of a hardship. Like, the loss of a job, the death of a spouse, a divorce, and for small business owners the loss of income and maybe the threat of bankruptcy. Of course it makes a difference. Let's illustrate with a working family story. Let's say you are a working man, your spouse also works, and in 1999, after years of meticulously saving for a nice down payment, you managed to qualify to purchase a single three bedrooms two bathroom home here in the Bay Area, lets say in a modest suburban neighborhood like Sunnyvale, for around $400,000.00. Over the years the house appreciated, but you struggled. You got laid off, and managed to survive for a while by borrowing on your equity. Maybe at some point you borrowed to help your son start a small business, but the recession came and the money was lost. Then your spouse got sick, and couldn't work anymore, and you spend lots of time caring for her, and while she was getting some money from the government your income still went down significantly, just when the cost of living went up. The type of problem working people go through. Now it's 2019, and your spouse finally passed away. Your home appreciated, and is now valued at $1,200,000.00. However, between mortgage, second mortgage, credit cards, personal loans, whatever, you now owe over $900,000.00. So, your capital gains on the house you just sold is now $800,000. Of course it matters why you had to sell. It matters that your dead wife no longer gets money from the government and you can't afford to live in the house and pay your debts and expenses anymore. It matters that even though now you have a decent job, you had to sell in order to keep going and in the hope of being able to pay all or most of your debt and move on as a widower, maybe retire soon. In your situation it matters why you sell, and the last thing on your mind is that it's fair to pay this tax because there are a few rich bums who have lots of money and we don't like them. What matters is that you need your equity to pay your debts and try to get back on your feet. And that goes for most working people who are forced to sell their assets when they have a hardship. The last thing they need is yet another tax.
I'm pretty sure the amount of tax on this is almost totally wrong because you receive the stepped-up basis on the death of your wife.
You are right. I think as things stand now if the home is jointly owned by a couple, half the value would be stepped-up if one of them dies. So, I believe that as long as our progressive friends don't change that particular aspect of the law when they reform and raise the capital gains tax laws, the man in my example would actually be paying capital gains taxes on "only" $400,000.00, assuming he manages to sell the house right after her death and before it continues appreciating. Now, a divorce would be a different story.
Aren't most pension plans not collectable until you retire, so if you get laid off, then you can't even dig into the pension plan, so wouldn't you be more SOL?
It would depend on the pension's vesting schedule. IIRC I was vested after 3 years. 401(k)s have vesting schedules on the employer contributions too. You're only guaranteed the amount you defer if you leave or are canned in a relatively short time.
That is a good deal, pretty expensive for the company, but good deal for those that can get it. Probably a company with little competition?
No, a large co. with lots of competition. They made the vesting schedule shorter not long after I was hired so I benefitted. Something like only 15% of Fortune 500 companies offer pensions nowadays to new hires. They were taken for granted by my parents' generation.
Talking about a study based on Rhode Island capping of interest rates. Basically some poor people saw the lower rate as an opportunity to borrow more money. https://www.economist.com/graphic-d...-payday-loans-leads-to-more-debt-and-defaults
Pantsuit edition: Presenting our December cover star: Rep. Alexandria Ocasio-Cortez! Two elections in, the congresswoman is still fighting the fight—and she’s as sure as she’s ever been. Read the @AOC cover story now. Photograph by Tyler Mitchell. https://t.co/xAbI0YAekC pic.twitter.com/lEeKmw5mGh— VANITY FAIR (@VanityFair) October 28, 2020
Lol you must be kidding. Yes, it takes a genius to accuse everyone who disagree with your policies of being racist.
Data backs up AOC & Bernie's "socialism" and not years of Republican economic horseshit Large tax cuts for the rich don't lead to economic growth and employment, and instead cause higher income inequality, a new study that examined tax cuts over 50 years has suggested. Tax cuts for the rich in 18 wealthy countries predominantly benefited the wealthy, according to a paper by David Hope of the London School of Economics and Julian Limberg of King's College London. https://www.businessinsider.com/tax-cuts-rich-trickle-down-income-inequality-study-2020-12