Death (estate) taxes? How are these legal? Are they wrong? If not, why?

Question

I would like some honest opinions on the estate tax. I am not a republican, so I know I'm supposed to be all for them, but I'm far from that. Here is my view, please read and then give me yours.

If my father works his entire life and pays taxes on every penny he makes, those funds have already been taxed. Because he leaves them to me, I am, according to the government, getting "NEW INCOME" that should also be taxed (At a much higher rate than anything I earn from a job mind you). However, I don't see it this way.

The money is not new income to my family. It has been in our family since my father began working. Being a part of the family, directly related to him by birth, it would seem to me that they are double taxing this money (property, assets..etc).

Why does the government deserve to take more of the money that they have already collected taxes on? Some families who run businesses often times lose their business because they cannot pay the taxes on the business's value.

Does it not seem like this is comepletely wrong and against our constitution (No double taxation)? I see this happen in many other ways as well, such as having both a federal and a state tax, that is indeed double taxation as it is all going to an entity of the US government, regardless if it is at state or federal level.

How can this be changed? Would the surpreme court decide for or against these taxes? How would one go about getting the case to the supreme court to begin with?

The us government is greedy, money hungry, and just plain wrong when it comes to our taxes.

Furthermore, don't you think we, as the people who are paying these taxes, should have more say on what they're spent on? I'm sorry, but spending 1.5 million of the tax payers money one one single missle seems to me to be a giant waste of funds. That one missle costs more than I will probably earn in my lifetime.

So much unfairness in politics.

As to only the wealthy being taxed in this matter, I do come from a very wealthy family. I am not bragging, because I don't see a penny of it myself, but at the same time, why should those who have worked hard all their lives and became wealthy by this work, suffer? Why should they have to give up such a massive amount of their own money while others do not?

No, this country is backwards in how it runs things.

As for me not understanding estate taxes, I don't know many people who do. I do know that when my grandmother died, she left my mother her antique shop. My mother (Who is not married to my father any longer, and not wealthy) had to sell the shop because the government wanted a % of what the shop was worth before they would give it to her, and she couldn't pay that, so she lost it.

On the flip side, how is this good for the economy if estate taxes can contribute to small businesses going out of business?

Why pass a law that only benefits a few? The same could be asked, only opposite. Why pass a law that only punishes a few? So by your statement, I would have to assume that you are not wealthy, and you do not want to see your taxes increased, so it is fine for you that the rich must lose part of their family estate when it comes time to pass it down.

Doesn't seem very fair to me?

Answer 1

Estate taxes are wrong and are an infringement on our freedom. Democrats love to fan the flames of class warfare and this is one of their favorite taxes. Everyone should be concerned about loss of freedom. For government to steal my choice of what I want to do with MY money and effectively confiscate a large portion of my assets because they feel entitled to, is absolutely ludicrous. Shame on those envious losers who support this confiscatory tax on success, and politicians who use it as an issue to get elected. Shame on them all.

Answer 2

The "estate" pays the tax, not the beneficiary. The Republicans want to eliminate the death tax, and the Dems are blocking them every step of the way. Basically, when you die with a sizable - and I mean well over a million dollar's worth- estate, which includes cash, real estate, personal & business property, you create a separate taxable entity. The estate pays the tax BEFORE the assets are distributed to the heirs, therefore, the heirs only pay tax on the EARNINGS of their inheritance, such as interest and dividends.

Answer 3

I'm no lawyer and I'm definitely no republican but I do know that death taxes probably won't affect your inheritance in the least bit. The big deal with these laws is how they affect the top 3% of the wealthiest of weathy Americans. I don't know what the tax % actually is but there is enough left over for generations of those folks to still be able to not have to work for a living. If they reduce the current tax or abolish it completely--where will they get the monies to replace that income? Why pass a law that only benefits the few? Do some research--theres plenty of info on the net.

Answer 4

The Federal tax is on $760.000 in 2006. after 2010 or so it will be the same as in 2001. Our family hasn't enough money to worry about it. If there might be a problem, your Bank offers estate planning and has for several years since becoming full service banks. Its the state taxes you need to worry about the most and need estate planning. What you pay in state estate taxes is deductable from your federal tax.

Answer 5

Well I'll put it to you this way.

Consider the fact that a person's rights in property are unique only to him. Lawyers talk about property rights as a "bundle of sticks." Each stick is a particular right that I have. For instance, if I own a house I have the right to live in it, quietly enjoy it, and park my car on the property. However, my rights may not be as complete as they seem. I may not have the right to paint my house certain colors or make additions ot the property if a homeowners association, cc&r or other regulation prohibits it.

There is nothing that says your father's property should pass on after his death at all. When he dies his rights to the property COULD die with him. Hence the property would escheat back to the state under those circumstances.

Americans have made ap olicy decision that we want people to be able to pass on their property. That does not make it the "best" "only" or "natural" way to do things.. thats just the way we choose to do things. So to, if we choose to vote for officials who elect to "tax" the right to have the property transferred upon death.. that is also our choice.

Remember, by definition, any constitutional law is "legal." The consitution protects property rights, but only the rights of the living. Once you're dead you are no longer a "person" protected by susbtantive due process. Hence you have no per se right to dispose of your property after death.

Answer 6

I agree with your logic. To open up a broader topic, the goverments ability to impliment and contral estate taxes comes from the lack of citizens who communicate with their representatives.

The representatives then follow the same pattern that was done before them. This is obviously a very simple answer to a much more complex problem.

Answer 7

I don't think you understand the (U.S., I think you mean, but read on) estate tax system. Although the US system has much in common with the UK system, the rates and definition of "domicile" are different; also it is alternatively applied on the basis of citizenship. (The Canadian system is quite diffferent: it taxes capital gain on a "deemed sale" at death.)

The most critical points are that:

(1) (in both countries now, but to an increasing extent in the USA and a DEcreasing extent in the UK) only a tiny fraction of estates are ever subject to tax. Because there is a $2 million exemption (there is a different exemption on gifts and on generation-skipping transfers) -- and additional provisions for relief in cases of family farms and familiy businesses -- and pitifully few people leave estates of that amount. And,

(2) there is a step-up in basis of all assets held at death, so there is no double taxation of these. Or any tax at all (capital gains or estate) if the total estate is below $2 million (a figure set to rise until 2010 but perversely in 2011 the old tax law comes back into force with a lower exemption again).

It is true that in those few estates subject to tax, the rate can be as high as 50% in the USA. And in the UK all assets over £285,000 are subject to 40% tax (and the average house or flat in London is worth more than that).

But in both countries (with minor exceptions when aliens or (in UK) persons domiciled abroad are concerned) a spouse takes with no tax at all. And the spousal exemption can be used to double the estate tax exemption on assets passed to others, such as children.

And in the USA Puerto Rican citizens (US citizens born or naturalized in PR) are not subject to federal estate tax on PR assets. (They pay a different, and lower, PR tax.)

Many states have estate taxes too, usually around 5%. Some states have "inheritance tax" instead, similar to what exists in many European countries: the tax rate is lower for closely-related persons and higher for distant relatives and unrelated persons.

Everywhere, gifts to charities are exempt. It is this exemption that has given rise to all those foundations and endowments of arts, universities and health in the USA.

Those who call it a "death tax" and who fight for its abolition -- Grover Norquist in their lead -- pretend that the tax affects the average American and that it is a "double tax" on thrift. They lie. The only case in which it is a double tax is where someone liquidates -- sells -- highly appreciated assets just prior to death. Most wealth is capital gain: only the titans of industry who earn multi-million dollar salaries and benefits accumulate much taxed income as savings.

The tax system is designed to do 2 things: raise money (thus avoiding inflation and keeping the value of the dollar high, unlike the Zimbabwean currency, for example) and responding to political expedience.

The estate tax served to prevent the creation of dynastic wealth, a landed gentry of the sort that existed in Britain for centuries and which still exists there to some substantial extent because gifts more than 7 years before death are not taxed at all; and income tax doesn't apply to unremitted foreign assets of persons not domiciled there even if they are citizens. (And the English law of domicile is quite different from the American.)

In the USA too, tax planning reduces the tax for the wealthy.
There are such things as "intentionally defective grantor trusts" taxed as income to the donor but not included in his or her estate. There are "charitable remainder trusts" that take advantage of charitable deductions. And many, many other tricks of the trade.

You have a vote next month. Use it. But remember this: most Americans vote against their own interests. They vote on the basis of hot-button issues (abortion, gun control, school prayer, immigration, Willie Horton . . .) which don't concern them directly and about which they have been cynically deceived.

I have no interest in convincing you of anything. I live in Europe. But I have tried to provide an answer for what you've asked.

Answer 8

I think its because you are viewed as a seperate legal person. Your father's assets is therefore viewed seprately to yours, which is why they still tax you. However though, I do think that the monies received from your father is a gift and should'nt be taxed. I dunno, aint a tax lawyer.