Forum Post: Eliminate the preferred rates at which long-term capital gains and inheritances are taxed
Posted 12 years ago on Oct. 18, 2011, 5:41 p.m. EST by jeyowell1
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Capital gains already enjoy unlimited exemption from tax until they are realized. Make all income including capital gains, gifts, inheritance and trust funds subject to the same marginal rates as ordinary income. Estates should have all the unrealized capital gains taxed before distribution to heirs, and then heirs should pay marginal rates from the first dollar. These preferred rates rate do not create jobs; they only accelerate the acquisition of financial instruments and consolidation of wealth. Lower marginal rates and shorter depreciation schedules can create jobs much more effectively. It’s not a matter of “soaking the rich”, but just bringing the tax rate of all income streams into parity with marginal rates. I would however recommend a much higher tax on the portion of individual inheritances above a certain threshold. There is no economic or social justification for 9 and 10 figure inheritances. We are neither a feudal society nor a caste system. Heavily taxing these kinds of inheritances is an essential component of creating a sustainable economic system. A society that fosters dynastic wealth is on the road to perdition, because the historical destinations are brutal repression, economic catastrophe, or revolution, and more often than not, the heirs of great fortunes are not prudent stewards. These are the facts of history. If death and taxes are both inevitable, it makes sense that they also be concurrent, because the more we pay as a society after death, the less we will have to pay while living. Lower marginal rates provide a superior economic stimulus to preferential treatment of inherited wealth or long-term capital gains. We could ignore history and just let things run their course, but I have to stress that these severe wealth imbalances never end well, unless you are a fan of repression, revolutions or economic calamity. The last time a similar imbalance occurred in our country was 1929. How did that work out for us?
You do understand that taxing capital gains before they are realized is equivalent to taxing you for selling your house every year you own it?
Capital gains are already subjected to income taxes after the capital gains tax - they are doubly taxed.
Please understand what you're talking about before you suggest changes.
I never suggested taxing capital gains before they are realized, and I don't know where you get the idea that capital gains are taxed twice. You need to take your own advice.
You suggested making them subject to the same tax rate as income - my point is that they already are.
You have no idea what you are talking about nor do you seem capable of understanding what you read.
It seems I do: "Make all income including capital gains, gifts, inheritance and trust funds subject to the same marginal rates as ordinary income."
Perhaps you could clarify if I am incorrect?
Long term capital gains are taxed at 15%. Short term gains are taxed at marginal rates. Long term gains should be taxed at marginal rates when they are realized. This would also close the loop hole for Hedge fund managers who pay the 15% rate on short term gains using the carried interest loophole.
Ahhh very well. I also don't believe that we should be incentivizing any form of investment over another.
There is no special patena on certain kinds of money. Actually capital gains is not really earned money like labor. But, for it to be taxed at a lower rate is stupid economically, but downright criminal.
The nutty thing is conservatives want the rate to be zero! That would mean only the unwashed pay taxes. I wish more would see through this by now. Why anyone would vote Republican is beyond me.
Thats why I say one rate for all income.
The top one percent should be taxed at 50 percent, period!
Different rates for different income is the problem, not the solution.
IMO profit on capital should be taxed at a rate higher that labor, not excessively higher but higher. As for inheritance you should be able to pass on say 2 milllion to each of your heirs (these must be people that were your dependents) tax free. but any additional should be taxed very high say maybe 75%. This is required for us to attent/maintain the "all men/women are created equal' objective. Without a high inheritance tax you end up with a situation where people are speaking from the grave "ie money = free speech". They are in effect exerting control on others that outlasts their own lifetimes.
Do you honeslty think that will work?
Theres about 1000 ways to get around this.
1 simple way is to create trusts or limited partnerships and distribute assets piece by piece. One partnership can buy the other partners shares and one can pay fee's to the other.
Also you can gift 13k a year to any individual you like tax free. Also you have a one time 5 Million dollar exemption to gift assets.
You do realize that people sit around in offices thinking of this stuff all day right?
The point is to simplify code and eliminate the exemptions. A rose by any other name is still a rose. The same thing should apply to income: Income should be income without anything to differentiate it. Marginal rates for all of it, but the marginal rates need to be lower.
I agree. If your goal is to stop wealth accumulation y not abandon the income tax and instead institute a wealth tax?
To the contrary. I am all for wealth accumulation by individual effort, and simply for parity of how income is taxed. I am not Harry Reid.
You are a majority Christian country. Where in your bible does it say that land can be owned and passed on to a direct descendent? Your Jesus made an anti-capitalist statement when he kicked the money changers out of the temple. Oh yeah - Camels and eyes of needles come in somewhere too!
Simply asking for all income streams to receive equal treatment under the law is not a radical agenda. Equalizing them would enable marginal rate to come down. What part of that is incomprehensible?
A stock owner or equity holder of a company is already taxed on company earnings, irrespective of capital gains. Almost all economists will agree that the capital gains tax amounts to double taxation. This is like if you worked and got taxed on your income, and you gave money to your husband for him to do grocery shopping and cook for the family, and Uncle Sam came and taxed your husband too. Is that fair?
Dividend distributions should be expensed because that is double taxation, but capital gains are not double taxation. Lower marginal rates are better for overall economic activity.
You're right. I'm mistaken. Apologies.
come on - family farmers are not the people lobbying to get rid of the estate tax - that problem could be solved very easily by exempting small farms whose heirs continue to farm! carpetbagger - what kind of nonsense is that! misguided, you are! - this tax is on estates over 1 million and has been higher in the past - does not affect the middle class much.
Estate taxes are one of the worst, most nefarious taxes in existence.
Even a socialized country like Canada does not have estate tax.
It is a primary reason for the failure of the American small farmer (as I saw yeppers point out).
Agreed fully.
Ignorance is bliss.
Ya ... prove it to me, sir.
Estate taxation is double taxation.
So if people who inherit wealth should be exempt from taxes, why should anybody have to pay? Its not double taxation unless you are a clone.
My family earned the money with the sole purpose of creating a nest egg for future generations.
Estate tax is criminal and enforces the mentality of moving money offshore to avoid it. Money not in the system is money not helping.
That is a lame goal for achievement, especially if the the price in aggregate is social and economic collapse. Is that the the legacy your family really wants to leave to future its generations? If your family members can't do better with lower marginal rates, then you make my case.
I have no idea what your contention here is.
Passing wealth from generation to generation should be the right of wealth. It should not be taxed as "income" because it is not income.
There is no support or evidence that passing of wealth causes social and economic collapse. That's just a blanket statement with no validity.
I don't know what you're inferring with lower marginal tax rates.
You make no sense.
Okay, let me break it down for you:
I do not believe that wealth redistribution should be the goal of taxation.
I do not believe inheritance is income.
There is no support to the notion that creating a "nest egg" causes social and economic collapse.
I do not know what you were trying to infer with the statement on lower marginal tax rates.
If you don't believe that wealth redistribution should be the goal of taxation, then how can you take issue with my position, especially with regard to lower marginal rates. The current system is totally about wealth redistribution, only to the top. If you don't believe that inheritance is income, then you live in fantasy land. Tell me how billion dollar "nest eggs" don't create social or economic collapse, but first acquire at least a passing familiarity with history.
I believe the burden of proof falls to those who make the claim. You claimed that inheritance is income. I disagree with your claim, so therefore the burden of proof should be in your court.
It's not that I disagree wholeheartedly to your notion of marginal tax rates - but I think it's shortsighted to think that simply taxing a different rates is a solution to the catastrophic nightmare we are currently facing. Our politicians have sold out the American populous, wealthy and poor, to the auction process that dominates our political election process (and our political system). Giving these predatory creatures more money to funnel away from the American society to their corporate masters is no solution, my friend.
At the end of the day, this is why taxation should never be about wealth redistribution. It's not the job of the American government to redistribute wealth, nor is there constitutional authority to do so, nor does it do so in an efficient manner. You're asking for corruption, especially when there is no accountability.
In fact, two of the most famous founding fathers were ardently opposed to the very notion - stating that they believed any such system would be like paying fealty to a king or a despot.
At the end of the day, in our broken political system, rather than reaching those in need, the money will be reallocated to causes that support the politicians pockets and agenda. Not the needs of the American populous - if that's even fiscally possible (ignoring the ideological opposition I have to the notion)
Further, the programs which this country has devised do not help those in need. They are there to keep those in need in their place. They do not promote advancement or provide a disincentive to remain in need. This is usually the result of the "fair" approach - which reduces the actual "fair".
Most people in society aren't vultures/leeches mooching our last dollar and most aren't ego-maniacal wealthy elites with no care for the welfare of those in need. These are the extremes. Most of society lands somewhere in-between.
You want to espouse fair and equal, but when you forcefully take from one to distribute, however inefficiently to another group, you are essentially destroying egalitarian society -- not reinforcing it. Especially when you take someone's inheritance - the very notion of it is revolting.
I oppose, so vehemently, the notion of inheritance tax. It's taxation on taxation and causes the people it pretends to help to lose land and assets. Not all wealth is monetary - and those that inherit assets are at a big disadvantage. Further you chase the money out of society with this type of nonsensical tax.
Even Canada doesn't have this tax.
If you wanted to argue that everything below some arbitrary, yet high figure, is non-taxable and everything above is marginally taxed -- I might not be so aggressively opposed. But people that seem to support the death tax point out these obscene and extreme cases to prove their point and ignore the people in the middle.
Income: "Something that come in as an addition or increase, especially by chance". Unless one is a clone, inheritance is income.
I agree with much of what you said above, but taxing all income streams at parity is the only way to avoid wealth redistribution by government fiat or worse which will happen when this economy really tanks. Telling one man that he gets taxed from the first dollar he makes and another that whatever daddy gave him is exempt from tax does is hardly fair. The system now is designed for catastrophe. Why is there no recovery to this recession? Because the oxygen has been sucked out of the room, by a relatively small group of people. It is a familiar historical pattern, and it never ends well.
Wealth imbalances divert money from the real economy and redeploy it in the “financial” economy, which at this stage in the cycle more resembles a rigged casino than an efficient conduit of capital. The last time the financial industry share of GDP spiked and the wealth was so concentrated was 1929. The reason it has not crashed yet is unparalleled government intervention, which has not fixed the problems, but only delayed the day of reckoning and increased the magnitude of that inevitability if nothing changes.
A more equitable and sustainable economy, is necessary to break the cycle of history. To accomplish this requires three simple things: Federal revenue must go up, Federal outlays must come down and there must be simple but real financial reform. It is not a choice between one and the others. Federal revenue increases should come exclusively from income streams that have enjoyed preferred treatment for a long time, but everyone will have to expect less from the government for expenses to be reduced. It will not be enough to merely balance the budget; we must begin paying down the cumulative debt to remain a dominant economic power. China’s “currency manipulation” is simply a matter of them buying our debt because we create it. For the last ten years the “financial sector” has prospered while the rest of America got saddled with more debt both public and personal. “Cutting taxes” and borrowing the shortfall isn’t really cutting taxes, because the actual tax due increases with the addition of interest, and the burden shifts to people who can’t vote because they are children or haven’t even been born yet. This generational theft is unconscionable. We hear a lot about the right to life of the unborn, but what about their right to liberty? The real price of the financial bailout is that we sold an unborn generation into indentured servitude when the government assumed or guaranteed private debt for which it had no previous obligation, while no attempt was made to “claw back” any money from the perpetrators or to prosecute them for systemic fraud. Instead, they kept their ill-gotten gains, their jobs and their freedom. They also claim they broke no law so the rest of us must have missed the news the day fraud was de-criminalized.
Estate taxes even as they sit today are the number 1 reason small farmers fail. The land is worth so much when the father dies the damily cannot afford the estate / inheritance taxes and the BIG corps buy them up. You Sir are a carpetbagger.
that is silly - right wing propaganda, small farmers are not the ones hurt by this tax - it is the mega wealthy - you could solve the problem by exempting anyone whose heirs continue to farm
What about the poor and working class who leave what little they have to their children. These taxes DO hurt more than the uber wealthy.
take a look at the assets of the poor and the working class - they have none - the tax starts at 1 million dollars so what are you talking about
That is not true. Some older poor people and working class people own their modest homes and have saved a little bit as they could. It might be meager but, it's best given to their children to do as they wish with. I am not saying no inheritance taxes on the uber wealthy but, I don't think there ought to be across the board inheritance tax on everyone.
look at the numbers - of course some have saved and they are not subject to inheritance tax (1 million is the starting point - i was higher in the past)- check out the facts - we shouldn't need to talk about this anymore
I am in the middle of settling a modest estate. Believe me I am checking out the facts up close and personal.
Well a small 200 acres is worth millions and I merely repled to what is happening now. So you say to exempt small farms worth maybe 5 or 6 millions?
i would exempt farms where they continue to work the family farm - not sure the price would matter - i looked at a 30 acre farm in western ny selling for 100k
Don't believe that small farm BS, they are no different than small business. We need a reasonable exemption and a massive tax on top of that.
As for the big corps buying up small farms..... We should have rules that disallow foreign ownership of US property. And property tax rates as the size of the operation increases. Also, we need to get rid of the genetically modified crops that are sprayed.
I agree, we've been in medical debt in my household for decades due to my son having a disability. The only money I ever got was what my mother left me and that wasn't much. I was taxed on some of it and that's money she had already paid taxes on within months of me paying on it again. Inheritance for the working class and even the poor is meager and I think capping exemptions for the uber rich is a good idea but, taxes on ALL inheritance are a bad idea! It's one of the only ways some of us can leave a tiny amount to our family as it is. I'm sorry but, I'd like to be able to leave my son with disabilities something and it won't be a lot as it is in this economy. This is a complex issue and taxing people who have worked hard all their lives for leaving their heirs a reasonable amount is just more oppression. This is one way the government keeps their jack boots on our throats while letting the uber wealthy off the hook. Keep your hands off my savings that I want to leave to people I love thank you very much. I don't even believe in inheritance tax at all.
There are state estate taxes that vary wildly. Many states have exemptions that prevent farms and small businesses from being broken up for tax reasons. The federal estate only starts after a million dollars now.
Having huge inherited wealth tends to concentrate wealth and power in the hands of a few families, which has happened in some South American countries. I can lead to a sort of economic feudalism.
Selling land at a large profit is not a function of failure.
Being forced to sell land when it has been farmed for generations then a death in the family causes a HUGE tax bill that the family cannot pay is a failure of the system.
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Not sure I agree. I hate the idea of an inheritance tax. All that does is keep the middle class from possibly becoming wealthy. Arguing for that is arguing for a caste system.
Arguing against it is arguing FOR an aristocracy... its a slippery slope.
Now, if we were talking a higher exception that might make sense.
Why are would my kids, or anyone whom I decided to leave my property too, not entitled to what I decide to leave them and why does anyone else have any right to make any decisions concerning my property and who it should belong to after my death if I have already made it known what my wishes are? My property does not belong to the state or anyone else and I should have the right to give it to whomever I so desire without having to pay the state for the privilege.
Re-read the Constitution. It gives the government eminent domain, the ability to tax you, and so on, for the 'privilege' of protecting your natural rights.
Negative. The eminent domain clause is not there as "payback" for any "privilege". It is actually a privilege granted to the government for very specific reasons, the power to tax is also very specific as to what the federal government can lay and collect taxes for, taxes were not supposed to be collected by the federal government from the individual but from the states, and protection of our natural rights is the job of our government not some benevolent function they do out of the kindness of their hearts.
Your "supposed to" is a different document, that was superceded. The Articles of Confederation no longer apply. Congress has power to LAY and COLLECT taxes in the ACTUAL Constitution.
The bottom line is you're fighting for a permanent aristocracy. Why? What good comes from that, as a country?
I said that congress has the power to lay and collect taxes for the enumerated reasons set forth in article 1 section 8 and personal income tax was not even a spark of a thought at the time. Anyhow what I am fighting for has nothing to do with aristocracy. It's about property rights.
You and your property can be separated by due process.
You have a government that can't take away life, liberty, or property and you have a government that can't even enforce its own laws. Murdered a citizen? Not their problem. Stole from someone? Can't do anything about it.
Regardless of your intentions, the end result is a permanent aristocracy, and a government that can't function. Inheritance is a transfer of property. Transfers of property are typically taxed. I don't see the problem.
Transfers of new property should be the only ones taxed. Other than that I agree with everything you have said about government it's broken at a far deeper level than taxation.
not sure that makes sense - the state helped you create that wealth so they should have some claim on it - that is probably not really the question though - is is more a question of degree - most would say that over a certain amount - let's say 10 million you need to help society by giving some back. we could debate what the number should be but the middle class is not really hurt here.
Whoa! The state helped me create the wealth? How so? Please explain and don't give me any of that Elizabeth Warren crap filled with fallacy. Ok I see you at least went after the rich guy now and not the middle class guy in my example, none the less giving back is a matter of choice once property is owned that's that. Force of property forfeiture is theft, plunder, it's the same as just rolling up on someone and taking their stuff and handing it to someone else because you felt that they had differing needs and you were serving a need of the one you gave it too. Never forget that you also have more than someone else.
and where is liz wrong - even buffet said that if he grew up in bolivia he would not be where he is today - the society around you has helped you obtain what you have - and what do you have and how did you create it on your desert island?
If he grew up in Bolivia he would not have had the opportunity which is provided by the system. It has nothing to do with anything anyone else gave him that they have not been already compensated for. The only people who can take without giving just compensation in this country is government (although they will swear up and down that you get your just compensation, some peoples compensation for their taxes is far more just than others). I own a house and no one else that has not been justly compensated already by myself or the previous own helped me in purchasing it so it's mine I have earned it and society has done nothing to help me earn it. Please explain to me otherwise.
did you listen to liz warren - can you tell me where she is off base - did you go to private school - whose roads did you drive on going to work - should i go on - seems obvious tome i think you need to explain otherwise
All those things were paid for by my parents through their taxes as well so what's her point?
your parents and lots of other people - they were paid for by society as a whole - your parents could not afford to do it alone - why are you having trouble understanding this - seems to me that this is a religious argument - you are blinded by something - are you misguided?
Religious argument? Really how did you get that vibe? The idea of contribution to society (basic infrastructure and schools and the like) is that you pay your way. Yes there are some people that pay and don't get their proper value in return and there are people that do not pay that get more than they put in. That's understood but that takes away the argument that because you are a functioning member of society that you somehow owe it something. What about those poor that do not pay into the system and take from it I would venture to argue that they owe much much more than someone who is productive and has created jobs and thus a living for others through their endeavors, risks, and hard work. No one is asking them to give what they have back, why? No one ever looks at the other side of the equation or the actual equity or inequity the system has on the individual. All anyone ever wants to look at is the people that have created something and find a way to take it away from them because they have in some form or fashion succeeded. If they have not stolen from anyone in the process they should be praises for their creation of wealth not just for themselves but for those who benefited from it via employment or the goods or services produced. I think you are looking at the situation with blinders on.
I could care less what two super rich dudes think about the plight of the poor and middle class and if they want to pay more taxes then why don't they cut checks to the treasury, they will accept them. And yes those bankers created something that someone thought was good regardless of how evil it was. I'm not defending anyone just refuting a poor point that is baseless. This is the occupy wall street site yes but not movement is going to succeed if it does not have the correct information. The creators of wealth (everyone to whatever degree) owe nothing to anyone else because they create wealth.
so the people who have made big money did it by creating something - hedge fund managers and wall street types - this is the occupy wall street site isn't it? the poor who do not pay - which ones are those - when both chomsky and buffet disagree with you maybe you are misguided!
High marginal rates and employment taxes are what keep the middle class from becoming wealthy.
Right so if your grandfather bought a brownstone in NYC back in the day when it was affordable and leaves it to your father who used it and now your father passes and leaves it to you and it's now worth 1.5 million that should of course be heavily taxed so you cannot live comfortably correct?
Inheriting a 1.5 million dollar asset is such a hardship. Tax the the poor so he can keep it.
Wow so f**k the middle class is your answer. What do the poor have to do with an inheritance?
So w should let the wealth continue to concentrate? Read history, understand the consequences.
What is the issue with that? Why is this premise that wealth is a zero sum affair so popular? Just because wealth is accumulated by one does not mean that it cannot be accumulated by all. The example I gave was one of someone taking a step forward from middle class to upper middle class or the lower rung of being wealthy, not an example of how the super rich pass on their money to their offspring, which is fine too. You think Paris Hilton is not dumping money into the economy? Young dumb rich kids might actually be helping us middle class folks these days.
The only way EVERYONE could be a billionaire is if the Fed ran it's printing presses day and night. There isn't enough money in the system, or land, or so on.
Simply put, MONEY DOESN'T GROW ON TREES. Wealth is accumulated from somewhere, and that somewhere has most often been the middle class.
No, money does not have to be printed night and day for you to get it. You just have to work hard and invest in good ideas.
...and sell them to who? The middle class is broke.
Yet another who doesn't grasp where "wealth" comes from...
Yet another who doesn't grasp the idea of a global economy...
It's hard to respond to so many broad, sweeping generalizations in a single block of text.
I mean just to start off "China has only been successful because they had us to sell to". Where to even begin...let me assume that you're talking specifically about an increase in Chinese exports over time....while the US is the largest of China's top 10 trade partners, we're not CLOSE to the only one. Japan trades with China at nearly the levels we do and they're a tiny Island. South Korea and Hong Kong also have huge trade volume with China. Then there's Taiwan, Germany, Australia, India, etc... this is why China is so dangerous to us right now. Aside from owning debt, even if Americans magically boycotted all Chinese imported goods overnight, the Chinese economy would likely keep rolling.
As for calling all of the nations in the EU "the Europeans"...not even sure where to start on that one until you let us know what you're talking about specifically. And you said it yourself in your last sentence...if "the Europeans" (or anyone) can't afford the crap we make, then how are we being competitive?
No, the problem is I understand it perfectly, and see how unsustainable it is.
China has only been successful because they had us to sell to. Chinese can't afford the crap they make. If we go the Chinese route, and we can't afford the crap we make, the Chinese can't afford the crap we make, the Europeans probably won't be able to afford the crap we make... where's the market?
Your lack of historical perspective is shared by the politicians in Washington.
Please enlighten me. What historical evidence can you give me to show me the need to plunder a man's earnings from his children in order to stop people from going hungry. Please prove to me that wealth accumulation is a zero sum affair and that by one man gaining it that takes the opportunity away from another man to gain it himself. Please enlighten me.
The French Revolution, The Russian revolution, The fall of the Roman Empire, USA cira 1929, the Arab spring...take your pick.
Wow all of those things you mentioned had more to do with the people wanting to free themselves from repressive government (all except USA 1929 of course and The roman empire). Those other than noted were not only repressive but they also were heavily taxed and even in the case of the roman empire socialist in nature. Once the government could no longer bribe the people with their own money things started to fall apart in each of them. I think you have a nice overarching view of what happened historically but don't really have that deeper understanding of what actually caused those things. You really should not have brought them up because if you did know what the causes for those things were you would be supporting what I am saying.
Seriously?
Great post.
The underlying premise of your theory here is that assets are not owned by the individual, that somehow they are owned by the state and only are on loan to the individual until they die. Besides, don't you realize that if you got your way, all small businesses would only be one generation businesses?
You thought you were pretty smart, huh. Not.
Where did I advocate a 100% inheritance tax.? You are not remotely a Knowledgeablefellow. Read what I say, not what you think.
I didn't say 100%. But I am saying that you are saying the government should control how much we have and when to give it to the government, and that is not how it is supposed to be. The government works for the people, not the other way around.
Again, read what I wrote.
First of all, you are wrong about lower tax rates for estates. There is an exemption that helps most people, but then the rate climb very quickly to be among the most punishing taxes we have. And your first sentence is a statement about cap gains aren't taxed until they are realized. Are you advocating the be taxed before they are realized?
No, just that they get taxed at marginal rates when they are realized. If all income is taxed at marginal rates, then marginal rates can be reduced for everyone.
But you don't account for the fact that income earned is taxed once, then when it is invested in the market and reaps a gain, it is taxed a second time. Of course when one dies and the estate tax kicks in, then it is taxed for, at minimum, the third time. How many times does income need to be taxed?
Capital gains are not a second tax. Unless one is a clone, inheritance is income and should be taxed as such. . “Cutting taxes” and borrowing the shortfall isn’t really cutting taxes, because the actual tax due increases with the addition of interest, and the burden shifts to people who can’t vote because they are children or haven’t even been born yet. Favorable treatment of capital gains and estates is the reason that poor and middle class people pay a higher functional tax rate. It is not a sustainable condition as history shows repeatedly, because systems that favor concentration of wealth always fail. But if you are a fan of economic calamity, revolution or war, then let the system continue as it is. It will work until it doesn't, and when it doesn't, the results will not be not pretty. OWS is simply the canary in the coal mine. The US economy is being transformed into something resembling a banana republic, and it will not end well without meaningful reform.
Tell me again how businesses last more than one generation when estates are heavily taxed? We would have nothing but one generation farmers, too.
And yes, cap gains generally are earned on invested money, which was earned and taxed already.
Your understanding of basic economics or the existing financial system leads me to believe that you have no money to either inherit or bequeath, so why do you even care?
I have spent 35 years in the existing financial system in a variety of positions in banking and investing. And there you go making assumptions about other people of which you have no basis at all.
Tell me again how businesses last more than one generation when estates are heavily taxed? You continue to refuse to address that issue.
Any business that can't survive paying marginal rates on the the value of the business being inherited won't survive anyway. Real entrepreneurs start from zero have much less to work with out of the gate but have to compete on an un-level playing field when they go against those to whom the business has been handed and have to pay marginal rates from the outset. If the business is sold to pay the taxes, it does not cease to exist, and the heir still has a capital advantage should he start a new business on his own.
jeyowell1...your comment won't let me reply, so here it is. Your statement that a business which can't pay what you call marginal rates on the value of the company won't survive anyway simply can't be supported. You have now way of knowing that. Your solution of selling the business is also faulty. It can't be good for that many businesses to be changing hands so often. And how would they be purchased? Mostly levered transactions, unless of course you want the wealthy to pay cash and usurp even more of the market.
https://docs.google.com/spreadsheet/viewform?hl=en_US&pli=1&formkey=dFlNNHJTRlZwMWs5ZjlhTWN0NlZReHc6MQ#gid=0
http://blog.richardkentgates.com
Of course capital gains aren't taxed until realized. Until they are realized (i.e., made real), they're numbers on a screen and subject to significant change.
It's clear that most of you guys really have no idea how much of what you complain about actually works.
Captial gains are not only an issue for the "1%" as you call it. They affect many if not most people in the form of savings, pension and retirement holdings, education funding, their homes, funding small businesses, etc.
Most of the money subject to capital gains has already been taxed at least once when it was received. Then it's put at risk. Along the way, the govenrment does not have to manage the investment and otherwise devote time and resources to maintain it. Beyond some limited deductions for capital losses, while the government is happy to take an unlimted gain on investment, they do not fully back-stop potential losses. That is, it's a no-effort, only benefit, no loss proposition on their end.
Furthermore, long-term capital is fundamental to providing funding for capital markets to fund bonds, etc., to build schools, hospitals, etc., pay pensions for average people, and on and on. Remove or lower the real return (after tax) from supporting investment activities and you directly affect the cost of things that they fund in the same proportion.
Business can create more jobs with lower marginal rates, especially small businesses which are the job engine in this country.
That's a completely different issue but, besides that, the effect of changing long-term capital gains/costs has a much farther reaching impact than simply changing marginal tax rates for business.
If your intent is a desire to some how punish rich kids with an inheretence for whatever reason, then there are more directed and effective ways of doing that. At a practical level, that's largely a self-regulating circumstance anyway given the general dissolution of such aggregated weath across multiple generations.
Punishment is not the point. Parity is.
Well, I'm broke at the moment...
How much you got? I want some of it.
I'm not talking about income or asset parity. Are you unable to comprehend the concept of tax rate parity?