Kathryn
It was on fire when I laid down on it.
Unless you've figured out a way to take it with you, your wealth is certain to be redistributed when you die. Your right to decide exactly how it will be redistributed is not unlimited.
If I inherit $5 million and pay $500,000 in estate taxes, I'm $4,500,000 better off than before. Where's the penalty?
If I win $100 million in the lottery and pay $50,000,000 in income taxes, will you feel sorry for me?
On the bright side, if estate taxes really bother you, you can always arrange to die this year. Unlimited exemption from estate taxes, this year only. If you die next year, the feds will tax your estate over $1 million.
Hey, trust me - if I inherited $5 million and only had to pay $500,000 I'd be thrilled - and who wouldn't be? However, the tax rate is much higher than that - sorry.
The tax on $5 million is 45%. In 2011 the max rate will go to 55%.
And here's my question - how is that justified? How is it right and decent for the government to take that?
Also keep in mind that the year in which a person receives an inheritance of anything over about $10,000 , their own personal tax rate will be significantly increased - in other words, they will owe the IRS more taxes on the money they earned that year.
Also - this is the rate that is in ADDITION to the other applicable federal taxes imposed on the inheritance ("earnings" taxes), so the rate is actually higher than 44/55%.
And this is only the FEDERAL taxes - I haven't included state taxes, which vary from state to state,
I'm not saying it wouldn't be great to still be left with one million dollars - sure it would be. But my question is how is such an exorbitant tax justified? Keep in mind that the parents have already earned and paid taxes on that money.
As for winning the lottery - that's hardly the same as inheriting a farm that's been in your family for generations - the house that your great grandfather built with his own hands, in which your grandfather and father were born, the barns that you played in as a child, the ponds that you swam in with your cousins.
The discussion was on estate taxes, not lottery winnings.
From Wikipedia:
"While it may be true that the receiver of wealth may not have a direct moral claim to that wealth, those opposed to the estate tax would argue that logically, neither does anyone else. The moral argument would further assert that the rights to that wealth lie with the deceased person, the person who earned it originally and who paid taxes on it continually while living. The rights lie with the deceased to dispose of his or her wealth as he or she sees fit, whether that disposition be in the form of a charitable gift, a check to the government, or a gift to a chosen heir."
Families shouldn't be required to visit the undertaker and the tax collector on the same day.
Estate tax in the United States - Wikipedia, the free encyclopedia
As for the death tax being at 0 this year - guess what - it goes to 55% in 2011. Frankly, I much prefer to pay the higher rate and have my parents around for a lot longer, but damn that's highway robbery!
Furthermore, if the government passes this bill for 2011 - GUESS WHAT - it's constitutional and PROBABLE that they will make it RETROACTIVE - meaning that the break families got this year will be taken back with a 55% vengeance.
Let's put this in real terms and quit talking about millions - which most people won't inherit. Let's talk about a modest inheritance of $60,000 which is not an unusual amount to inherit from parents.
You will pay $13,400 in federal estate taxes on that money. In addition to that, you will probably pay state taxes. For example, in Ohio that would be another $1400 - so now you're up to $14,800. So you're at about 20% now, right? Now - add that $80,000 to your taxable income for the year - hmmmm, what tax bracket are you in now? Somewhere between the 27 and 33% tax bracket - at LEAST. Hmmmm...So that estate gets taxed AGAIN - and your own earnings get taxed AGAIN.
And remember, dad already paid taxes on that money and it's earnings when he opened up that CD.
BUY FIXED RATE ANNUITIES! They can't be taxed again upon death.