Taxing the Rich (pay attention lefties)

[Rage Against the McKee]

your critique falls on its face because it doesn't take into account how the rich work.

A common symptom of a person infected with the mental disorder known as liberalism is the "Scrooge McDuck Delusion".  One afflicted with Liberalism often believes that rich people horde their money in large fortified edifices so they can swim in their wealth and protect it from those whom are "entitled" to it for no reason other than a common sovereign government. 

Here is an image of what the mentally deranged see when this symptom is at work

There are exceptions, of course, but most rich people are the scum of the earth.

[Sugar Dick]

 

your critique falls on its face because it doesn't take into account how the rich work.

A common symptom of a person infected with the mental disorder known as liberalism is the "Scrooge McDuck Delusion".  One afflicted with Liberalism often believes that rich people horde their money in large fortified edifices so they can swim in their wealth and protect it from those whom are "entitled" to it for no reason other than a common sovereign government. 

Here is an image of what the mentally deranged see when this symptom is at work
[img width=278 height=253]

There are exceptions, of course, but most rich people are the scum of the earth.

 

wow, another bigoted liberal.   

simply shocking

[06wildcat]

A single small businessman has $1M in liquid assets and a small business structured as an unincorporated sole proprietorship with a fair market value of $9M.  His net worth is thus $10M ($1M liquid assets + $9M equity in his business). 

The man dies at a time when the estate tax that allows him to pass up the $1M tax-free to his heirs.  Assume that every dollar beyond $1M is taxed at a flat rate of 55%.

After the man's death, simultaneous with IRS acceptance of the $9M valuation of the business, a rapidly developing economic crisis occurs and the fair market value of the business falls to $5M.  The IRS refuses to revise their $9M valuation citing rules requiring valuation as of the date of death. The heirs cannot, due to the financial crisis, find a lender willing to lend them the money to pay the estate tax due. 

Rather than sell the business at a depressed value, the heirs spend $500k of the $1M liquid assets challenging the IRS in tax court. The IRS prevails and the $9M valuation stands. 

A subsequent sale of the business nets the heirs $2.5M after fees and expenses. 

1) How much do the heirs inherit?

2) What is the maximum amount of the $10M estate the heirs could have inherited had the businessman structured his unincorporated sole proprietorship as, "... some sort of incorporation/LLC?" 

3) Discuss how, precisely, "... some sort of incorporation/LLC," would have been structured so as to avoid the largest possible amount of estate tax.

4) If you believe yourself incompetent to answer #3 (as seems overwhelmingly likely), provide references that explain, in detail, the "... easy ways to protect your family," from estate taxes via, "... some sort of incorporation/LLC."   

How old is the man. How many heirs does he have? How old are the heirs? Any of the heirs married with children? Also assuming the man had no debt (personal or business) since liquid + business assets equals $10 million. What type of business is it?

I understand what you're getting at here but there are lots of ways to avoid estate taxes on $10M. Your hypothetical guy is a huge dumbass for having so much of his net worth tied up in illiquid assets and not at the very least having any type of life insurance to cover the tax.

[Dirty Sanchez]

A single small businessman has $1M in liquid assets and a small business structured as an unincorporated sole proprietorship with a fair market value of $9M.  His net worth is thus $10M ($1M liquid assets + $9M equity in his business). 

The man dies at a time when the estate tax that allows him to pass up the $1M tax-free to his heirs.  Assume that every dollar beyond $1M is taxed at a flat rate of 55%.

After the man's death, simultaneous with IRS acceptance of the $9M valuation of the business, a rapidly developing economic crisis occurs and the fair market value of the business falls to $5M.  The IRS refuses to revise their $9M valuation citing rules requiring valuation as of the date of death. The heirs cannot, due to the financial crisis, find a lender willing to lend them the money to pay the estate tax due. 

Rather than sell the business at a depressed value, the heirs spend $500k of the $1M liquid assets challenging the IRS in tax court. The IRS prevails and the $9M valuation stands. 

A subsequent sale of the business nets the heirs $2.5M after fees and expenses. 

1) How much do the heirs inherit?

2) What is the maximum amount of the $10M estate the heirs could have inherited had the businessman structured his unincorporated sole proprietorship as, "... some sort of incorporation/LLC?" 

3) Discuss how, precisely, "... some sort of incorporation/LLC," would have been structured so as to avoid the largest possible amount of estate tax.

4) If you believe yourself incompetent to answer #3 (as seems overwhelmingly likely), provide references that explain, in detail, the "... easy ways to protect your family," from estate taxes via, "... some sort of incorporation/LLC."   

How old is the man. How many heirs does he have? How old are the heirs? Any of the heirs married with children? Also assuming the man had no debt (personal or business) since liquid + business assets equals $10 million. What type of business is it?

I understand what you're getting at here but there are lots of ways to avoid estate taxes on $10M. Your hypothetical guy is a huge dumbass for having so much of his net worth tied up in illiquid assets and not at the very least having any type of life insurance to cover the tax.

A dumbass is one that thinks this is the way things should have to work.

[AzCat]

A single small businessman has $1M in liquid assets and a small business structured as an unincorporated sole proprietorship with a fair market value of $9M.  His net worth is thus $10M ($1M liquid assets + $9M equity in his business). 

The man dies at a time when the estate tax that allows him to pass up the $1M tax-free to his heirs.  Assume that every dollar beyond $1M is taxed at a flat rate of 55%.

After the man's death, simultaneous with IRS acceptance of the $9M valuation of the business, a rapidly developing economic crisis occurs and the fair market value of the business falls to $5M.  The IRS refuses to revise their $9M valuation citing rules requiring valuation as of the date of death. The heirs cannot, due to the financial crisis, find a lender willing to lend them the money to pay the estate tax due. 

Rather than sell the business at a depressed value, the heirs spend $500k of the $1M liquid assets challenging the IRS in tax court. The IRS prevails and the $9M valuation stands. 

A subsequent sale of the business nets the heirs $2.5M after fees and expenses. 

1) How much do the heirs inherit?

2) What is the maximum amount of the $10M estate the heirs could have inherited had the businessman structured his unincorporated sole proprietorship as, "... some sort of incorporation/LLC?" 

3) Discuss how, precisely, "... some sort of incorporation/LLC," would have been structured so as to avoid the largest possible amount of estate tax.

4) If you believe yourself incompetent to answer #3 (as seems overwhelmingly likely), provide references that explain, in detail, the "... easy ways to protect your family," from estate taxes via, "... some sort of incorporation/LLC."   

How old is the man. How many heirs does he have? How old are the heirs? Any of the heirs married with children? Also assuming the man had no debt (personal or business) since liquid + business assets equals $10 million. What type of business is it?

I understand what you're getting at here but there are lots of ways to avoid estate taxes on $10M. Your hypothetical guy is a huge dumbass for having so much of his net worth tied up in illiquid assets and not at the very least having any type of life insurance to cover the tax.

Those are certainly very relevant questions in the context of an overall estate plan but they're not really relevant in the context of the very specific issues I'd like ednksu to discuss.  Namely: why, specifically, does he believe that corporations and limited liability companies offer advantages over other available options in reducing estate tax burdens; what, specifically, are those advantages; and how, specifically, are those advantages gained?  I hear this sort of thing an awful lot, specifically with respect to LLC interests, but I've yet to hear anyone articulate with any degree of specificity what estate tax benefits accrue due to the use of an LLC or corporation that would otherwise remain unattainable.  I've even left the low-hanging fruit obviously available by casting the hypothetical business as a sole proprietorship, there's a slam-dunk response for ednksu inherent in that form.

The client may or may not be a "dumbass" for not purchasing life insurance.  That depends on an awful lot of factors including but not limited to whether the client is unfortunate enough to have had asava act as his attorney during his estate planning (since we know that asava is afraid of and has been told never to utilize irrevocable trusts).  But again, the hypothetical is very limited in scope and intended as a vehicle for ednksu's forthcoming explanation of the estate tax benefits of corporations and limited liability companies.     

Ditto the large fraction of illiquid assets.  It depends, very much, on an awful lot of factors that are well beyond the scope of this very simple and extremely limited hypothetical. 

Besides, it wouldn't be much of a hypothetical if the hypothetical client weren't doing something stupid now would it? 

[06wildcat]

A single small businessman has $1M in liquid assets and a small business structured as an unincorporated sole proprietorship with a fair market value of $9M.  His net worth is thus $10M ($1M liquid assets + $9M equity in his business).  

The man dies at a time when the estate tax that allows him to pass up the $1M tax-free to his heirs.  Assume that every dollar beyond $1M is taxed at a flat rate of 55%.

After the man's death, simultaneous with IRS acceptance of the $9M valuation of the business, a rapidly developing economic crisis occurs and the fair market value of the business falls to $5M.  The IRS refuses to revise their $9M valuation citing rules requiring valuation as of the date of death. The heirs cannot, due to the financial crisis, find a lender willing to lend them the money to pay the estate tax due.  

Rather than sell the business at a depressed value, the heirs spend $500k of the $1M liquid assets challenging the IRS in tax court. The IRS prevails and the $9M valuation stands.  

A subsequent sale of the business nets the heirs $2.5M after fees and expenses.  

1) How much do the heirs inherit?

2) What is the maximum amount of the $10M estate the heirs could have inherited had the businessman structured his unincorporated sole proprietorship as, "... some sort of incorporation/LLC?"  

3) Discuss how, precisely, "... some sort of incorporation/LLC," would have been structured so as to avoid the largest possible amount of estate tax.

4) If you believe yourself incompetent to answer #3 (as seems overwhelmingly likely), provide references that explain, in detail, the "... easy ways to protect your family," from estate taxes via, "... some sort of incorporation/LLC."    

How old is the man. How many heirs does he have? How old are the heirs? Any of the heirs married with children? Also assuming the man had no debt (personal or business) since liquid + business assets equals $10 million. What type of business is it?

I understand what you're getting at here but there are lots of ways to avoid estate taxes on $10M. Your hypothetical guy is a huge dumbass for having so much of his net worth tied up in illiquid assets and not at the very least having any type of life insurance to cover the tax.

A dumbass is one that thinks this is the way things should have to work.

Can you provide a link to where I support a 45 percent effective tax rate on estates of $10 million?

[Sugar Dick]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

[06wildcat]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

And LOL at including farmers in this debate. Farm/ranch land is quite easy to protect/maintain to a family despite the estate tax. And proper planning makes life insurance easily affordable for all.

[john "teach me how to" dougie]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

And LOL at including farmers in this debate. Farm/ranch land is quite easy to protect/maintain to a family despite the estate tax. And proper planning makes life insurance easily affordable for all.

I guess I will never understand why anybody would fight to pay more taxes. Do you really think our government is a good investment for your money? To me it looks like a poorly run business that we subsidize to keep afloat.

[06wildcat]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

And LOL at including farmers in this debate. Farm/ranch land is quite easy to protect/maintain to a family despite the estate tax. And proper planning makes life insurance easily affordable for all.

I guess I will never understand why anybody would fight to pay more taxes. Do you really think our government is a good investment for your money? To me it looks like a poorly run business that we subsidize to keep afloat.

OK, I believe that a reasonable estate tax is necessary for several reasons and in no way do I think a top marginal rate of 55 percent is reasonable.

That said, I think our federal government does a mediocre job with the money it gets. It could be a lot better if it didn't have to placate retards who think government should be run like a business.

[Sugar Dick]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

And LOL at including farmers in this debate. Farm/ranch land is quite easy to protect/maintain to a family despite the estate tax. And proper planning makes life insurance easily affordable for all.

a) you're confused per usual.  All earnings made in life, whatever the source, are taxed.  If you own a factory that sells a good, you take the proceeds from the sale of the good, buy more material and make more goods.  Each time you sell, you get taxed on the profit.  Kinda like gambling, earn money, bet on black, have twice as much money, must claim the earnings on tax return (lol at anyone that does this).  The Estate Tax, is an excise tax on the transfer of property at death.  All the earnings made from salary, gambling, investment, robbery, etc. have already been taxed.  Dieing is not an income producing event, this is why the Congress created 3 entirely different titles to the internal revenue code (Gift, Estate, GST).  Congress, unlike you, understands that dieing is not an income producing event.

2) Farmers and Ranchers certainly belong in this debate as they often own a large amount of land that needs to be passed from family to family to continue the business.  When the government decides we need to make corn into gas, the value of their land skyrockets and when they die they have to pay the value at date of death.  Land is illiquid, but more importantly if you have to sell the resource necessary to operate your business, it's hard to keep operating.  Not sure why people effected by the estate tax should be categorically excluded because you think it's lol.  It's not lol, lol is talking out of your ass with people who know what they talk about.  LOL at you. LOL LOL LOL

ii) If its so easy and affordable to buy life insurance, then why is it so hard and expensive to buy health insurance?  Why are ranchers and farmers held to a different insurance planning standard than stupid poor people who refuse to acquire a single skill necessary to land a job that provides insurance?   This seems to trample on lib favored Equal Protection of the law, I for one won't have it.  LOL LOL LOL at you.

III) Why is it fair that people who earn more money must pay more taxes at an increasing rate for the same or less public services than the person who refuses to do anything at all? 

[Sugar Dick]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

And LOL at including farmers in this debate. Farm/ranch land is quite easy to protect/maintain to a family despite the estate tax. And proper planning makes life insurance easily affordable for all.

I guess I will never understand why anybody would fight to pay more taxes. Do you really think our government is a good investment for your money? To me it looks like a poorly run business that we subsidize to keep afloat.

OK, I believe that a reasonable estate tax is necessary for several reasons and in no way do I think a top marginal rate of 55 percent is reasonable.

That said, I think our federal government does a mediocre job with the money it gets. It could be a lot better if it didn't have to placate retards who think government should be run like a business.

What are your thoughts on running the government like a battleship?  Would be pretty cool, imo.

Also, please share the reasons why the estate tax is necessary. 

[Rage Against the McKee]

The estate tax is the worst tax ever imposed by Congress. It is completely unfair.

Sugar Dick, life insurance policies are very cheap at an early age. Health insurance is never cheap. Also, people who earn more money pay more taxes than people who do nothing at all because people who do nothing at all have no money to pay.

[Sugar Dick]

The estate tax is the worst tax ever imposed by Congress. It is completely unfair.

Sugar Dick, life insurance policies are very cheap at an early age. Health insurance is never cheap. Also, people who earn more money pay more taxes than people who do nothing at all because people who do nothing at all have no money to pay.

Well stated.

Couple comments re: insurance.  It doesn't matter how cheap life ins. is when you're young, you don't know how much you need until you die.  Health insurance is much cheaper when you are young, you just can't lock in premiums.  Little kids don't have money so it doesn't matter in either case, which leads directly to the second point. . .
Poor people not paying because they don't have anything doesn't make income tax fair (what I thought was being tossed around).  Maybe if poor people weren't given stuff for not participating people wouldn't have a problem with it.  The fact of the matter, is half those earning income in this country pay more in FICA taxes than they do in income taxes.  Proof that the current income tax structure is severely broken.

[john "teach me how to" dougie]

The only thing "fair" about the Death/Estate/Transfer/Inheritance Excise Tax is step-up basis.  Why should a person who pays taxes their entire life on earnings, pay one more tax at their death on the earnings they didn't spend during their life? 

The tax is a nightmare for small business owners and farmers (who stupidly own illiquid assets - actually they need those illiquid assets to operate their business and may not have the cash flow or clean bill of health to afford Life Ins., would love to see a farmer grow crops on treasury bills and harvest them with stocks). 

It doesn't even generate a lot of revenue for the Fed, I think approx $30B a year, which is about 3 seconds of spending.

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

And LOL at including farmers in this debate. Farm/ranch land is quite easy to protect/maintain to a family despite the estate tax. And proper planning makes life insurance easily affordable for all.

I guess I will never understand why anybody would fight to pay more taxes. Do you really think our government is a good investment for your money? To me it looks like a poorly run business that we subsidize to keep afloat.

OK, I believe that a reasonable estate tax is necessary for several reasons and in no way do I think a top marginal rate of 55 percent is reasonable.

That said, I think our federal government does a mediocre job with the money it gets. It could be a lot better if it didn't have to placate retards who think government should be run like a business.

I don't actually believe the government should make money, but it is being completely and utterly run into the ground by morons that believe there will always be an unlimited supply of idiots from which to suck more and more taxes. There comes a point (which we have reached) that more taxes are counterproductive. Just look at Europe.

[Rage Against the McKee]

The fact of the matter, is half those earning income in this country pay more in FICA taxes than they do in income taxes.  Proof that the current income tax structure is severely broken.

I would say it's proof that nearly half of all Americans don't make enough money to put food on their tables and pay taxes. In no way are Americans who don't make enough money to pay taxes better off than taxpayers. Also, cutting benefits to the poor would increase crime rates.

[AzCat]

We really should tax dead people more. I mean it's not like they can use it. Also, we shouldn't tax gambling winnings that were won using money that was already taxed.

Good point. By that logic we also shouldn't tax interest from savings / bonds or capital gains on most investments.  Pretty much all of that is purchased with post-tax money. 

OK, I believe that a reasonable estate tax is necessary for several reasons ....

And those reasons are? 

[Paul Moscow]

Republicans typically agree with the idea that giving a person un-earned income stifles their incentive to work, right?   

 "The parent who leaves his son enormous wealth," wrote steel magnate Andrew Carnegie a century ago, "generally deadens the talents and energies of the son, and leads him to lead a less useful and less worthy life than he otherwise would."

[OregonSmock]

Those tax cuts for the top 2% sure created a lot of jobs. 

[Sugar Dick]

The fact of the matter, is half those earning income in this country pay more in FICA taxes than they do in income taxes.  Proof that the current income tax structure is severely broken.

I would say it's proof that nearly half of all Americans don't make enough money to put food on their tables and pay taxes. In no way are Americans who don't make enough money to pay taxes better off than taxpayers. Also, cutting benefits to the poor would increase crime rates.

Ah yes, starvation, this problem afflicting approximately half of this country.  Really makes Michelle's great crusade against obesity look foolish.

Libs and Justice isn't about what's right and wrong, it's a constant comparison of what he has that she doesn't.  Pretty pathetic.

[Sugar Dick]

Republicans typically agree with the idea that giving a person un-earned income stifles their incentive to work, right?   

 "The parent who leaves his son enormous wealth," wrote steel magnate Andrew Carnegie a century ago, "generally deadens the talents and energies of the son, and leads him to lead a less useful and less worthy life than he otherwise would."

So you're against welfare and inheritance.  Got it.

[john "teach me how to" dougie]

Republicans typically agree with the idea that giving a person un-earned income stifles their incentive to work, right?   

 "The parent who leaves his son enormous wealth," wrote steel magnate Andrew Carnegie a century ago, "generally deadens the talents and energies of the son, and leads him to lead a less useful and less worthy life than he otherwise would."

Carnegie sounds like a shitty father. Trump has done OK with his kids.

[Sugar Dick]

Republicans typically agree with the idea that giving a person un-earned income stifles their incentive to work, right?   

 "The parent who leaves his son enormous wealth," wrote steel magnate Andrew Carnegie a century ago, "generally deadens the talents and energies of the son, and leads him to lead a less useful and less worthy life than he otherwise would."

Carnegie sounds like a cacty father. Trump has done OK with his kids.

Just another example of an evil rich person

Carnegie donated most of his money to establish many libraries, schools, and universities in America, the United Kingdom and other countries, as well as a pension fund for former employees.

His only daughter was employed as the trustee of his foundation.


Difference between people who inherit money and those who don't have any.  Taxes don't support the dereliction of the person who inherits wealth, in fact taxes continue to be collected from that person.

[AzCat]

Difference between people who inherit money and those who don't have any.  Taxes don't support the dereliction of the person who inherits wealth, in fact taxes continue to be collected from that person.

Additionally the half-life of the vast majority of inheritances, even seven figure ones, is pretty damn short.  I thought lefties liked all of that spending.  Isn't that how they now claim jobs are created?  Heirs are gold in that department.

[Sugar Dick]

Difference between people who inherit money and those who don't have any.  Taxes don't support the dereliction of the person who inherits wealth, in fact taxes continue to be collected from that person.

Additionally the half-life of the vast majority of inheritances, even seven figure ones, is pretty damn short.  I thought lefties liked all of that spending.  Isn't that how they now claim jobs are created?  Heirs are gold in that department.

Thought about throwing that in, but didn't think they'd have a chance of understanding it.  I believe the general rule of thumb is that a typical inheritance is usually squandered within three generations.