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mrcheerful Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:45 AM
Original message
Help with a Bushbot and the estate tax.
Guy is running that estate tax starts at 1 million, I say it starts at 2 million. Guy says 401 K's are going to be hit with an estate tax. I say BS. Guy says its very easy for everyone to get hit with estate tax because of homes being worth big bucks. I say BS. Guy says estate tax is double taxing money already taxed by parent or grand parent. I say more BS. Guy says theres millions of people going to be hit by estate tax, I say no right now it only effects 8,000 families. Anyone got independent links on estate taxes and who is effected?
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Deep13 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:49 AM
Response to Original message
1. I say dead people don't care about taxes. nt
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:50 PM
Response to Reply #1
20. But people who are dying, do. They care very much that
they can leave something for their families.
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Deep13 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:57 PM
Response to Reply #20
22. Sure. "something for their families"
Definitely think Grand-dad's watch needs to stay in the family. No one disputes that or even his middle-class house. The baronial mansion on the other hand and the hundreds of millions of dollars ought to be subject to taxation. It is a check on the aristocracy which as a republic we are not supposed to have.
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 01:04 PM
Response to Reply #22
23. I agree. I don't think the estate tax should be eliminated.
But I do think the previous limit, before the change in the law -- $600,000 -- was way too low. The question is what would be the right amount.

I believe the Democrats' proposal was for $5 million, which would take care of most family businesses and farms. There is a big difference between the couple that worked hard to set up a family-run dry cleaning business -- that they don't want to have to sell in order to pay for taxes -- and, as you say, the baronial estates worth hundreds of millions of dollars.
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Deep13 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 01:23 PM
Response to Reply #23
26. yup. That's reasonable.
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Dora Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:50 AM
Response to Original message
2. The wikipedia page is informative
Made my head spin, but I think it has what you want to know:

http://en.wikipedia.org/wiki/Estate_tax_%28United_State...
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sinkingfeeling Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:50 AM
Response to Original message
3. Try this Q&A section from the IRS....
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trotsky Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:50 AM
Response to Original message
4. Here's a great site.
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Another Bill C. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:51 AM
Response to Original message
5. It's on the IRS site
http://www.irs.gov/formspubs/article/0,,id=112782,00.ht...

Applicable Exclusion Amounts
Year Exclusion Amount
2003 $1,000,000
2004 and 2005 $1,500,000
2006, 2007, and 2008 $2,000,000
2009 $3,500,000
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TexasLawyer Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:51 AM
Response to Original message
6. Here's an excellent site
http://www.faireconomy.org/estatetax/ETMythsFacts.html

And here's an interesting factoid:

Permanent repeal of the estate tax will cost nearly $1 trillion over the next two decades.

Who is going to make up this loss? Taking away the estate tax directly shifts these losses onto the general public. WE will be paying the taxes that otherwise would have been paid by Paris Hilton out of her millions.

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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:53 AM
Response to Original message
7. Both 'right' (sorta)
For a person dying during 2005, an estate with a value less than $1,500,000 would not pay a federal estate tax and most likely would not have to file a federal estate tax return. The applicable exclusion amount increases to $2,000,000 for decedents dying in the years 2006, 2007 and 2008. The amount increases to $3,500,000 for 2009. According to the Economic Growth and Tax Relief Reconciliation Act of 2001, the federal estate tax disappears for the year 2010, but the tax returns in 2011 at the 2001 level. Do not confuse the estate tax credit or exemption equivalent with the federal gift tax credit or exemption equivalent. The gift tax exemption is frozen at $1,000,000 and does not increase, as does the estate tax exemption.

http://en.wikipedia.org/wiki/Estate_tax_%28United_State...
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Geoff R. Casavant Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:54 AM
Response to Original message
8. I'm a trusts and estates attorney
Let's take them one at a time:

1. You are correct that, in general, estates under $2 million are not taxed for decedents dying this year. The exemption will eventually fall back to $1 million, though.

2. 401k's are subject to estate tax like all assets, so if the estate is over $2M and the 401k is not otherwise exempt such as by leaving it to a spouse, it will be added to the taxable estate.

3. Homes are taxable like any other asset.

4. The majority of assets subject to estate tax represent unrealized capital gains that have not been previously taxed and, because of the estate tax basis step-up, will never be taxed as capital gains.

5. You're both wrong as to how many people are affected by the estate tax, but you're closer to correct. The tax affects less than 1.5% of all estates in any given year.
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:44 PM
Response to Reply #8
18. When you say "affects" what do you mean?
Are you talking about only the people who actually pay it?

Or are you including as "affected" those who WOULD have owed estate taxes except that they made charitable donations instead?
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Geoff R. Casavant Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 03:01 PM
Response to Reply #18
30. I mean those above the exemption amount
If your gross estate is above the exemption amount, your heirs must file a return in any event. Many of these estates will ultimately owe no tax, either because of the marital deduction, or, as you have pointed out, the charitable deduction.
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SoCalDem Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 05:46 PM
Response to Reply #8
36. ALL assets are added together and IF it exceeds the limit
Edited on Mon Oct-23-06 05:46 PM by SoCalDem
there "may" be taxes due..
When I was executor of my father's estate, I remember my unscrupulous brother howling when I insisted on having his jewelry appraised.. he also howled when I hired a lawyer..

I lived (still do) in California, my father lived and died in Florida..he had assigned no power of attorney to anyone, and Florida was (is still?) a probate state.

I demanded that everything be done legally, and my brother was livid.. he basically just wanted to drive my father's car home with him and load up everything he could carry, even though there was a very specific will..

we have not spoken since... that was 10 years ago.
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Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 11:59 AM
Response to Original message
9. For 2006, the floor is 2 million
I know because I just finished the dreaded estate tax filing, myself.

As for double taxing, that's pure hooey. It's not as though most estates were only wages and tips. Most of them involve appreciation on things like real estate and investments. Plus, the heir hasn't paid a dime on any of it, and that's rather the point.

Ask him how many millions he's going to inherit. Inform him that there were exemptions for farms and family businesses before the estate tax adjustments were passed. Then ask him why Paris Hilton needs a welfare program.
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ClintonTyree Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:20 PM
Response to Original message
10. "The Paris Hilton Tax".......
is what you mean, right? Don't allow them to frame the debate. Why is this guy so adamant about securing Paris Hilton's wealth when she did absolutely nothing to earn it? I thought Reich-Wingers were all about "pulling yourself up by the boot-straps" and not living on handouts? :shrug: Why should the idle rich be an exception? Would poor Paris have to make do with her old yacht. Hey, things are tough all over. :eyes:
There's a million and one examples you can use to make this guy shut his gaping maw. Don't be kind, slap him aside the head. ;)
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mrcheerful Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 01:10 PM
Response to Reply #10
24. I pointed that fact out and got the reply
Paris got up at 4am to do photo shoots and she worked hard for her money.
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ClintonTyree Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 05:47 PM
Response to Reply #24
37. Really?
Wow, that guy is more stupid than the average wingnut, and that's saying something. It makes we want to break into song......."she works haaaard for the money, she works haaaard for the money......." :rofl: Yeah, Paris is a REAL ball of fire! :rofl:
What a moron! These people can justify the most outrageous bullshit imaginable to support their ideology. :rofl: I'm in tears here! :rofl:
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Beelzebud Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:21 PM
Response to Original message
11. Challenge him to give you an example of someone who got the tax.
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:42 PM
Response to Reply #11
17. He will have no problem naming someone who was AFFECTED
by the tax. Just a few years ago, the limit was only $600,000 and yet very few people paid it. Why? Because they gave that amount to charity instead. If they hadn't made the charitable contribution, then their estates would have been subject to the tax.

The number of estates that pay the tax are the tip of the iceberg of the families that are AFFECTED by it. The ones that pay the tax are simply the ones who don't bother to set up their estate so that the amount that is owed to the government goes to charity instead.
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Beaverhausen Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:27 PM
Response to Original message
12. If someone didn't lift a finger to earn the money, why shouldn't they pay tax
Edited on Mon Oct-23-06 12:27 PM by Beaverhausen
I pay taxes on money I earn that I work for, why shouldn't some do-nothing rich kid have to pay taxes on money they only received due to being lucky enough to have rich parents?
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:46 PM
Response to Reply #12
19. If a parent worked hard for their home and other assets, why shouldn't
they be able to leave most of it with their children when they die? We're not living in a communist country.

I am in favor of estate taxes but I'm not in favor of estate confiscation, which you seem to be advocating.
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SharonAnn Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 03:12 PM
Response to Reply #19
32. For many estates, the value in it has never been taxed. It is appreciation
of stocks, bonds or real estate. If those items had been sold, the incremental value would have been taxed.

Wages are always taxed, multiple times. My employer pays me and I pay taxes on the income, I then hire somebody to work for me or buy something from someone, they pay taxes on the income and buy something form my employer who then pays taxes on the income, etc. Lather, rinse, repeat.

Why shouldn't unearned wealth, transferred to someone not be taxed also. Is a person who didn't work for their income more virtuous than one who works for their income? Do we value more people who get but don't labor, than those who labor?

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Beaverhausen Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 04:34 PM
Response to Reply #19
33. Confiscation? Yeah, where did I say that?
I'm just saying people who inherit money should have to pay taxes on it. That money is most likely not money that anyone has paid tax on yet, but was accumulated over time in things like real estate appreciation, stocks, etc.

If I pay taxes, so should Paris Hilton. Sorry if you disagree.
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 05:41 PM
Response to Reply #33
34. You're right, you didn't say that. Sorry. Other DU'ers have said
that there should be a 100% tax, but not you. (And I'm talking about other threads.)
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ClintonTyree Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:31 PM
Response to Original message
13. I just LOVE this argument.........
Myth: The estate tax raises little revenue, so repealing it will have no effect.
Fact: Permanent repeal of the estate tax will cost nearly $1 trillion over the next two decades. This will deprive the Treasury of resources that could be used to address pressing needs such as safeguarding Social Security and Medicare, improving education, or extending health insurance coverage.


Now, which is it? The Reich-Wingnuts say that the "death tax" hurts so MANY people and that it MUST be repealed to protect small business and the American farmer". BUT, how can that be true if "the estate tax raises little revenue, so repealing it will have no effect".

Excuse me, but :wtf: They want it both ways. "It's too much so it's bad" or "it's so little why does it matter". Talk out of both sides of your mouth much? :eyes: My god these people are stoopid!
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TahitiNut Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:32 PM
Response to Original message
14. How much would an heir pay in taxes if the same amount were EARNED?
This, for me, is a key question. The fact of the matter is that people who gain from the DEATH of another pay far, far less than those who WORK for the same amounts.

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ComerPerro Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:33 PM
Response to Original message
15. tell him to prove anything he said, without using "sources"
like BushCo, RW talk radio, or RW websites like blogs, forums, and places like Drudge and Newsmax.
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mrcheerful Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 01:16 PM
Response to Reply #15
25. Been there done that and got this is my opinion I don't want or have the
time to research it. I just think its unfair that they are double taxing these poor little rich kids. Then he went off topic and started complaining about how cars are also taxed to death. After all the first owner of the car paid the taxes on it, so why should the next guy that buy's the car have to pay a sales tax for the same car.
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ComerPerro Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 01:30 PM
Response to Reply #25
27. then don't worry about it, he knows he is full of shit and can't back up
what he is saying.

Some people deserve to be pissed on by the rich.

Its just too bad they have to drag everyone else down with them
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:38 PM
Response to Original message
16. It isn't true that it only affects 8,000 families. Not even close.
Edited on Mon Oct-23-06 12:38 PM by pnwmom
Here's the thing. Even just a few years ago, when it was a 40% and higher tax on the portion of estates above $600,000, very few families paid it. Why? Because there were only a few thousand families with assets that high? NO! There may be millions of families with assets above $600,000. There have always been many more families who are AFFECTED by the estate tax than who pay it. As you pointed out, in high cost cities many people can easily be above that amount based on their house value alone, not to mention their other taxable assets (which do include retirement accounts).

So why didn't they pay the estate tax? Most affected families arrange in their wills and trusts to have the same amount given to charity instead. So it is NOT true that only a few thousand families are AFFECTED by the estate tax. Many many more are AFFECTED -- they just decide that, rather than give the money to the government, they would rather set up their estate so that it goes to charity instead.

We're not going to get anywhere in arguments with Repubs if we don't recognize the reality. Many of them -- and many Dems -- ARE in families that are AFFECTED by the estate tax, whether they actually pay the money to the government or donate it to charity instead. They'll just dismiss us as uniformed if we don't recognize that.
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sinkingfeeling Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 02:42 PM
Response to Reply #16
28. The other point is that much of this wealth can be safely passed to
Edited on Mon Oct-23-06 02:44 PM by sinkingfeeling
a surviving spouse without taxation. You can also give the money or property as a direct gift to people not your spouse.

Q: What deductions are available to reduce the Estate Tax?

1. Marital Deduction: One of the primary deductions for married decedents is the Marital Deduction. All property that is included in the gross estate and passes to the surviving spouse is eligible for the marital deduction. The property must pass "outright." In some cases, certain life estates also qualify for the marital deduction.
2. Charitable Deduction: If the decedent leaves property to a qualifying charity, it is deductible from the gross estate.
3. Mortgages and Debt.
4. Administration expenses of the estate.
5. Losses during estate administration.

http://www.irs.gov/businesses/small/article/0,,id=10814...
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RC Quake Donating Member (202 posts) Send PM | Profile | Ignore Mon Oct-23-06 03:06 PM
Response to Reply #28
31. That's my option...
2. Charitable Deduction: If the decedent leaves property to a qualifying charity, it is deductible from the gross estate.

My local animal shelter will be very happy when I die. My family? Not so much so.
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 05:43 PM
Response to Reply #31
35. Welcome to DU, RC Quake!
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zbdent Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 12:51 PM
Response to Original message
21. Somewhat on-topic ... had a conversation with a Repuke co-worker
(who once informed me that he might, MIGHT, vote for Ted Strickland ... but I don't see him voting for Sherrod Brown)

This guy is a die-hard "conservative" Republican ... he was talking about his meeting with a financial adviser.

Adviser suggested he not fight too hard paying off his loans ... in case something happened to him.

Let his kids take up the debt ...

My jaw hung open as I tried to point out to him that this Republican (default to "death tax" hater) essentially was giving his kids a "death tax" ... his debt, which they would have to pay off ... there is no way in hell that any one of his kids would "inherit" a million off him, let alone anything that would qualify for paying on the estate tax ...
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stepnw1f Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 02:50 PM
Response to Original message
29. I Find Millionaires Crying about Paying Taxes
dispicable. Even after they pay their taxes they are pretty well off....

One million and I'd live within my means without working again. That's purely hypothetical of course, because I'd go nuts without being productive.
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pnwmom Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Oct-23-06 05:50 PM
Response to Reply #29
38. Here's the thing about family owned businesses, farms, ranches.
Edited on Mon Oct-23-06 05:51 PM by pnwmom
The kids have grown up pitching in, often unpaid. Everyone in the family has. But before the tax law was changed, if the property -- say, a small farm -- was worth more than $600,000, then the tax rate on the amount above that started at more than 40% and went up from there. So, in order to pay the estate taxes, families were having to sell the farm that the whole family had been working together on.

It just stands to reason that the tax rate should be different on an estate of $2 million and $2 billion. But under the old law, it was exactly the same -- you maxed out at something like $2 million and after that everyone, even the billionaires, paid at the same rate. That doesn't make sense, at least not to me.
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