A different way to think about estate taxes.

[Mina]

It's disingenuous to say nobody owns the property, because the owner is dead, when you've already said that you believe nobody owns anything, anyway.

As you know, I didn't say nobody owns anything. I specifically listed some things that can be owned in the moral sense. And, of course, in the legal sense I'm not questioning that the deceased owned the property prior to death. So, why offer a disingenuous argument like that?

Yes, it is a confiscation scheme.

It isn't. If nobody owns the property, it can't be confiscated. It's effectively abandoned property. If the dead person wants to claim it, he's welcome to show up and make his pitch for it. But until the dead return to life, it's property that has no owner. The question is merely who we will give that abandoned property to.

The 40% is entirely arbitrary....

True, and that's part of my discomfort. Why such a very low tax rate? Wouldn't it be better to do a simple 50/50 split between the designated heirs and the rest of us? Or maybe a 80% tax, such that it represents a more modest "discount" -- it's not uncommon to find 20% discounts in commercial contexts, after all, whereas a 60% discount is a rare exception.

But the 40% tax level appealed to me in part because even when it comes to the very biggest estates (where the exemption would be negligible), that would put the heirs to family businesses in a position where a competently managed business should create income equal to that amount in approximately two years (based on a 20% ROI on the undiscounted value of the business).

So, I think of it as the "utter imbecile threshold" -- the level at which a person would have to almost be trying to be such a blundering asshat as to fail to keep the business afloat in the face of such a radically modest tax bill.

Upon reflection, that's really much to gentle of treatment for those heirs, who after all will tend to have had all sorts of advantages in life that most can only dream of. Even before that gigantic windfall came their way, they will usually have been given a giant leg up on the competition. They will ordinarily have gone to great schools, for instance, and have had opportunities to develop professionally in a way only the boss's kid is likely to see early in a career. So, if even after all of that advantageous prep, they can't make a go of a business at, say, a 20% discount, rather than a 60% discount, I shouldn't care if they fail, right? If their competitors can make a go of it at 100% of the cost, and they can't at 80%, why should I have a problem with that result?

But call me an old softy. I'm setting the tax so incredibly low, at just 40%, to try to give them every change to figure it out.

, and you note that yourself when you say that your premise includes that the entire property could be seized.

The entire property has been abandoned, so there is no seizure. I'm simply saying that if we wanted, we could convey it to the public generally, rather than to a designated heir (or, for the intestate, some individual or individuals we have made default heirs).

 

[Bullseye]

My plan wouldn't prevent that. Remember, the inheritance is still tax free under the exemption, and even above the exemption the designated heirs get the majority. So, unless the parent also got a huge windfall when his parents died, the kid is being put in a better position than the parent was. The parent is leaving the child better off than he was. What's the problem?

If, on the other hand, the parent was also a spoiled rich kid who was handed a huge unearned fortune by way of being in the right family tree, and we're now talking about third-generation wealth, my heart isn't going to bleed over the possibility of the kid not getting an additional step up even over such a lofty predecessor. There are bigger tragedies in this world than a silver-spoon brat not getting to be even richer than his silver-spoon-brat parents.

So, revenge is your motivation for this?


[/QUOTE]

If a business is worth $X, it's because people in the market generally think they could pay $X and yet still manage to get a decent rate of return on it (otherwise, they'd take that same money and buy something else that can provide such a return). Generally speaking, that rate of return tends to be around 20% for small businesses.

Ok, and . . .?

I'm not saying it's impossible that some people will be unable to make a decent go of a business even when they're effectively allowed to "buy" it from the estate for a mere 40% of its value. There are going to be people who are that unbelievably incompetent at business. And I even accept there may be a disproportionate number of those nincompoops among the kinds of cossetted brats who are in line for large family fortunes like that. When you're used to being handed everything on a silver platter by daddy, you may never have had to learn to work hard and think clearly, so maybe you really will drive a business into the ground despite being entitled to buy it for 60% off.

I just don't see that we need to further cosset them with the tax code. It's sink or swim time. If you can't get a reasonable return on investment even when offered a 60% discount relative to true value, then society should have no sentimental attachment to keeping you afloat. Let those assets move into the hands of someone who knows how to use them.

Again jealousy is not the basis for a sound tax code. Nor would many businesses survive having to pay out 40% of their valuation.

 

[Bullseye]

For the four reasons I laid out earlier in this thread, in detail: fairness, productivity, stability, and happiness. And a fifth: it contributes to general revenues, which is important in a country running a giant deficit.

"Fairness"? YGTBSM! How is it "fair" to force a company to liquidate 40% of its validation? Nor do I think that would generate much "happiness". And productivity and stability would be destroyed.

 

[RF667799]

As you know, I didn't say nobody owns anything. I specifically listed some things that can be owned in the moral sense. And, of course, in the legal sense I'm not questioning that the deceased owned the property prior to death. So, why offer a disingenuous argument like that?

It isn't. If nobody owns the property, it can't be confiscated. It's effectively abandoned property. If the dead person wants to claim it, he's welcome to show up and make his pitch for it. But until the dead return to life, it's property that has no owner. The question is merely who we will give that abandoned property to.


True, and that's part of my discomfort. Why such a very low tax rate? Wouldn't it be better to do a simple 50/50 split between the designated heirs and the rest of us? Or maybe a 80% tax, such that it represents a more modest "discount" -- it's not uncommon to find 20% discounts in commercial contexts, after all, whereas a 60% discount is a rare exception.

But the 40% tax level appealed to me in part because even when it comes to the very biggest estates (where the exemption would be negligible), that would put the heirs to family businesses in a position where a competently managed business should create income equal to that amount in approximately two years (based on a 20% ROI on the undiscounted value of the business).

So, I think of it as the "utter imbecile threshold" -- the level at which a person would have to almost be trying to be such a blundering asshat as to fail to keep the business afloat in the face of such a radically modest tax bill.

Upon reflection, that's really much to gentle of treatment for those heirs, who after all will tend to have had all sorts of advantages in life that most can only dream of. Even before that gigantic windfall came their way, they will usually have been given a giant leg up on the competition. They will ordinarily have gone to great schools, for instance, and have had opportunities to develop professionally in a way only the boss's kid is likely to see early in a career. So, if even after all of that advantageous prep, they can't make a go of a business at, say, a 20% discount, rather than a 60% discount, I shouldn't care if they fail, right? If their competitors can make a go of it at 100% of the cost, and they can't at 80%, why should I have a problem with that result?

But call me an old softy. I'm setting the tax so incredibly low, at just 40%, to try to give them every change to figure it out.


The entire property has been abandoned, so there is no seizure. I'm simply saying that if we wanted, we could convey it to the public generally, rather than to a designated heir (or, for the intestate, some individual or individuals we have made default heirs).

"I think people own some things -- but just modest personal effects. Little acquisitions and things absolutely necessary for subsistence are an individual's property in the moral sense."

Yes, yes. You might allow people to own what is necessary for their survival, and perhaps a few luxury items like a toothbrush and a comb. But there's really nothing in anything you have said that allows even that limit to your claim on others. I am so impressed at your magnanimity though! We can only hope the heirs to your scheme are as generous.

The rest of your post is just more hatred for "the boss's kid", and more attempts to justify that hatred by explaining how generous you are in allowing them to keep....their toothbrushes.

Tell me...what of someone who inherits a piece of property for which there is no income stream?

 

[Mina]

So, revenge is your motivation for this?

It isn't. What did you misread that badly? If you can point to the exact language, I can walk you through your error and you can avoid similar humiliations in the future.

Ok, and . . .?

And that means that a business person with the normal level of competence would be expected to be able to take that business and produce a return many, many times greater than the return you'd have to see for someone to drive a business into the ground despite effectively buying it at a 60% discount. So, the question becomes why would we want to skew tax policy just to make sure such an incompetent wouldn't have to sell off his business to someone able to use it more productively. It's basically a form of welfare for shiftless rich kids.

Again jealousy is not the basis for a sound tax code.

Agreed, and yet that's exactly what we have with our absurdly high estate tax exemption and our absurdly low estate tax rates. Recall that jealousy refers to the sentiment of someone hostile to a rival -- such as when the Bible says that Yahweh is a "jealous god" (meaning he won't share his followers with others). When someone is given 60% of a fortune and yet is hostile because others get to share the other 40%, that's jealousy. And that jealousy is the basis for our unsound tax code, right now. Envy would be wanting something that belongs to another, which is a different sentiment and doesn't apply here, since the property has been abandoned by way of death and belongs to nobody.

Nor would many businesses survive having to pay out 40% of their valuation.

The competently managed ones all could. The mere fact they're valued at that level suggests others would be willing to pay out 100% of that valuation to get their hands on the same thing, and yet still expect to turn a tidy profit. What we're effectively doing here is fretting about the spoiled rich kids who get it at a 60% discount and still can't keep it afloat.

 

[Mina]

"Fairness"? YGTBSM! How is it "fair" to force a company to liquidate 40% of its validation? Nor do I think that would generate much "happiness". And productivity and stability would be destroyed.

It's not forcing them to liquidate a thing. One could, of course, simply mortgage the assets for the value, and pay it back in stages -- over ten years, for instance. And, yes, it will produce happiness to spread some share of this vast, unearned fortune from the aristocracy (already to supersaturated with privilege as to be getting diminishing returns with each added dollar) to the society as a whole (many of whom are living paycheck to paycheck, where every little windfall is appreciated). And no, of course neither productivity nor stability would be destroyed. We had estate taxation more or less in line with what I'm saying for most of the middle section of the 20th century, when productivity was actually rising more quickly than today, and we weren't seeing ravening hordes storming our Capitol.

 

[Mina]

I am so impressed at your magnanimity though!

Yes, it's EXTREMELY magnanimous. It allows the already-unfairly-privileged children of the wealthy to not only get a few hundred thousands of unearned wealth completely tax free (while those of us who work for a living pay on every dime earned), but also gives them the lion's share of anything above that exemption, too. Calling it magnanimous is selling it short. It takes generosity almost to the point of outright submission to the aristocracy. I should probably be ashamed of being willing to cut them such a favorable deal.

Tell me...what of someone who inherits a piece of property for which there is no income stream?

Depends. Is it above or below the exemption? If below, then he can be grateful for a tax-free windfall -- an enrichment that he did nothing to deserve but that he can nevertheless receive without the taxes that would have come if he'd actually busted his ass doing productive labor to get the exact same property.

If, on the other hand, it's above the exemption, he'll have the choice to either find a way to pay the taxes, or instead sell it off and pocket a huge unearned gain on the net proceeds -- a sum that, in any event, will be hundreds of thousands of dollars. He can then go off and buy himself a lovely vacation home, at that point, or retire early, etc.

For obvious reasons, I'm less worried about the "poor soul" who gets a gigantic windfall but maybe has to sell a property that he'd rather have kept, than I am about the vastly more numerous people who inherit nothing and have no shot at affording properties at all. If the taxes the lucky ducky pays can help to make their dreams more achievable, that will be a good thing.

 

[RF667799]

Yes, it's EXTREMELY magnanimous.

Sure it is! It's abandoned property as you said, and you don't have to give them ANY of it, except out of your generous nature.

Will you claim the corpse as well, and section it up for whatever proceeds may be had? Will you offer the family a cut?

 

[Bullseye]

It's not forcing them to liquidate a thing. One could, of course, simply mortgage the assets for the value, and pay it back in stages -- over ten years, for instance.

Give me a break.

And, yes, it will produce happiness to spread some share of this vast, unearned fortune from the aristocracy (already to supersaturated with privilege as to be getting diminishing returns with each added dollar) to the society as a whole (many of whom are living paycheck to paycheck, where every little windfall is appreciated). And no, of course neither productivity nor stability would be destroyed. We had estate taxation more or less in line with what I'm saying for most of the middle section of the 20th century, when productivity was actually rising more quickly than today, and we weren't seeing ravening hordes storming our Capitol.

Taxation by ideology and slogans is an insult to our system. You do know that that money doesn't sit in someone's basement, right? It's out working to drive the economy, start new businesses and back entrepreneurs develop new goods and services to improve our lives. You've been watching too many Dynasty reruns.

 

[gdgyva]

Yes, sorry, I was thinking net income and wrote revenues.

Anyway, in what way do you think the valuation is off? If a business is producing $1 million in net income, and you could buy that business for an investment of $5 million, then your annual return would be 1/5, or 20%. If you could buy it at a 60% discount, that would be $1 million, making the ROI 1/2 or 50%.

if you can buy a business throwing off a million net for five million, i can have 10 investors lined up tonight to buy as many as you have

that is what i mean by your valuation being off

a 20% return......that is mammoth

more likely you are going to pay 7-8 million for that business today.....and you still get a nice ROI for the investment

 

[AZRWinger]

if you can buy a business throwing off a million net for five million, i can have 10 investors lined up tonight to buy as many as you have

that is what i mean by your valuation being off

a 20% return......that is mammoth

more likely you are going to pay 7-8 million for that business today.....and you still get a nice ROI for the investment

Don't forget who will set the "valuation" to be used for the inheiritance tax calculation is set by Federal bureaucrats or their pet contractors. They will have every incentive to inflate the valuation.

 

[AZRWinger]

Yes, it's EXTREMELY magnanimous. It allows the already-unfairly-privileged children of the wealthy to not only get a few hundred thousands of unearned wealth completely tax free (while those of us who work for a living pay on every dime earned), but also gives them the lion's share of anything above that exemption, too. Calling it magnanimous is selling it short. It takes generosity almost to the point of outright submission to the aristocracy. I should probably be ashamed of being willing to cut them such a favorable deal.


Depends. Is it above or below the exemption? If below, then he can be grateful for a tax-free windfall -- an enrichment that he did nothing to deserve but that he can nevertheless receive without the taxes that would have come if he'd actually busted his ass doing productive labor to get the exact same property.

If, on the other hand, it's above the exemption, he'll have the choice to either find a way to pay the taxes, or instead sell it off and pocket a huge unearned gain on the net proceeds -- a sum that, in any event, will be hundreds of thousands of dollars. He can then go off and buy himself a lovely vacation home, at that point, or retire early, etc.

For obvious reasons, I'm less worried about the "poor soul" who gets a gigantic windfall but maybe has to sell a property that he'd rather have kept, than I am about the vastly more numerous people who inherit nothing and have no shot at affording properties at all. If the taxes the lucky ducky pays can help to make their dreams more achievable, that will be a good thing.

Buying a business means the purchaser assumes its debts. Why buy a business with a huge IRS lien to satisfy when it can be purchased at a tax auction for pennies on the dollar and the tax lien is dissolved?

Of course in the imaginary world where government just declares the value of the business and investors march to pay the amount. Who cares if the inheritance tax scheme actually works, it services the hatred of class envy. No doubt the former employees of the business destroyed by the imperative to punish so-called rich brats will be grateful for the liquidation.

Stop pretending an understanding of commercial lending or business.

 

[RF667799]

Buying a business means the purchaser assumes its debts. Why buy a business with a huge IRS lien to satisfy when it can be purchased at a tax auction for pennies on the dollar and the tax lien is dissolved?

Of course in the imaginary world where government just declares the value of the business and investors march to pay the amount. Who cares if the inheritance tax scheme actually works, it services the hatred of class envy. No doubt the former employees of the business destroyed by the imperative to punish so-called rich brats will be grateful for the liquidation.

Stop pretending an understanding of commercial lending or business.

It isn't even the usual class envy. In the case of family farms at least, when it was pointed out this scheme would just accelerate the trend of those farms to end up in the portfolios of the mega-wealthy and mega-corporations; she seemed to consider that a feature of the scheme.

No....the scheme seems motivated by a very personal hatred of "heirs", for who she reserves her most venomous characterizations. It might work to satisfy that hatred...and not much else.

 

[Mina]

Sure it is! It's abandoned property as you said, and you don't have to give them ANY of it, except out of your generous nature.

Will you claim the corpse as well, and section it up for whatever proceeds may be had? Will you offer the family a cut?

Ideally, people would make their corpses available to the best uses. That’s certainly what I’m doing — I‘m a registered organ donor, because I think it’s utterly obscene that some people might suffer and die needlessly, just so my body can rot in the ground. But, I get that many people are fundamentally immoral and aren’t bothered by such suffering of others. Since the body itself is such an intimate part of a person’s being, even after it has been vacated by death, I’m content to defer to any expressed wish of the deceased about how it should be handled. If they’ve said to give the family a cut, that’s fine.

 

[Mina]

Give me a break.

Taxation by ideology and slogans is an insult to our system. You do know that that money doesn't sit in someone's basement, right? It's out working to drive the economy, start new businesses and back entrepreneurs develop new goods and services to improve our lives. You've been watching too many Dynasty reruns.

Sometimes money is, in fact, sitting in someone’s basement. Other times it’s out doing good in the world. More robust estate taxation will tend to have more money in the latter category and less in the former. You’ve been watching to much Fox News.

 

[Mina]

if you can buy a business throwing off a million net for five million, i can have 10 investors lined up tonight to buy as many as you have

that is what i mean by your valuation being off

a 20% return......that is mammoth

more likely you are going to pay 7-8 million for that business today.....and you still get a nice ROI for the investment

The valuation isn’t off. I do this for a living — albeit with much bigger businesses. If the companies I advise don’t expect to get an average of 15% or more ROI on a company they’re targeting, they don’t pull the trigger, because they could instead just stick the money into a diversified stock portfolio of large cap stocks and expect an average of 10%+ with less risk. Smaller companies tend to be viewed as higher risk, so people demand higher return than that: more in the 15% to 30% range, rather than the 10% to 20% range:

How to Calculate ROI Before Buying a Business

If you want a way to own a small business with all of the rewards and a little less excitement, you might consider buying an existing business.

www.neat.com

“Because small business owners usually have to take more risks, most business experts advise buyers of typical small companies to look for an ROI between 15 and 30 percent.”

So, a 20% return isn’t mammoth by small business standards. It’s well within the range of what buyers expect. If, instead, you were only expecting, say, 10%, you’d be a fool to buy the headaches and risks that come with a small business, when you can average over 10% without a lick of work just by sitting the money in a diversified large-cap ETF like VOO, with vastly more liquidity.

Anyway, I’m talking here about longer term ROI, rather than what you expect in the present year. And things can go up or down depending on what kind of returns other options are getting. If, for example, large-cap stocks are seen as over-valued at the moment, such that people expect well under 10% ROI in the coming years, then that would make a smaller company look like a decent deal at that level. But, in the same sense, if large caps are seen as a bargain at the moment, such that people are expecting over 10%, then a small company is going to look even less enticing at that level. And since the long-term averages are a bit over 10% for large cap domestic stocks, there will be at least as many times they do better than that than when they do worse.

 

[Bullseye]

Sometimes money is, in fact, sitting in someone’s basement.

Nonsense

Other times it’s out doing good in the world. More robust estate taxation will tend to have more money in the latter category and less in the former. You’ve been watching to much Fox News.

I doubt that. Money in the hands of government is probably the least efficient usage. Money in the private sector in infinitely more productive and efficiently used. See, if the government wastes money or uses for stupid stuff there's no down-side; the just tax more. In the private sector poorly used capital causes businesses to fail and creates opportunity for other businesses.

 

[Mina]

Buying a business means the purchaser assumes its debts. Why buy a business with a huge IRS lien to satisfy when it can be purchased at a tax auction for pennies on the dollar and the tax lien is dissolved?

Because, in this case, it won’t go to auction. If the tax liability is, say, $1.8 million, and the business is worth $5 million, judging by the $1 million per year in net profits it’s been creating, then there will be people lining up willing to buy it at a modest discount from that true value.

But, if you’re genuinely worried that the government may be over assessing the value, there are simple ways that could be handled — like allow the designated heirs to call the IRS’s bluff by selling it to them at 50% of the net of the assessed value and the tax liability. Then, if the IRS turns around and sells it for “pennies on the dollar,” the heirs will have more than enough cash on hand to buy it at that stage, and they’ll come out way ahead of where they would have if it hadn’t been taxed in the first place. But, if they attempt to “call the IRS‘s bluff” and the business is, in fact, worth something near the assessed value, they’ll be much worse off than if they’d just paid the taxes.

But I suspect this isn’t a good-faith concern, and so a good-faith solution like that would do nothing to resolve the issue. Instead, it’s just one of those “kitchen sink” arguments thrown at the issue on behalf of the aristocracy by those who feel that rich kids shouldn’t have to pay taxes on their unearned windfalls, the way that people who actually work for a living are expected to pay taxes on money they actually earn.

Stop pretending an understanding of commercial lending or business.

I do this for a living and make a quarter million dollars per year doing it. My academic training was in this area, and my job is working as a consultant for big businesses that do valuations on M&A targets. I’ve mentioned that in the past.

 

[AZRWinger]

Because, in this case, it won’t go to auction. If the tax liability is, say, $1.8 million, and the business is worth $5 million, judging by the $1 million per year in net profits it’s been creating, then there will be people lining up willing to buy it at a modest discount from that true value.

But, if you’re genuinely worried that the government may be over assessing the value, there are simple ways that could be handled — like allow the designated heirs to call the IRS’s bluff by selling it to them at 50% of the net of the assessed value and the tax liability. Then, if the IRS turns around and sells it for “pennies on the dollar,” the heirs will have more than enough cash on hand to buy it at that stage, and they’ll come out way ahead of where they would have if it hadn’t been taxed in the first place. But, if they attempt to “call the IRS‘s bluff” and the business is, in fact, worth something near the assessed value, they’ll be much worse off than if they’d just paid the taxes.

But I suspect this isn’t a good-faith concern, and so a good-faith solution like that would do nothing to resolve the issue. Instead, it’s just one of those “kitchen sink” arguments thrown at the issue on behalf of the aristocracy by those who feel that rich kids shouldn’t have to pay taxes on their unearned windfalls, the way that people who actually work for a living are expected to pay taxes on money they actually earn.

I do this for a living and make a quarter million dollars per year doing it. My academic training was in this area, and my job is working as a consultant for big businesses that do valuations on M&A targets. I’ve mentioned that in the past.

IRS tax liens don't work the way you seem to think they do. There is no negotiation to get cash back. The IRS seizes assets for unpaid liens then sells them off typically through an auction house at a steep discount with adminstrative and other costs deducted from proceeds. If the taxpayer is picked clean, the IRS might settle for less than the lien, otherwise the vultures will keep picking until nothing is left.

For the vast majority of small business a 40% of arbitrary valuation as a tax bill for nothing isn’t survivable. The heirs are frequently relatives and children who grew up in the business. Their owners equity is the sweat kind, not cash.

But who cares if the confiscatory inheritance tax crushes family businesses, it's all about getting even with rich brats. Right.

 

[LostInSeattle]

What’s wrong with multigenerational aristocracy?

Just about everything.

 

[Mina]

IRS tax liens don't work the way you seem to think they do. There is no negotiation to get cash back

I didn't suggest there was. Reread. I'm simply suggesting that if you're really worried about this (rather than just running interference for the aristocracy) there'd be simple rules changes that would address that worry. Obviously, that targeted fix would make more sense than giving the vast majority of heirs gigantic tax-free windfalls to avoid such rare occurrences.

But who cares if the confiscatory inheritance tax crushes family businesses, it's all about getting even with rich brats. Right.

Again, it's not a confiscatory tax, since there's no owner from whom to confiscate anything. The property has been abandoned by death. What we're discussing is simply what to do with that abandoned property. Should it effectively be shared equally by all? Should it go entirely to the eldest son, which would be in keeping with long tradition? Should it go to whoever the dead person would have wanted it to go to? Or should part of it go one way and part another? Some might say the designated heirs should get 100%. Some might say their luck of being related to a wealthy person has already represented a huge unfair advantage in life and that we shouldn't be increasing that privilege yet more by giving them a larger share of that estate than any of the rest of us get. I err a bit on the side of the privileged, I guess, since I say somewhere between 60% and 100% (depending on whether and by how much it exceeds the exemption).

 

[mrjurrs]

I'm a little skeptical of 95%, since I'm not aware of it having been tried at that level, and I'm "conservative" in the classical sense: reluctant to experiment with untested ideas. But, we do have experience with progressive estate taxes, with the equivalent of a $600k exemption (today's dollars), and then rates rising from 18% to 77% on the balance. That worked out fine. So I'd happily support that. If the very biggest estates merely approached 77% taxation, that would still go a long way towards fighting the growing wealth inequality in this country.

The reality is that estates that are subject to estate tax issues can 'estate plan' their way out serious tax issues. Why is it that one political party can be so against giving money to people who haven't earned it and so adamant about giving money to a different group that hasn't earned it?

 

[Mina]

The reality is that estates that are subject to estate tax issues can 'estate plan' their way out serious tax issues. Why is it that one political party can be so against giving money to people who haven't earned it and so adamant about giving money to a different group that hasn't earned it?

Yep. There are certain privileged groups the Republicans are happy to see handed lots of unearned wealth.

This is actually something that drives me away from the GOP. In theory, they might be able to woo someone like me with their talk of wanting to reward hard work and innovation, and not wanting to prop up lazy people. But that kind of pitch would focus more on income taxes for earned incomes. The Republicans, though, actually want to PUNISH those who work hard and innovate, relative to those who get the exact same income with less or no effort. Basically, they want you to pay less in tax the less you've done to deserve the money.

If you earn a given sum as a salary, for productive personal labor, they want to punish you with high rates. If you "earn" it as a dividend as a business owner (such that you effectively own part of the value created by those who work for you), they want taxes to be lower, same as if you get it through a capital gain (which often just involves riding a rising tide that lifts everyone with an ownership stake). And if you get it merely by having been in the right family tree, they want you to pay nothing at all. It's exactly inversely proportional to merit, for them. And that is so repulsive it makes it impossible for me to even flirt with the idea of moving their way.

 

[ttwtt78640]

if you can buy a business throwing off a million net for five million, i can have 10 investors lined up tonight to buy as many as you have

that is what i mean by your valuation being off

a 20% return......that is mammoth

more likely you are going to pay 7-8 million for that business today.....and you still get a nice ROI for the investment

The estate tax does not “buy the business” it simply demands a cut before the business or other estate assets are transferred to (potentially multiple) heirs. It can be avoided by transferring the assets to a ‘corporate’ entity prior to death (aka estate planning).

 

[BirdinHand]

Mental note to make sure to give our financial planner a really nice bottle of his favorite the next time we're visiting with him. Thankful he will keep the paws of folks like Mina off my son's future inheritances.