Originally Posted by Iriemon
Why is it a horrendous practice for Paris Hilton to inherit $28 million income and not pay a dime of tax, so that someone who works for and earns their income pays MORE tax?
Look - I criticize the media more than anyone I know for the attention Paris Hilton receives. Without question, she's a bimbo and an embarassment to hard working women who manage both a home and a job. However, her grandfather worked hard, made good investments and left his family an incredible trust fund.
The practice of inheritance tax is bad because it punished him (Conrad Hilton) for all his hard work. Here in Toledo there was a locally owned grocery chain (founded in the 20's I believe) - 4 stores. They offered outstanding customer service and great products - including things the national chains didn't. The founder/owner died about 6 years ago. His heirs had to sell the stores because of inheritance taxes. That's a loss to the community. As an aside - the national chain they sold to just closed all their Toledo area stores. I grew up in a farming family. Many family farms are sold to pay inheritance taxes. I know of several small family business owners that worry about what will happen to their business when they pass away.
Seems to me that the Paris Hilton's are the exception and the small business owners are the rule.
Personally, I don't agree with income tax either. The founding fathers never intended an income tax - heck, the constitution needed to be amended to allow for it. I work extremely hard - generally 45-50 hours at the office plus I bring work home. The government doesn't deserve one red cent of what I've earned.
I'd like to see us go back to the days when serving in Congress was a part time job, when representatives and senators had real jobs that occupied their lives for 9-10 months of the year, when they didn't have expense accounts and staffs larger than the one at my office. We live in a free market society and personally I think the private sector can do a better job of managing the country, providing education, building roads and bridges, taking care of the national parks and such than the government does. The government's role in our lives should be extremely limited.
Let me address your points in somewhat reverse order.
Your last two paragraphs attacked the issue of whether there should be any tax. That is a different (and somewhat hypothetical subject). The fact is we have a Govt that likes to spend money, primarily on social welfare, military and wars, and interest on the debt it has accumulated. The question is, given that, there must be some form of tax. Given that -- does it make sense that people who inherit money pay NO tax (as the Republicans propose), such that people who work must pay a HIGHER tax. That is the issue.
You argue that "Paris Hiltons" are the exception, and that the tax really hurts small businesses.
Let me address the Paris Hiltons first. It is true I used Paris Hilton (who probably actually had some tax taken out of what she inherited, because the tax is not fully repealed, yet) because she is the perfect symbol of why I think an inheritance tax is fair. My point is pretty basic. I bust my ass to earn my salary. It pisses me off to think I have to pay taxes, and the Parises can inherit money tax free for the hard work and talent of picking the right womb to be born. Why do I have to pay MORE tax so Paris pays NO tax?
There are many scores of thousands of Parises out their, trust fund babies who inherit or stand to inherit huge sums of money. Should people who work pay MORE tax so those folks pay NO tax?
You argue that an inheritance tax is unfair to Paris' dad. I don't see the point. He's dead. He's not keeping anything. If what you are saying is that since he paid a tax on what he earned, Paris should not, I don't see the logic in that either. Using that same theory, the person who pays me for my services paid a tax on their money, so why should I have to pay a tax on it?
Finally, you argument that an inheritance tax hurts small businesses doesn't fly either. The businesses aren't taxed, the persons inheriting the shares are. Before the repeal, the exemption was $600k per parent, so that was $1.2 million, and then the taxes didn't really kick in for another couple million or so, so heirs inheriting businesses worth less than several million dollars weren't taxed -- most of your "small businesses" were not affected.
You gave an example of a retail business. If an heir wanted to keep a business, most times they could borrow the money to pay the tax and keep the business. My guess is what happens in most cases is that multiple kids receive the stock, cannot agree on how to run the business, or do not want to and just want the $$$, and that is why they sell.
Down here in Miami, we did have a business that was sold to pay the estate tax (they said), the Miami dolphins. Joe Robbie's heirs had to sell the team to pay the tax. But somehow, I don't shed too many tears for them, they still inherited multi-millions each, and I am not willing to pay MORE tax so they can inherit multi-millions tax FREE. Nor do I think that is fair.
As for that farms, we heard Bush and the Republicans trumpet the theme of family farms being lost. I've done research and have not found one case where this actually happened. Family fams are being lost, but because of the Govt subsidized big farm businesses in bed with the red state Republicans. Not because of the estate tax.