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$5 million is ordinary if you consider the richest household out of fifty to be the norm and all of the poorer forty-nine to be outliers.
My father was an extremely successful professional who joined government and obtained a very large pension that he collected and saved much of for over 15 years before his death. At his death, he fully owned some real property as well. Nevertheless, his estate was not remotely close to this "ordinary" $5 million that is spoken of. I suspect inheritances that are $5 and larger are less than the 1% we often talk about the wealthiest people in this country. Maybe $5 million would be the 1/2 % of 1% or something.
As a rule of thumb, I think modest inheritance taxes ought to start at about 300K. Perhaps, there should be a 5% tax on such inheritances. Than at the $1 million point it should rise considerably.
Hoffdano
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I don't agree with #1 (of course).
As for #2 - it is clear you and I disagree. I work/invest for myself and my family. I think I have earned my right to give my money away. I was taxed when I earned it. I was taxed when I bought an item. Etc. The "unearned money" issue is irrelevant to me when the event that triggered the unearned money is my death. I consider it a ridiculous waste of time and resources to have to manage my death so taxes are minimized.
I am sympathetic to taxation of dynastic or massive wealth inheritance. But not ordinary wealth ($5M is ordinary these days).
My BIL believes all inheritance should be abolished. It should all go to society (government). So we should work our entire lives to pass on our life's savings to people with no connection to me? No. Taxes paid while I am working already do that.
I don't believe in abolishing inheritance because the goal of taxation should not be to redistribute income. The goal of taxes should be to pay for the necessary operations of government that a majority of Americans choose through their Congress. However, I think such taxes should be used to collect a greater percentage of necessary taxes. Please note that this is a different argument than some are trying to make here--straying off topic--by suggesting taxes generally are too high. Nor, am I arguing that government isn't sometimes wasteful--another red herring argument. That's not the discussion here and one I would be all to happy to respond too, but under another subject header.
Will people try to evade such taxes? Of course, they will. What else is new? However, we see the same issue with the sales tax and any other tax. The government finds ways to collect it. Some people find a way to avoid paying part of it. Occasionally, tax laws have to be rewritten and reinterpreted and accountants make their living doing that. That's the way our system works. Its nothing I find particularly upsetting.
Finally, every dollar collected should be used to reduce the amount working people pay in income taxes.
My comments to OAKTONITE in blue...
And let me reiterate that buying anything solely on the basis of tax consequences is a fool's errand. There must be an actual underlying rationale for an investment before it can begin to make sense. More or less favorable tax treatment is merely one aspect of deciding between competing such candidates.
A business owner most certainly buys things based on tax consequences - buying your commercial building or investing in company profit sharing are examples of this. You do not own a business, so you do not know about this. You are a restaurant manager.
No, I'm pushing 70, and if you were not afraid to use the word DEBT in a sentence, you should simply have done so rather than so obviously investing in dancing around it. Leverage is the use of OPM -- Other People's Money. That's borrowed money. Borrowing creates debt. You may as well just say so.
Considering I have proudly proclaimed that I use "prudent DEBT," I can only assume lack of reading comprehension. I am very happy to borrow other people's money to create profit - and other people are very happy to give it to me for the returns.
Rest assured that I am knowledgeable over the ranges of both sane and insane uses of leverage.
Way to go.
Said the first-year to the department chair.
You are a "department chair" restaurant manager trying to give advice to successful business owners/investors on this forum... Way to go. If you were so well off, would you really being be spending your golden years managing a restaurant?
It is meanwhile often found that those who do what they love and invest in what they know are able to compile an enviable record of success in life. Including financial success of course, but many other sorts as well.
Leverage -- like all DEBT -- is a tool. So is a chainsaw. Used properly, these are very beneficial things. Used improperly, they can do a lot of long-term damage.
I agree with your above 2 paragraphs. Do you think I do not?
Estate planning is for those who can actually expect to have an estate when they die. For most, nothing beyond a simple will is necessary. Trying to push people into products and services that they don't and won't ever have an actual need for is shyster-stuff.
If you have a success mentality, you can expect an estate when you die. Intelligent financial planners are not being "pushed into products/services" they don't need. They expect to succeed, are in the process of succeeding, and are laying out their own foundation, while also arming themselves with tax-sheltering advantage. If you are posting about the "ignorant masses," don't assume they are all on this forum.
Tax-sheltering is very different from investing solely on the basis of tax advantages. That's another tune changed there.
Different issues that can BOTH be addressed in estate planning.
Do you recall 2000 as having been some year of mass rich-person exodus from the US or frenzied tax-avoidance behavior modification of their part?
You do know that "rich people" do not have to actually leave the continental U.S. to move their money around in their shell corporations, or trusts, or off-shore accounts, right? They can do that right from their living rooms.
A business owner most certainly buys things based on tax consequences - buying your commercial building or investing in company profit sharing are examples of this. You do not own a business, so you do not know about this. You are a restaurant manager.
Clue: The restaurant is owned and operated by my LLC.
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Originally Posted by GoCUBS1
Considering I have proudly proclaimed that I use "prudent DEBT," I can only assume lack of reading comprehension. I am very happy to borrow other people's money to create profit - and other people are very happy to give it to me for the returns.
You were oddly reluctant to equate leverage to debt. I had to force the admission out of you. I see this often enough among salespersons and others accustomed to the imprecision of spin and other forms of advertising-speak.
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Originally Posted by GoCUBS1
You are a "department chair" restaurant manager trying to give advice to successful business owners/investors on this forum...
I am an economist, business owner, and public charity director. You have not been educating me about any of them. To the contrary, you have made one misstatement after another.
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Originally Posted by GoCUBS1
If you were so well off, would you really being be spending your golden years managing a restaurant?
I'm well enough off to do whatever I want. I've been involved as a worker or investor in restaurants since the 1960's. Why would you find it odd for such a person still to be involved? Do you recall that "do what you love" thing? And admit it -- you've dreamed a dozen times of opening your own restaurant. For you of course, it's just a pipedream still.
I agree with your above 2 paragraphs. Do you think I do not?
No, I think you need to move on to more than just those two paragraphs.
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Originally Posted by GoCUBS1
If you have a success mentality, you can expect an estate when you die.
LOL! There's a complete load of crap if I ever saw one. Wealthy people often have a "success mentality". Therefore, if you have a "success mentality", you can expect to become wealthy. What a spectacular crock!
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Originally Posted by GoCUBS1
Intelligent financial planners are not being "pushed into products/services" they don't need.
Repeat after me: Almost no one is ever going to have a federal estate tax liability. The people who will have such a liability will know about it with more than ample time left to make necessary arrangements. All these milions of other people do not now and never will need fancy trusts, tax-avoidance schemes, or other time- and money-consuming bells and whistles that protect them only from what isn't coming in the first place. See elephant stampedes noted above.
You do know that "rich people" do not have to actually leave the continental U.S. to move their money around in their shell corporations, or trusts, or off-shore accounts, right? They can do that right from their living rooms.
US citizens are taxed on their global incomes. Some of the provisions for this may be found in the Foreign Account Tax Compliance Act of 2010 (P.L. 111-147). Recent guidance may be found here...
I'm well enough off to do whatever I want. I've been involved as a worker or investor in restaurants since the 1960's. Why would you find it odd for such a person still to be involved? Do you recall that "do what you love" thing? And admit it -- you've dreamed a dozen times of opening your own restaurant. For you of course, it's just a pipedream still.
That's ok, I'm doing a bit better than restaurant management. Owning a restaurant - no thanks. Not my dream. Have too many friends who do this - bad profit margins, bad hours, bad working conditions, major personnel issues, very low barrier to entry - that is why any yahoo can try to do it. And before you mention it, I also have no interest in coffee shops or Ebay or bread routes.
I'll stick to my market where my corporate customers actually have multi-million dollar budgets - not a $10 Groupon - and require expertise you can't garner from "Restaurant Management For Dummies."
US citizens are taxed on their global incomes. Some of the provisions for this may be found in the Foreign Account Tax Compliance Act of 2010 (P.L. 111-147). Recent guidance may be found here...
No, I think you need to move on to more than just those two paragraphs.
LOL! There's a complete load of crap if I ever saw one. Wealthy people often have a "success mentality". Therefore, if you have a "success mentality", you can expect to become wealthy. What a spectacular crock!
Repeat after me: Almost no one is ever going to have a federal estate tax liability. The people who will have such a liability will know about it with more than ample time left to make necessary arrangements. All these milions of other people do not now and never will need fancy trusts, tax-avoidance schemes, or other time- and money-consuming bells and whistles that protect them only from what isn't coming in the first place. See elephant stampedes noted above.
"Wealthy people" (and people who are becoming wealthy) typically don't have a victim mentality and are proactive on things like estate planning and taking advantage of tax sheltering. But by all means, keep assuming that the masses are idiots and incapable of such planning to defer/shelter taxes. Not everyone can be as smart as you. They should "heed your advice" and stick their heads in the sand.
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Originally Posted by oaktonite
You were oddly reluctant to equate leverage to debt. I had to force the admission out of you. I see this often enough among salespersons and others accustomed to the imprecision of spin and other forms of advertising-speak.
A complete fabrication which is readily apparent to anyone who read my posts.
Last edited by GoCUBS1; 08-10-2013 at 03:02 PM..
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