The Top Fifth

[RedDenver]

RedDenver, in your 40M 90% estate tax scenario, an estate worth 100M would be taxed 54M, more than half of the estate. Is this a correct examination, and is that fair do you think?

EDIT (poor choice of words): I don't really care about "fair" - life isn't fair. I'm more interested in the benefits and harms to both the individual and society. (Maybe I'm being pedantic and that's just another definition of "fair".)

 

But to the point of your question, I'm honestly conflicted. As BRB argues, there's more context to these things than just the raw numbers.

Edited June 14, 2017 by RedDenver

[Nebfanatic]

 

RedDenver, in your 40M 90% estate tax scenario, an estate worth 100M would be taxed 54M, more than half of the estate. Is this a correct examination, and is that fair do you think?

I don't really care about "fair" - life isn't fair. I'm more interested in the benefits and harms to both the individual and society. (Maybe I'm being pedantic and that's just another definition of "fair".)

 

But to the point of your question, I'm honestly conflicted. As BRB argues, there's more context to these things than just the raw numbers.

With that logic we should just tax the wealthy for all they have! Life isn't fair folks, and neither are our tax laws lol

 

Edit: I agree with you mostly here red Denver, but for the sake of discussion, I press

[BigRedBuster]

 

 

 

 

 

 

 

My biggest issue with what you have said is from your first statements where your reasoning behind your estate taxes wasn't to raise money for the government to work. It was to break up wealth

I agree with this.

 

off the top of my head I would suggest that we tax income from the assets and capital gains if and when the assets are sold

The tip-top of estates will consist of "unrealized" capital gains. If the assets are never considered realized, then these gains will go untaxed in perpetuity.

 

If an asset is not sold, there is no capital gains realized or unrealized.

 

Let's say I inherit a section of land in the Platte Valley. Right now that is probably worth around $4,480,000. I have a choice of either selling that or maintaining it and receiving income off of it. So, If I keep ownership, I should be taxed on the income I receive off of that land. If I sell it, I should then be taxed a reasonable capital gains tax. If I then die 5 years from now and pass that on to my kids, they then have the opportunity to sell it and create the taxable event or receive income off of it which is taxable.

 

If assets are privately owned, eventually they will be sold. It may be generations down the road, but nothing lasts forever.

 

At one time (may still be the case) the two largest land owners in Nebraska was Ted Turner and the Mormon Church. Now, I have way more of a problem with the Mormon Church ownership than I do Ted Turner because at some point, he will die and his assets will probably be liquidated. If they aren't they will be eventually when his heirs start dying off. The Mormon Church is the one that will own the land into perpetuity. But, it's their right to own the land, I just hope the tax laws are such that the church (in this case) is taxed just like a normal investor instead of some type of loop hole for churches. I think that's the case but I have never been able to find out.

 

In your Ted Turner and heirs vs the Mormon Church as land owners, how are they any different if Ted' heirs never sell? Because even when Ted's heirs start dying off, they can hand over the assets to their heirs, and so on with each generations. You see that they're similar problems, right?

 

Sort of but not necessarily.

 

I'm not a big fan of Ted buying huge chunks of land in the Sandhills simply because I think that land is better served in the hands of the local ranchers who know how to take care of a delicate ecosystem such as that is. So, I'm not going to defend him or act like I like it that he owns that land. BUT, my point is, the government doesn't have the right to go in and break that up now or at his death just for the purpose of redistribution of wealth.

 

Interestingly, I firmly believe that if large ranches are forced to be broken up because the government believes those heirs don't deserve it and the state does, that land is MORE likely to be put in the hands of people like Turner and the Mormon Church than staying in local ownership.

 

Yes, I see your point here. Especially given the current $10.5 million exemption. But if the exemption was higher, how often would estate taxes actually affect these ranches? The link you gave somewhere earlier about the Sandhills ranch being sold was for about $19 million (if I remember right), so that ranch at least wouldn't be affected by what I'm proposing. It goes back to my question of, is there any exemption limit (and/or rate above the limit) for the estate tax that could keep billionaires from buying up and holding land without affecting the family ranches? If not, is there another means?

 

I used a ranch in the sandhills as an example. I feel the same way about any family owned company. Sure, if you raise the limit, it affects fewer people. But, I don't see that as validation that it's the right thing to do.

 

So whether the inheritance is $10 million, $1 billion, or $100 billion, it makes no difference?

 

Let me put this in perspective of people who both of us despise. Let's say Donald Trump dies tomorrow (no, I'm not wanting this to happen).

 

Now, I don't know much about his financial situation other than what has been made public in the last year. He claims to be worth over a billion dollars. Yes, his kids are rich too.

 

Now, let's say a very large portion of that worth is tied up in the real estate of his golf courses and Trump Towers. So, lets say 900,000,000 of the worth is not liquid.

 

With your proposal I saw earlier, you would say that he could will 40,000,000 to his kids and the rest is taxed at 90%. So, Ivanka and brothers get 40,000,000 and the family (company) needs to come up with 864,000,000 in taxes. To do that, his golf courses and other assets would probably need to liquidated. That puts every day Americans out of work who work at those courses and the supporting businesses. It negatively affects the communities these facilities are in.

 

Another thing about this is, a fact that is true about family businesses. Something like 75% of them don't survive the second generation. From that, something like 90% don't survive the third generation. So, the vast majority of these transactions are naturally going to cause an event where the assets get liquidated and broken up.

 

Look at the big business moguls of American history. People like the Vanderbilts and Duponts of the world. Eventually over time, their assets get distributed and sold off.

[RedDenver]

 

 

RedDenver, in your 40M 90% estate tax scenario, an estate worth 100M would be taxed 54M, more than half of the estate. Is this a correct examination, and is that fair do you think?

I don't really care about "fair" - life isn't fair. I'm more interested in the benefits and harms to both the individual and society. (Maybe I'm being pedantic and that's just another definition of "fair".)

 

But to the point of your question, I'm honestly conflicted. As BRB argues, there's more context to these things than just the raw numbers.

 

With that logic we should just tax the wealthy for all they have! Life isn't fair folks, and neither are our tax laws lol

 

I'd obviously oppose that: "I'm more interested in the benefits and harms to both the individual and society"

[RedDenver]

 

 

 

 

 

 

 

 

My biggest issue with what you have said is from your first statements where your reasoning behind your estate taxes wasn't to raise money for the government to work. It was to break up wealth

I agree with this.

 

off the top of my head I would suggest that we tax income from the assets and capital gains if and when the assets are sold

The tip-top of estates will consist of "unrealized" capital gains. If the assets are never considered realized, then these gains will go untaxed in perpetuity.

 

If an asset is not sold, there is no capital gains realized or unrealized.

 

Let's say I inherit a section of land in the Platte Valley. Right now that is probably worth around $4,480,000. I have a choice of either selling that or maintaining it and receiving income off of it. So, If I keep ownership, I should be taxed on the income I receive off of that land. If I sell it, I should then be taxed a reasonable capital gains tax. If I then die 5 years from now and pass that on to my kids, they then have the opportunity to sell it and create the taxable event or receive income off of it which is taxable.

 

If assets are privately owned, eventually they will be sold. It may be generations down the road, but nothing lasts forever.

 

At one time (may still be the case) the two largest land owners in Nebraska was Ted Turner and the Mormon Church. Now, I have way more of a problem with the Mormon Church ownership than I do Ted Turner because at some point, he will die and his assets will probably be liquidated. If they aren't they will be eventually when his heirs start dying off. The Mormon Church is the one that will own the land into perpetuity. But, it's their right to own the land, I just hope the tax laws are such that the church (in this case) is taxed just like a normal investor instead of some type of loop hole for churches. I think that's the case but I have never been able to find out.

 

In your Ted Turner and heirs vs the Mormon Church as land owners, how are they any different if Ted' heirs never sell? Because even when Ted's heirs start dying off, they can hand over the assets to their heirs, and so on with each generations. You see that they're similar problems, right?

 

Sort of but not necessarily.

 

I'm not a big fan of Ted buying huge chunks of land in the Sandhills simply because I think that land is better served in the hands of the local ranchers who know how to take care of a delicate ecosystem such as that is. So, I'm not going to defend him or act like I like it that he owns that land. BUT, my point is, the government doesn't have the right to go in and break that up now or at his death just for the purpose of redistribution of wealth.

 

Interestingly, I firmly believe that if large ranches are forced to be broken up because the government believes those heirs don't deserve it and the state does, that land is MORE likely to be put in the hands of people like Turner and the Mormon Church than staying in local ownership.

 

Yes, I see your point here. Especially given the current $10.5 million exemption. But if the exemption was higher, how often would estate taxes actually affect these ranches? The link you gave somewhere earlier about the Sandhills ranch being sold was for about $19 million (if I remember right), so that ranch at least wouldn't be affected by what I'm proposing. It goes back to my question of, is there any exemption limit (and/or rate above the limit) for the estate tax that could keep billionaires from buying up and holding land without affecting the family ranches? If not, is there another means?

 

I used a ranch in the sandhills as an example. I feel the same way about any family owned company. Sure, if you raise the limit, it affects fewer people. But, I don't see that as validation that it's the right thing to do.

 

So whether the inheritance is $10 million, $1 billion, or $100 billion, it makes no difference?

 

Let me put this in perspective of people who both of us despise. Let's say Donald Trump dies tomorrow (no, I'm not wanting this to happen).

 

Now, I don't know much about his financial situation other than what has been made public in the last year. He claims to be worth over a billion dollars. Yes, his kids are rich too.

 

Now, let's say a very large portion of that worth is tied up in the real estate of his golf courses and Trump Towers. So, lets say 900,000,000 of the worth is not liquid.

 

With your proposal I saw earlier, you would say that he could will 40,000,000 to his kids and the rest is taxed at 90%. So, Ivanka and brothers get 40,000,000 and the family (company) needs to come up with 864,000,000 in taxes. To do that, his golf courses and other assets would probably need to liquidated. That puts every day Americans out of work who work at those courses and the supporting businesses. It negatively affects the communities these facilities are in.

 

Another thing about this is, a fact that is true about family businesses. Something like 75% of them don't survive the second generation. From that, something like 90% don't survive the third generation. So, the vast majority of these transactions are naturally going to cause an event where the assets get liquidated and broken up.

 

Look at the big business moguls of American history. People like the Vanderbilts and Duponts of the world. Eventually over time, their assets get distributed and sold off.

 

I'm not sure how you're arriving at the bolded. Having to sell your company doesn't suddenly mean it vanishes. There will be new owners, who probably want an income off their purchase.

[Nebfanatic]

 

 

 

RedDenver, in your 40M 90% estate tax scenario, an estate worth 100M would be taxed 54M, more than half of the estate. Is this a correct examination, and is that fair do you think?

I don't really care about "fair" - life isn't fair. I'm more interested in the benefits and harms to both the individual and society. (Maybe I'm being pedantic and that's just another definition of "fair".)

 

But to the point of your question, I'm honestly conflicted. As BRB argues, there's more context to these things than just the raw numbers.

With that logic we should just tax the wealthy for all they have! Life isn't fair folks, and neither are our tax laws lol

I'd obviously oppose that: "I'm more interested in the benefits and harms to both the individual and society"

I think the disagreement (if there even really is one) could probably be resolved if I replaced fair with appropriate in my original post. As you mentioned in the latter half of your post, it gets complicated dependent on situation.

[BigRedBuster]

 

 

 

 

 

 

 

 

 

My biggest issue with what you have said is from your first statements where your reasoning behind your estate taxes wasn't to raise money for the government to work. It was to break up wealth

I agree with this.

 

off the top of my head I would suggest that we tax income from the assets and capital gains if and when the assets are sold

The tip-top of estates will consist of "unrealized" capital gains. If the assets are never considered realized, then these gains will go untaxed in perpetuity.

 

If an asset is not sold, there is no capital gains realized or unrealized.

 

Let's say I inherit a section of land in the Platte Valley. Right now that is probably worth around $4,480,000. I have a choice of either selling that or maintaining it and receiving income off of it. So, If I keep ownership, I should be taxed on the income I receive off of that land. If I sell it, I should then be taxed a reasonable capital gains tax. If I then die 5 years from now and pass that on to my kids, they then have the opportunity to sell it and create the taxable event or receive income off of it which is taxable.

 

If assets are privately owned, eventually they will be sold. It may be generations down the road, but nothing lasts forever.

 

At one time (may still be the case) the two largest land owners in Nebraska was Ted Turner and the Mormon Church. Now, I have way more of a problem with the Mormon Church ownership than I do Ted Turner because at some point, he will die and his assets will probably be liquidated. If they aren't they will be eventually when his heirs start dying off. The Mormon Church is the one that will own the land into perpetuity. But, it's their right to own the land, I just hope the tax laws are such that the church (in this case) is taxed just like a normal investor instead of some type of loop hole for churches. I think that's the case but I have never been able to find out.

 

In your Ted Turner and heirs vs the Mormon Church as land owners, how are they any different if Ted' heirs never sell? Because even when Ted's heirs start dying off, they can hand over the assets to their heirs, and so on with each generations. You see that they're similar problems, right?

 

Sort of but not necessarily.

 

I'm not a big fan of Ted buying huge chunks of land in the Sandhills simply because I think that land is better served in the hands of the local ranchers who know how to take care of a delicate ecosystem such as that is. So, I'm not going to defend him or act like I like it that he owns that land. BUT, my point is, the government doesn't have the right to go in and break that up now or at his death just for the purpose of redistribution of wealth.

 

Interestingly, I firmly believe that if large ranches are forced to be broken up because the government believes those heirs don't deserve it and the state does, that land is MORE likely to be put in the hands of people like Turner and the Mormon Church than staying in local ownership.

 

Yes, I see your point here. Especially given the current $10.5 million exemption. But if the exemption was higher, how often would estate taxes actually affect these ranches? The link you gave somewhere earlier about the Sandhills ranch being sold was for about $19 million (if I remember right), so that ranch at least wouldn't be affected by what I'm proposing. It goes back to my question of, is there any exemption limit (and/or rate above the limit) for the estate tax that could keep billionaires from buying up and holding land without affecting the family ranches? If not, is there another means?

 

I used a ranch in the sandhills as an example. I feel the same way about any family owned company. Sure, if you raise the limit, it affects fewer people. But, I don't see that as validation that it's the right thing to do.

 

So whether the inheritance is $10 million, $1 billion, or $100 billion, it makes no difference?

 

Let me put this in perspective of people who both of us despise. Let's say Donald Trump dies tomorrow (no, I'm not wanting this to happen).

 

Now, I don't know much about his financial situation other than what has been made public in the last year. He claims to be worth over a billion dollars. Yes, his kids are rich too.

 

Now, let's say a very large portion of that worth is tied up in the real estate of his golf courses and Trump Towers. So, lets say 900,000,000 of the worth is not liquid.

 

With your proposal I saw earlier, you would say that he could will 40,000,000 to his kids and the rest is taxed at 90%. So, Ivanka and brothers get 40,000,000 and the family (company) needs to come up with 864,000,000 in taxes. To do that, his golf courses and other assets would probably need to liquidated. That puts every day Americans out of work who work at those courses and the supporting businesses. It negatively affects the communities these facilities are in.

 

Another thing about this is, a fact that is true about family businesses. Something like 75% of them don't survive the second generation. From that, something like 90% don't survive the third generation. So, the vast majority of these transactions are naturally going to cause an event where the assets get liquidated and broken up.

 

Look at the big business moguls of American history. People like the Vanderbilts and Duponts of the world. Eventually over time, their assets get distributed and sold off.

 

I'm not sure how you're arriving at the bolded. Having to sell your company doesn't suddenly mean it vanishes. There will be new owners, who probably want an income off their purchase.

 

It doesn't happen all the time. But, it would happen a lot of the time.

[BigRedBuster]

 

RedDenver, in your 40M 90% estate tax scenario, an estate worth 100M would be taxed 54M, more than half of the estate. Is this a correct examination, and is that fair do you think?

I don't really care about "fair" - life isn't fair. I'm more interested in the benefits and harms to both the individual and society. (Maybe I'm being pedantic and that's just another definition of "fair".)

 

But to the point of your question, I'm honestly conflicted. As BRB argues, there's more context to these things than just the raw numbers.

 

You really want to go down that road in this discussion?

[RedDenver]

 

 

RedDenver, in your 40M 90% estate tax scenario, an estate worth 100M would be taxed 54M, more than half of the estate. Is this a correct examination, and is that fair do you think?

I don't really care about "fair" - life isn't fair. I'm more interested in the benefits and harms to both the individual and society. (Maybe I'm being pedantic and that's just another definition of "fair".)

 

But to the point of your question, I'm honestly conflicted. As BRB argues, there's more context to these things than just the raw numbers.

 

You really want to go down that road in this discussion?

 

We can if you want, but there are lots and lots of examples of life not being fair. And if you want economics to be fair, you're probably going to end up at socialism. Or more likely a debate about the definition of "fair".

[BigRedBuster]

Well, the other side can just say life isn't fair and it sucks some times. I've worked hard for my wealth and you haven't. Life isn't fair.....deal with it.

 

I can pay for healthcare and you can't.....life isn't fair...deal with it.

 

Now, in general, I believe "life isn't fair" and the sooner an individual understands that and deals with it...the better for them. I've told my kids that a lot.

 

But, in a macro sense, saying "I don't care what's fair" that instantly degrades the discourse in trying to find a solution.

[RedDenver]

Well, the other side can just say life isn't fair and it sucks some times. I've worked hard for my wealth and you haven't. Life isn't fair.....deal with it.

 

I can pay for healthcare and you can't.....life isn't fair...deal with it.

 

Now, in general, I believe "life isn't fair" and the sooner an individual understands that and deals with it...the better for them. I've told my kids that a lot.

 

But, in a macro sense, saying "I don't care what's fair" that instantly degrades the discourse in trying to find a solution.

Touche. But I think we actually agree here. Maybe a better statement from me is "Not everything should be fair".

 

EDIT: I've edited the original post to reflect that I made a poor choice of words. I don't want to get bogged down in a debate about that part of that post, so I'll just say mea culpa and move on.

Edited June 14, 2017 by RedDenver

[BigRedBuster]

 

Well, the other side can just say life isn't fair and it sucks some times. I've worked hard for my wealth and you haven't. Life isn't fair.....deal with it.

 

I can pay for healthcare and you can't.....life isn't fair...deal with it.

 

Now, in general, I believe "life isn't fair" and the sooner an individual understands that and deals with it...the better for them. I've told my kids that a lot.

 

But, in a macro sense, saying "I don't care what's fair" that instantly degrades the discourse in trying to find a solution.

Touche. But I think we actually agree here. Maybe a better statement from me is "Not everything should be fair".

 

That's fine. But, just remember, if you use that argument, it's fair game for the other side to use it too.

[RedDenver]

 

 

Well, the other side can just say life isn't fair and it sucks some times. I've worked hard for my wealth and you haven't. Life isn't fair.....deal with it.

 

I can pay for healthcare and you can't.....life isn't fair...deal with it.

 

Now, in general, I believe "life isn't fair" and the sooner an individual understands that and deals with it...the better for them. I've told my kids that a lot.

 

But, in a macro sense, saying "I don't care what's fair" that instantly degrades the discourse in trying to find a solution.

Touche. But I think we actually agree here. Maybe a better statement from me is "Not everything should be fair".

 

That's fine. But, just remember, if you use that argument, it's fair game for the other side to use it too.

 

Yep, and it's not what I was intending to convey. And I edited the post while you were typing.

[RedDenver]

 

 

 

 

 

 

 

 

 

 

My biggest issue with what you have said is from your first statements where your reasoning behind your estate taxes wasn't to raise money for the government to work. It was to break up wealth

I agree with this.

 

off the top of my head I would suggest that we tax income from the assets and capital gains if and when the assets are sold

The tip-top of estates will consist of "unrealized" capital gains. If the assets are never considered realized, then these gains will go untaxed in perpetuity.

 

If an asset is not sold, there is no capital gains realized or unrealized.

 

Let's say I inherit a section of land in the Platte Valley. Right now that is probably worth around $4,480,000. I have a choice of either selling that or maintaining it and receiving income off of it. So, If I keep ownership, I should be taxed on the income I receive off of that land. If I sell it, I should then be taxed a reasonable capital gains tax. If I then die 5 years from now and pass that on to my kids, they then have the opportunity to sell it and create the taxable event or receive income off of it which is taxable.

 

If assets are privately owned, eventually they will be sold. It may be generations down the road, but nothing lasts forever.

 

At one time (may still be the case) the two largest land owners in Nebraska was Ted Turner and the Mormon Church. Now, I have way more of a problem with the Mormon Church ownership than I do Ted Turner because at some point, he will die and his assets will probably be liquidated. If they aren't they will be eventually when his heirs start dying off. The Mormon Church is the one that will own the land into perpetuity. But, it's their right to own the land, I just hope the tax laws are such that the church (in this case) is taxed just like a normal investor instead of some type of loop hole for churches. I think that's the case but I have never been able to find out.

 

In your Ted Turner and heirs vs the Mormon Church as land owners, how are they any different if Ted' heirs never sell? Because even when Ted's heirs start dying off, they can hand over the assets to their heirs, and so on with each generations. You see that they're similar problems, right?

 

Sort of but not necessarily.

 

I'm not a big fan of Ted buying huge chunks of land in the Sandhills simply because I think that land is better served in the hands of the local ranchers who know how to take care of a delicate ecosystem such as that is. So, I'm not going to defend him or act like I like it that he owns that land. BUT, my point is, the government doesn't have the right to go in and break that up now or at his death just for the purpose of redistribution of wealth.

 

Interestingly, I firmly believe that if large ranches are forced to be broken up because the government believes those heirs don't deserve it and the state does, that land is MORE likely to be put in the hands of people like Turner and the Mormon Church than staying in local ownership.

 

Yes, I see your point here. Especially given the current $10.5 million exemption. But if the exemption was higher, how often would estate taxes actually affect these ranches? The link you gave somewhere earlier about the Sandhills ranch being sold was for about $19 million (if I remember right), so that ranch at least wouldn't be affected by what I'm proposing. It goes back to my question of, is there any exemption limit (and/or rate above the limit) for the estate tax that could keep billionaires from buying up and holding land without affecting the family ranches? If not, is there another means?

 

I used a ranch in the sandhills as an example. I feel the same way about any family owned company. Sure, if you raise the limit, it affects fewer people. But, I don't see that as validation that it's the right thing to do.

 

So whether the inheritance is $10 million, $1 billion, or $100 billion, it makes no difference?

 

Let me put this in perspective of people who both of us despise. Let's say Donald Trump dies tomorrow (no, I'm not wanting this to happen).

 

Now, I don't know much about his financial situation other than what has been made public in the last year. He claims to be worth over a billion dollars. Yes, his kids are rich too.

 

Now, let's say a very large portion of that worth is tied up in the real estate of his golf courses and Trump Towers. So, lets say 900,000,000 of the worth is not liquid.

 

With your proposal I saw earlier, you would say that he could will 40,000,000 to his kids and the rest is taxed at 90%. So, Ivanka and brothers get 40,000,000 and the family (company) needs to come up with 864,000,000 in taxes. To do that, his golf courses and other assets would probably need to liquidated. That puts every day Americans out of work who work at those courses and the supporting businesses. It negatively affects the communities these facilities are in.

 

Another thing about this is, a fact that is true about family businesses. Something like 75% of them don't survive the second generation. From that, something like 90% don't survive the third generation. So, the vast majority of these transactions are naturally going to cause an event where the assets get liquidated and broken up.

 

Look at the big business moguls of American history. People like the Vanderbilts and Duponts of the world. Eventually over time, their assets get distributed and sold off.

 

I'm not sure how you're arriving at the bolded. Having to sell your company doesn't suddenly mean it vanishes. There will be new owners, who probably want an income off their purchase.

 

It doesn't happen all the time. But, it would happen a lot of the time.

 

I'm not seeing it. Are you saying the new owners would do it, or that there's some inherent process in selling a business that causes this?

[RedDenver]

I'd like to say thanks to everyone who contributed to this thread. Gave me a lot of food for thought.