Nothing is as true as Ben Franklin’s quote. We will all die, and the government will have its pound of flesh. Estate taxes involve the confluence of both.
The founding fathers instituted this tax because it inhibits the formation of American aristocracies. If large estates are attenuated by taxes when generations change, then each generation is responsible for replenishing the family fortune – the desired result. If estate taxes destroy family businesses and leave children of the wealthy without the resources to continue their life plan, it is not conserving the American dream.
Conservatives despise the “Death Tax” because it extracts its toll from those seen to be the producers of value in society. In the USA only the 2% of the wealthiest pay estate taxes. This tax effects the conservative constituency heavily because it drains the wealth that can be transferred from generation to generation. Of course, there is no assurance that the beneficiaries of an estate will have the skills, drive and effectiveness of the person who generated the wealth.
The way estate taxes are levied today is troublesome because they are calculated upon the value of the estate, not on the amount received by each beneficiary. It doesn’t matter whether there are fifteen heirs or only one. It doesn’t matter whether the estate is composed of cash and stocks or the family business or farm. (upon which the beneficiaries may depend for their jobs).
As people live longer, there generations overlap more. Lets take the case where Granddad built a business, and left it to his son at age 80. The son, 25 years younger at 55 dies two years later, leaving the business to the grandson of 30. The tax hit from two rounds of estate taxes within two years is unsustainable. If the business was a farm, the farm would be lost, if it was a factory, family control would be lost, and the grandson would be reduced to a simple employee. Even with optimal estate planning, a family business worth $50 Million would be lost.
I suggest an alternative scheme for generational taxes. This plan would protects family businesses and farms, assures a generous “stake” for the children of wealthy, and seems more rational.
First, make the proceeds of an estate taxable to the recipient, with an exemption. If an individual dies with an estate of ten million dollars and has to split it between eight children, each getting a 1/8th share it should not be taxed at the same rate as the same estate divided among two. Under my system, each child in both cases would be assured of receiving a million dollars or so without taxation. Under present rules the estate would be as heavily taxed in case of eight beneficiaries as when there are only two latter, meaning that each of the eight children would receive well less than a million dollars from the estate. Children and student recipients should have an increased exemption to cover costs of education.
Second, when the estate consists of productive assets (such as land, businesses, patents, copyrights, etc., but not publicly traded securities) the taxes due on the net value of those assets would automatically be payable over time. If the period were twenty years, for example, any well managed business can readily finance the tax under these terms. If the property is sold, the outstanding amount becomes due. If the person receiving the asset dies before the taxes are paid, the remaining taxes are forgiven. The goal is that inheritance taxes on productive assets never compound when a generation is less than twenty years.
Reforming estate taxes into inheritance taxes makes a lot of sense. Actuarially, it is easy to make this proposal “revenue neutral”. It will resolve claims of unfairness that are the fodder for calls to abolish estate taxes entirely. It will preserve family businesses and farms, yet still serve the founding father’s goal of averting American aristocracy.
If the test that former Supreme Court Justice O’Connor used to decide Establishment Clause issues relating to the separation of Church and State was:
“Encouragement”; i.e. did the State encourage a religion, and in doing so, made others not of that religion feel ‘excluded’;
Why, then doesn’t the concept of “marriage” (which is the religious ceremony piece of a civil union) violate the same Establishment Clause? Wouldn’t same sex couples feel excluded on the basis of a religious belief?
Perhaps the solution to arguments on same sex marriages is to remove the word “marriage” from the purview of government. If the states and federal government only recognized civil unions, and left marriage to religious and other nongovernmental bodies it moots all the political arguments.
Under this regime, two Individuals who wished to be considered a unit for tax, inheritance, medical, child custody and all other legal and practical matters would enter a civil union. This civil union could be “blessed” and become a marriage by whatever church, lodge, association etc. the parties may choose. As far as the state is concerned, nothing except a civil union is required. A marriage without an underlying civil union would have no force of law, and a marriage ceremony would have no effect on rights or privileges of the couple. The governmental and legal benefits would accrue solely through the civil union.
This concept would simplify the law with respect to polygamy. A person could be a member of only one civil union at any time.
The goal of this site it to open minds. These are days of change, and the changes should be guided by fact and thoughtful consideration.
Please join in to illuminate the information found here. This is my site, and I want to hear opposing views. Two rules: All posts must be respectful of others and their opinions. No false witness – facts stated here must be true to the best of knowledge of the writer.
Throughout all of history, folks have tried to determine what it is that makes a person have consciousness. What is it that makes the light illuminating our mind with awareness of being?
No one has found a physical “thing” in a person that could be called a soul. In spite of the images in Harry Potter, Ghost and other works, no structure, vapor or essence has been identified as the soul or consciousness. I suggest that the reason is that the soul is an action, not a thing. In I am a Strange Loop, Doug Hofstadter makes a convincing case that human consciousness consists of a self referential strange loop.
I don’t think Doug completed his thesis. He left the nature of the strange loop as simply “something” within the cranium. The definition of a loop can be anything from a complete electrical circuit, anything round or oval that is closed or nearly closed, a curl or coil, or finally, a computer program sequence that repetitively executes a series of instructions. If one looks at a strange loop as an algorithm that recursively refers to both new input and itself, a clearer picture of what might be consciousness arises.
DesCartes said, cogito ergo sum (“I think, therefore I am”). He should have said “I think, and this makes me be”. Thinking is consciousness – while we are awake and aware the strange loop is the execution of thought. It depends on all the inputs from our senses, the state of our body and all the memories and associations or “tokens” we have developed through life.
A new variation of poetry, with constraints similar to haiku has cropped up – Fibonacci poetry. The number of syllables in each line follows the Fibonacci sequence – where each number is the sum of the preceding two numbers 0-1-1-2-3-5-8-13-21-34….
National governments have chosen to block internet content using tools blunt and sophisticated. China has been working with Google and other companies to restrict access to content that it does not like. The UAE has blockedflickr.com and other general interest sites as well as all VOIP services such as Skype. India has blocked *.blogspot.com, *.typepad.com and geocities.com/* . This action caused a storm of protest among Indian internet users. Will this protest be blocked?
The United States government, “the land of the free”,has collected international phone records of millions of Americans. Will snooping and control of our internet use follow?
All this is done in the name of fighting terrorism. There is no protection from bombers in blocking access to websites. Anyone wanting to send secret terrorist messages would use encryption or steganography. Web based communications is used to reach the masses – to put together demonstrations or strikes. These are not the tools of terrorists – these are the tools of legitimate political participation. (more…)
Thomas Paine said: “That government is best which governs least.”
What did he mean by that? Governments are inefficient – Yes, but in his mind that would be a good thing.
Those who run governments are tyranical? – Yes, but that is not the point.
Government, no matter how benevolent and well meaning, will interfere with the desires and rights of someone!
A government by its very nature controls power over individuals. Paine’s thesis is that individuals should cede only enough power to the government to undertake its necessary functions. (more…)
We all have a personal reality, shared throughout society, more or less.
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