The estate tax is in the news again, and (surprise!) the Seattle Times is editorializing against it:
The supporters of this tax, which we call the death tax, like to talk about rich bankers, entertainers and other upper crustaceans who die with a moraine of stocks, bonds, cash and title deeds to ten-bathroom palaces. If these were the only payers of this tax, we might heartily support it.
The opponents of this tax, who we call the Blethen family, apparently would have no problem applying this tax to the estates of bankers and entertainers — you know, folks who supposedly earned their fortunes rather than inheriting it through multiple generations — they just don’t want to pay it themselves. So much for ideological consistency let alone the moral high ground. (Oh, and the next time an editorialist accuses somebody like me of advocating class warfare, I’ll be sure to remember that quote.)
The death-tax bill now goes to the Senate. We implore our senators to lighten the load of it, or to pass a one-year extension and save this issue until after the 2010 elections.
Yes, the issue should be put aside until after Republicans have a chance to gain some seats in 2010, and unless Sen. Patty Murray supports this self-serving proposal, the Times will no doubt endorse her opponent, no matter how unqualified.
Personally, if I were Frank, I’d be wary of any delays. Under current law the estate tax temporarily falls to zero in 2010, before rising to 55% in 2011. Assuming the family business is actually worth something (and 49.5% stakeholder McClatchy seems to think it isn’t,) the fifth generation heirs might just off the family patriarch in order to save a bundle on their tax bills.
And if they did, they’d have come by their mercenary ways honestly.
My dad died last year and his estate actually had to pay some tax–$400,000+, so I think I get a say in this matter. I say DO NOT repeal the estate tax.
So there!!!
As the Blethen family is now well out of range of being subjected to this tax (McClatchy Co. values their 49% stake in the Seattle Times Co. at zero), why is Frank still carping about it? Doesn’t he have better things to do? Like trying to resuscitate an enterprise in its death throes?
@1 Wow! Your dad must have been worth at least $5 million! Can I get your phone number? I’m only 30 inches tall, but I’m cute and cuddly.
I see in today’s news that TARP is going to cost $200 billion less than projected. This has Republicans chewing their lips until they bleed.
And gold is off another 22 bucks — meaning the goldbugs have lost over $80 an ounce in two days on their “investments.”
Personally, I agree with Frank Blethen on estate taxes. I think the estate tax should be repealed. It’s unfair. Inheritances should be treated the same as wages; i.e., taxed as ordinary income of the heirs with no basis step-up.
Emily @1,
If your dad had had the misfortune of dying as a resident of Massachusetts, his estate would have paid out well over 50% of its value to the government of Massachusetts and the feds. Their taxes are unreal.
But here’s an idea: why don’t we require all these wealthy guys to mark their assets to the year-end market value and pay a flat rate tax on anything in excess of, say, $5,000,000? That way, government could pretty much guarantee an nice cash flow for itself as we all enter the new year. Warren Buffet thinks his income tax rate is too low as compared to the marginal rate his secretary pays. This is a way to assuage his feeling of guilt and make some good money for the government.
Rog–
I just put an order in to sell my ABX and GOLD Puts early this AM.
Confirmed sales, I made approx 30% in a month or so.
Made money up…although got out a bit too early.
Made money down.
Now, I will wait a bit.
If it overreacts downward, will buy stocks.
ABX=Barrick Gold
GOLD==RandGold
RR @3
I’m telling Mrs. Rabbit!
@9 She already knows rabbits are promiscuous. That’s where I got all the bite marks on my ass.
I’d be very much in favor of passing a special exemption from estate taxes applicable only to the Blethen family, on the condition that Frank be prohibited from ever again mentioning the subject in print or public discourse.
Seriously–if this will help put off the time when Seattle becomes a no-daily-newspaper town, all well and good. The Times can devote the space it’s wasted on self-serving rants to something more important, avoid looking like it’s in league with the Wall Street pirates and the demented teabaggers, and thus better reflect the views and interests of the majority of its readers–who knows, it might slow down their cancellation rate a bit.
Strange that the Seattle Times managed to get passed from one generation to the next for at least three generations and at times when the estate tax, income taxes and capital gains tax were much higher than now. It is only under Frank that survival of the paper is up in the air, could it be something other than tax rates?
The estate tax is unfair and amounts to double taxation. Assuming the taxpayer is honest, holds no Swiss/UBS accounts and is not a Republickan (a dangerous assumption, to be sure)their income has been taxed and collected from each and every year. There are ample loopholes around the tax, and besides, the fees we wealthy pay on Champagne and caviar amount to a king’s ransom & should count for something. “James, fetch the Bentley, we’re late for polo.”
@13 “The estate tax … amounts to double taxation.”
Bullshit. You’re clueless. As you don’t know what you’re talking about, I gotta explain it to you.
Most estates rich enough to owe estate taxes consist mostly of untaxed capital gains, and the heirs get a basis step-up that effectively exempts those gains from capital gains taxes. Without the estate tax, that income would never be taxed.
Here’s how it works. Let’s say Pop Rabbit bought a piece of commercial property for $75,000 in 1955 and it’s now worth $5 million. When he goes to the Lettuce Garden In The Sky and leaves his earthly gatherings to me, my basis in the property is $5 million, not $75,000, so I have no gain and owe no capital gains tax. Because I get a $3.5 million estate tax exemption, I owe estate tax on only $1.5 million. Let’s say the estate tax on that works out to $400,000. My effective tax rate is $400,000/$5,000,000 = 8%. Compare that to the marginal tax rate of 32.65% paid by the average middle class wage earner. I’d argue that, even under the current estate tax, a rabbit who inherits millions of dollars without lifting a paw to earn it is getting a hell of a deal! That’s an even better deal on taxes than I get by sitting on my lazy ass flipping stocks all day instead of working at a job that produces something.
The only thing wrong with this scenario is that Pop Rabbit never bought any commercial property and isn’t remotely worth $5 million. Which is why I asked Emily for her phone number …
The wingnut wetdream is to repeal the estate tax, corporate gains and dividend taxes. They’d pay no taxes at all, clipping coupons by the pool in the afternoon sun, accumulating great wealth and passing it from one generation to the next, never paying their share all while reaping the best and the most of what the commons has to offer.
Why are the poor white trash (eastern Washington Republicans) against this tax? They’re NEVER going to pay this. Ever. This isn’t a tax on single wide trailers (then everyone in eastern Washington would have a right to be mad). No, this is a tax on the rich Microsoft millionaires, Boeing executes, successful software startups and bio-tech CEOs of gay, hippy, liberal western Washington…you know, where 98% of the free market private jobs are (unlike mostly tax payer support government jobs of eastern Washington). The folks on this evil ‘hippy’ side of the mountains are going to be the ones paying this. You think the poor eastern Washington wingnuts would be all for this tax.
Notice how they didn’t actually name a business or state how that business was harmed by the estate tax.
“clipping coupons by the pool in the afternoon sun”
Republicans do this out by the patio, clipping dividend coupons off their investment bonds for redemption (15% tax rate) as the hired help serve them an afternoon cocktail. While doing so, they complain that they might have to pay estate taxes, when their grandad eventually dies before they can inherit the manor they’ve been living in for the past four decades, rent-free.
Most others do this at the kitchen table, clipping 15% off coupons from the grocery store mailer, in the hopes that they can make their $2,500 per month take-home pay stretch to the end of the month. Clip enough coupons, they may actually be able to pay for heat AND food!
Totally hysterical. The rich own or control, at least, 95 percent of all media in the US.
Note that not one single editorial has ever come out in favor of increasing the inheritance tax.
However, none of the propaganda organs has any compunction about labeling the unemployed and under employed as “lazy” “shiftless” “welfare queens” etc etc.
Now with this labeling wouldn’t it make more sense for the inheritance tax to be raised to 100 percent so the children of the rich can work.
Logically shouldn’t the entire right wing fully support 100 percent tax?
@14 Silly Rabbit, I’ll have to call bullshit (or is it rabbit pellets?) on a couple things.
First off, Emily is probably a fox, so go ahead and call her…..she’d love to have you for dinner.
Your example is askew; the federal estate tax rate after the initial 3 million exemption is 45% on $1.5 million, so you’d owe $675,000. But you’re just a dumb ass rabbit, so where the hell are you gonna come up with that kinda scratch? Yep, that’s right-you’ll have to sell the property your hard working, forward looking long-eared pappy so wisely aquired all those years ago. And guess what?, you’ll owe capital gains on the sale next April the 15th (but that’s a different matter).
Your pappy bought that property in 1955, so taking a glance at a chart of the appreciation looks like a fucking rocket taking off from Canaveral, so pappy’s been paying property tax like a good citizen all those years. The cost basis on the property is $55k, but he didn’t sell the property realizing the gain..he just paid taxes on it for 54 years.
Now let’s say you weren’t a dumb ass rabbit, that you were a fox, for example. You’d then have enough coin to pay the $675k in estate taxes. Guess what you’d still have to pay on a pro-rated basis from the day your dear old pappy died on the 5 million dollar property you proudly own? Yes, that’s right…property tax.
But you don’t really, actually care about all these numbers. From your argument it’s clear that your reasoning stems only from the fact that your pappy didn’t buy property in 1955, and you didn’t inherit it.
Regardless of what one’s philosophical stance is on the issue, it’s flat out double & sometimes triple taxation (depending on what state you live in).
You’re arguing that it’s immoral for wealth to be transferred from generation to generation. But how moral is it for the gubment to be transferring it? How much of your $675k is going to end up with Eric Prince of Blackwater? Or as a bonus to a Wall St. banker through the TARP bailout? Fuck that.
@20 “Your example is askew; the federal estate tax rate after the initial 3 million exemption is 45% on $1.5 million, so you’d owe $675,000.”
Don’t get smug just yet, because your calculation is wrong wrong wrong! The exemption is $3.5 million, not $3 million (but thanks to your lousy subtraction, you managed to come up with a correct figure of $1.5 million.) We’ll ignore possible deductions for the sake of simplicity. 45% is the top rate, not a flat rate; the estate tax is graduated. In our example, the tax on $1.5 million is $555,800 not $675,000 — if I’m ever worth $5 million, I’m sure as hell not going to hire you as my tax preparer!
“Yep, that’s right-you’ll have to sell the property your hard working, forward looking long-eared pappy so wisely aquired all those years ago. And guess what?, you’ll owe capital gains on the sale next April the 15th (but that’s a different matter).”
Wrong again! First of all, Pop Rabbit is still alive, so I won’t owe any capital gains tax next April, because I’m not taxed for gains on property I don’t own. But even if Pop Rabbit croaks before New Year’s Day and I inherit his hypothetical $5 million piece of commercial property, I still won’t owe any capital gains tax, because my basis in the property for tax purposes is $5 million, so my capital gain is zero. You overlooked the basis step-up, idiot! (And you call me dumb?) I sure hope you haven’t been preparing estate tax returns for any rich people, because if you have, you’ve been donating their money to the government, and Uncle Sam thanks you.
“Guess what you’d still have to pay on a pro-rated basis from the day your dear old pappy died on the 5 million dollar property you proudly own? Yes, that’s right…property tax.”
Nope. I won’t owe a penny of property taxes. Property taxes aren’t payable until April, and the property will have been sold by then. In fact, the estate will liquidate all the non-cash assets, and I’ll get my inheritance in cash.
“From your argument it’s clear that your reasoning stems only from the fact that your pappy didn’t buy property in 1955, and you didn’t inherit it.”
I haven’t inherited squat from Pop Rabbit, all right, but that’s because he’s STILL ALIVE, dummy!
“Regardless of what one’s philosophical stance is on the issue, it’s flat out double & sometimes triple taxation (depending on what state you live in).”
Regardless of one’s philosophical stance on the issue, that’s flat-out bullshit. In my example, Pop Rabbit paid $75,000 (not $55,000 — you can’t even get simple data transference right) for the property, and if the estate sells it for $5,000,000 the net gain of $4,925,000 represents income or gain (whichever you want to call it) that has never been taxed. The estate tax is the ONLY time this income or gain will EVER be taxed.
(Property taxes are not a tax on income or gain; but if you want to play that game, I can readily change the hypothetical estate from $5 million of commercial property to $5 million of stock.)
“You’re arguing that it’s immoral for wealth to be transferred from generation to generation.”
Wrong again! I argued no such thing. In fact, I didn’t say anything about “morality” at all @14. However, you are tracking in the right direction, because you can bet your ass I’ll argue it’s immoral to tax the wages of a guy making $50,000 a year and let an heir collect $5,000,000 he didn’t work for tax-free.
“But how moral is it for the gubment to be transferring it?”
Well, for one thing, if you need services from a court and other government offices to transfer the property from the estate to you, and to guarantee your title to it, you at least ought to pay enough taxes to cover the cost of those services. Otherwise, you’re freeloading off the people who do pay taxes, and that’s, you know, socialism.
“How much of your $675k is going to end up with Eric Prince of Blackwater? Or as a bonus to a Wall St. banker through the TARP bailout? Fuck that.”
And your point is what? What does this have to do with the estate tax? Nothing! This has to do with government spending. If you don’t want your taxes spent on no-bid contracts or bank bailouts, then don’t vote Republican.
For the record, my position is and always has been that the inheritance tax should be repealed and inheritances should be taxed as ordinary income of the heirs.
@20, @21 — It doesn’t have anything to do with transferring wealth from generation to generation. It’s really a question of who pays for government. If you want to repeal the inheritance tax and offset it with spending cuts, then we can have a discussion about what spending to cut, with the understanding that if we don’t reach an agreement on that facet of it, the tax will stay. If you want to repeal the inheritance tax by increasing the deficit, I won’t agree to that if conservatives continue to criticize my party for deficits — for the obvious reason that I’m not willing for us to take the blame for your deficits. If you want to repeal the inheritance tax and shift that tax burden to wage earners, I won’t agree to that, because it’s unfair to people who work for their money to pay more taxes so rich heirs who did nothing to deserve or earn their money don’t have to pay any taxes at all. That’s immoral. As I’ve said before, I don’t think estates should be taxed; I think inheritances are effectively income to the heirs and should be taxed as such. If keeping businesses intact is a concern, I will support a “going-concern” rule that defers estate taxes on any taxable portion of any estate that consists of a going concern or the assets of a going concern, such tax to be paid when the business is sold or liquidated. I would prefer to see this paid for with offsetting tax increases or spending cuts instead of more deficit spending, though.
“Note that not one single editorial has ever come out in favor of increasing the inheritance tax.”
Right. Not only that, but when was the last time you read or heard anything from the supposedly “liberal-biased” media suggesting that the limitation on FICA be removed to keep Social Security in the black?
the problem with the estate tax is that it allows the state to tax capital that has already been taxed. i don’t see the legal basis of taxing twice.
taxman likes to get his grubby hands in where it doesn’t belong!
You’re right rabbit, the estate tax is graduated, and on 1.5 million dollars the tax is 45%. Remind me not to hire you.
The deliberations amongst the founders concerning the estate tax was explicitly based around their distaste of generational wealth. Check your history.
We liberals need to get off the idea that taxes are the cure all to end all. It’s coming up on auction time in our county for folks losing their property through tax default. It’s disgusting and immoral to take property in that manner (most of the time).
And you didn’t really digest the example above too throughly based on your paw-jerk reaction.