Inheritance Taxes plus No Stock reset...

[QP!]

I am curious what everyone, left or right view on this.

Using Jeff Bezos as the example, when he dies he will likely leave substantially all of his Stock to his kids. Stock he received at a zero cost base when Amazon was created that is worth Hundreds of billions today.

Due to lobbied for tax policy Bezos has been able to just borrow money against his stock to live and never sell any stock and thus avoid the significant Capital Gains tax he would otherwise pay.

When his kids get the stock, after his death Congress due to Lobbying passed a law that the stock gets a Capital gains reset, meaning whatever the stock price is, it is trading at, now becomes the price they would set for them to pay Capital gains but all the prior gains they get free. SOmething Jeff Bezos would not have got while alive.

So not only do the kids hundreds of billions but they get it tax free on a stock gain that NEVER EVER gets taxed in the way normal citizens with stock get taxed.

Making the heirs pay the Capital Gains at inheritance still leaves them filthy rich but just allows the tax everyone else pays on stock gains to be received by government.

Would you support this transfer being taxed or do you believe the heirs should get it tax free?

 

[Poor Richard Saunders]

Either have to pay an inheritance tax on all that wealth or pay the capital gains.

When the rich don't have to pay either, it means the rest of us have to pay more while they get their money for free.

 

[QP!]

About 1/3rd of Billionaires become Billionaires NOW via inheritance and not work.

A throw back to the age of being born of a Kings or other aristocracies family being the path to success and wealth instead of work and merit. It is an emerging Caste system in America.

Inheriting is becoming nearly as important as working​

More wealth means more money for baby-boomers to pass on. That is dangerous for capitalism and society​

 

[Crepitus]

I am curious what everyone, left or right view on this.

Using Jeff Bezos as the example, when he dies he will likely leave substantially all of his Stock to his kids. Stock he received at a zero cost base when Amazon was created that is worth Hundreds of billions today.

Due to lobbied for tax policy Bezos has been able to just borrow money against his stock to live and never sell any stock and thus avoid the significant Capital Gains tax he would otherwise pay.

When his kids get the stock, after his death Congress due to Lobbying passed a law that the stock gets a Capital gains reset, meaning whatever the stock price is, it is trading at, now becomes the price they would set for them to pay Capital gains but all the prior gains they get free. SOmething Jeff Bezos would not have got while alive.

So not only do the kids hundreds of billions but they get it tax free on a stock gain that NEVER EVER gets taxed in the way normal citizens with stock get taxed.

Making the heirs pay the Capital Gains at inheritance still leaves them filthy rich but just allows the tax everyone else pays on stock gains to be received by government.

Would you support this transfer being taxed or do you believe the heirs should get it tax free?

All capital gains, realized or not, are income. tax it all.

 

[QP!]

All capital gains, realized or not, are income. tax it all.

I do not necessarily agree with that nor taxes on home valuation increases that are not realized, unless we carefully carve it out for top wealth tiers and do it more in the form of wealth tax.

It will be those in the middle class often hurt the most by an unrealized Capital gains tax, if they choose to hold stocks in their savings or retirement portfolio, if they are forced to sell simply because of a paper gain.

I will use Meta to explain, albeit as a simplistic way, to do so.

Lets say a young couple put $25000 savings into Meta stock in 2020 at $100 a share getting 250 shares.

When it peaks in 2022 at $400 a share you would arguably owe about $15,000 in capital gains tax but your investment is worth $100,000.

You now are able to use that asset (stock) when buying a home, etc as a collateral consideration.

So now to pay your tax on this unrealized (not sold) stock, you are forced to sell about 40 shares to cover it. You are left with 210 shares.

When the price plummets to below $100 in 2023 your asset is worth less (it is lower price but you have LESS of it) and even on the full recovery back to near its peak, it is worth less.

You have hit this middle class pretty hard even in a case where the stock recovered. Now imagine a stock that does not recover after it plummets. Instead they just stay down for years on end. You paid the peak tax but have no asset or collateral value you can recover.

 

[QP!]

it can be even more devastating to the MC to do that on Home values and taxing the unrealized gains because Banks who gave mortgages at the top valuation at the time, can pull or put a much higher rate on mortgages if the value of the home, sold or not, mortgage being paid or not, is revised up and down with market fluctuations tied to unrealized gains.

One time wealth taxes deployed above a certain wealth level and only once on that asset until it is sold with rules to prevent gaming it, can better deal with this.

 

[SmarterthanYou]

why are liberals so against wealth, except for themselves?

 

[Crepitus]

I do not necessarily agree with that nor taxes on home valuation increases that are not realized, unless we carefully carve it out for top wealth tiers and do it more in the form of wealth tax.

It will be those in the middle class often hurt the most by an unrealized Capital gains tax, if they choose to hold stocks in their savings or retirement portfolio, if they are forced to sell simply because of a paper gain.

I will use Meta to explain, albeit as a simplistic way, to do so.

Lets say a young couple put $25000 savings into Meta stock in 2020 at $100 a share getting 250 shares.

When it peaks in 2022 at $400 a share you would arguably owe about $15,000 in capital gains tax but your investment is worth $100,000.

You now are able to use that asset (stock) when buying a home, etc as a collateral consideration.

So now to pay your tax on this unrealized (not sold) stock, you are forced to sell about 40 shares to cover it. You are left with 210 shares.

When the price plummets to below $100 in 2023 your asset is worth less (it is lower price but you have LESS of it) and even on the full recovery back to near its peak, it is worth less.

You have hit this middle class pretty hard even in a case where the stock recovered. Now imagine a stock that does not recover after it plummets. Instead they just stay down for years on end. You paid the peak tax but have no asset or collateral value you can recover.

YOu're already paying taxers on you appreciating home. My house is long payed off and sit still costs me nearly $1000 a month in taxes and insurance.

 

[QP!]

YOu're already paying taxers on you appreciating home. My house is long payed off and sit still costs me nearly $1000 a month in taxes and insurance.

Now imagine adding on a capital gains tax if a young family buys a home that on paper goes up a lot in a bull market, they are forced to find money to pay that and then it goes back down in the bear market.

Lots of MC families just are not sitting on cash to do that.

 

[QP!]

why are liberals so against wealth, except for themselves?

Why are magats for freeloaders getting tons of money but never paying a cent of tax on it?

 

[Crepitus]

Now imagine adding on a capital gains tax if a young family buys a home that on paper goes up a lot in a bull market, they are forced to find money to pay that and then it goes back down in the bear market.

Lots of MC families just are not sitting on cash to do that.

They already do. That's your property tax.

 

[QP!]

They already do. That's your property tax.

No that is a vast misunderstanding of the Capital Gains tax versus the property tax.

A Capital gains tax is typically a one time larger tax due on the sale of certain properties. Property taxes are typically yearly and much much smaller maintenance like taxes.

Most young home owners, living pay check to pay check, would have to seek a second mortgage or sell their home if they suddenly had to pay a Capital Gains in a Bull market valuation on their home.

 

[T. A. Gardner]

If you think some billionaire is about to have their kids pay tax on inheritance, you are nucking futs. They will put that wealth in a trust, corporation, hedge fund, or whatever in such a way as to avoid taxes. The kids simply gain control of the funds.

It is waste of time trying to out fox a fox.

 

[QP!]

If you think some billionaire is about to have their kids pay tax on inheritance, you are nucking futs. They will put that wealth in a trust, corporation, hedge fund, or whatever in such a way as to avoid taxes. The kids simply gain control of the funds.

It is waste of time trying to out fox a fox.

The "surrender as we can never tax the rich properly" is the worst of all ideas.

There is no reason to give them a Capital gains reset on a stock that went from 0$ value to billions or trillions in value (Bezos Amazon stock).

Whether that stock is inherited or put in a trust or corporation or hedge fund WHOEVER SELLS IT should pay the Capital gains. To give it a tax reset at death such that all Capital gains are forgiven, as it is now, is madness. IT makes no sense.

 

[Crepitus]

No that is a vast misunderstanding of the Capital Gains tax versus the property tax.

A Capital gains tax is typically a one time larger tax due on the sale of certain properties. Property taxes are typically yearly and much much smaller maintenance like taxes.

Most young home owners, living pay check to pay check, would have to seek a second mortgage or sell their home if they suddenly had to pay a Capital Gains in a Bull market valuation on their home.

Nope. Different names, same effect.

 

[T. A. Gardner]

The "surrender as we can never tax the rich properly" is the worst of all ideas.

There is no reason to give them a Capital gains reset on a stock that went from 0$ value to billions or trillions in value (Bezos Amazon stock).

Whether that stock is inherited or put in a trust or corporation or hedge fund WHOEVER SELLS IT should pay the Capital gains. To give it a tax reset at death such that all Capital gains are forgiven, as it is now, is madness. IT makes no sense.

Taxing the rich, or anyone else, is one thing. Confiscation of wealth, particularly heavy-handed confiscation, doesn't work. "Eat the rich" is a disastrous idea.

If you massively tax inheritance, then those with lots to inherit will simply find a way around the tax.

 

[QP!]

Nope. Different names, same effect.

No. As i said you are speaking on a topic you have a profound lack of understanding of.

Capital Gains Tax is a one-time federal and state tax on the profit made from selling a property and is often a significant and large check taken upon the property closing sale, while Property Tax is an ongoing, yearly local tax based on the assessed value of the home itself and is typically small and managed from a families cash flow.
Here is a direct breakdown of how these two taxes function:

Feature	Capital Gains Tax (When Sold)	Property Tax (Yearly)
Trigger Event	Selling the home for a profit.	Simply owning the property.
Frequency	One-time event (only when the sale closes).	Yearly (often split into semi-annual or monthly payments).
Tax Base	The net profit (Selling Price minus Purchase Price & Improvements).	The assessed market valueof the land and buildings.
Who Collects It	Federal government (IRS) and your state government usually at home sale as part of closing since the amount can be large.	Local government (your county, city, or school district).
Purpose	Taxes the creation of new wealth/income.	Funds local services (schools, roads, police, fire departments).

 

[QP!]

Taxing the rich, or anyone else, is one thing. Confiscation of wealth, particularly heavy-handed confiscation, doesn't work. "Eat the rich" is a disastrous idea.

If you massively tax inheritance, then those with lots to inherit will simply find a way around the tax.

Again you are missing the point.

When Jeff Bezos created Amazon the stock would have been issued at a cost base of $0 on the concept of a company with no operational business.

When Jeff Bezos dies that stock (he has never sold) may be worth Trillions and there simply is no reason to say who ever inherits gets a tax reset to whatever value they get it, and do not have to pay any of the Capital gains up to that point if they sell it.

Jeff Bezos himself could not sell it and escape Capital Gains, so why should a person who did not none of the work and just inherited get that massive billion/trillion dollar perk?

It should not be considered 'massively taxing wealth' to make the person inheriting pay the same amount the guy who did the work would pay if still alive.

 

[ThatOwlWoman]

I am curious what everyone, left or right view on this.

Using Jeff Bezos as the example, when he dies he will likely leave substantially all of his Stock to his kids. Stock he received at a zero cost base when Amazon was created that is worth Hundreds of billions today.

Due to lobbied for tax policy Bezos has been able to just borrow money against his stock to live and never sell any stock and thus avoid the significant Capital Gains tax he would otherwise pay.

When his kids get the stock, after his death Congress due to Lobbying passed a law that the stock gets a Capital gains reset, meaning whatever the stock price is, it is trading at, now becomes the price they would set for them to pay Capital gains but all the prior gains they get free. SOmething Jeff Bezos would not have got while alive.

So not only do the kids hundreds of billions but they get it tax free on a stock gain that NEVER EVER gets taxed in the way normal citizens with stock get taxed.

Making the heirs pay the Capital Gains at inheritance still leaves them filthy rich but just allows the tax everyone else pays on stock gains to be received by government.

Would you support this transfer being taxed or do you believe the heirs should get it tax free?

Concentrating great wealth in the hands of fewer and fewer people is a recipe for an unbalanced economy as well as a breeding ground for resentment and even revolution. Cash flowing is what makes the economy run. Wealth hoarded causes stagnation.

IMO the inheritances should be taxed at the same rate we middle class wage earners are taxed. No loopholes or legal dodges. If they can't live on 70% of a billion bucks then they have problems.

 

[T. A. Gardner]

Again you are missing the point.

When Jeff Bezos created Amazon the stock would have been issued at a cost base of $0 on the concept of a company with no operational business.

When Jeff Bezos dies that stock (he has never sold) may be worth Trillions and there simply is no reason to say who ever inherits gets a tax reset to whatever value they get it, and do not have to pay any of the Capital gains up to that point if they sell it.

Jeff Bezos himself could not sell it and escape Capital Gains, so why should a person who did not none of the work and just inherited get that massive billion/trillion dollar perk?

It should not be considered 'massively taxing wealth' to make the person inheriting pay the same amount the guy who did the work would pay if still alive.

So long as those that inherit the wealth, in whatever form, don't have to pay taxes on that wealth, it's all good.

For example, Bezos puts the stock in a trust that his kids are part of. The trust holds the stock, not Bezos personally. He dies, the trust continues, and the kids 'inherit' the stock with no taxes paid because it is the trust not them, that legally owns it. It is really just semantics, but whatever the government can come up with, smart people will find a way around it.

Massively taxing inheritance--or trying to--just leads to a loss of multi-generational wealth. That is, for persons in the Middle Class, there is no escape upwards by passing on wealth to your children. If on the other hand, such wealth is not taxed, then your children can build on what you've earned and saved pushing them up in terms of economic position.

I think that's a far better model than one where each generation is stripped of its wealth upon the last passing away.