[quote=BigGovernmentIsGood]The only true remedy to deflation is to tax wealth and to have a very high estate tax. This will allow for redistribution of wealth from the upper classes who are hoarding it to the lower, more productive classes who will spend and invest it.[/quote]
Oh yeah, the entire tax the big bad estate tax since it’s a tax that hits only the wealthy…
You do realize that the estate taxes reverts back to the original levels in 2011, don’t you???And you do know what that level is, don’t you?…Guess what? It’s not going to be the super wealthy that is going to be hit the most…It’s going to be middle class people that are going to be hit… Please lookup what the estate taxes are going to be reset to… In fact, I’ll make it simple for you.
Yup that’s right… At the current rate, estate tax exception is going to be $1million, over which everything will be taxed at 55%…and that $1million is not inflation adjusted…Now might think $1million is a lot of money to begin with…BUT, really…..Do you really think $1million is something you would consider a lavish gift to let’s say a widowed spouse with 1-2 kids can live off of, say if you were to die in your 40ies especially in CA? Because obviously if you did the math, you would realize it costs a lot of money to raise a kid all the way to college, and also that being a widowed parent that also now needs to deal with raising 1.5 kids isn’t going to be working at full capacity.. On top of that, you can kiss any employee-spoused health benefits goodbye, so chances are he/she needs to figure that out too..(Hope you don’t have any family members with medical issues too).
And if the argument is “$1million is not obtainable by most people…”…Please…It’s called life insurance…and the point of it is to support your family if you aren’t there…(And if you are 30ies/40ies and you haven’t bought at least $1million worth of life insurance, that’s just poor financial planning for your family, unless you don’t plan on sending your kids to college, unless you expect your spouse to be fending for his/herself while at the same time raising 1-2 kids simultaneously…) Also that $1million also includes any assets that “savers” have been saving, part of which includes your house (though with one surviving spouse, it doesn’t come into play really)..
Lastly, have you wondered why the link I posted above is from an insurance company???It’s because the truly super rich already use tools to minimize their estate taxes. With the exception of 2010 (in which there essentially is no estate taxes), the maximum exception from estate taxes was up to 3.5 million in 2009. Now do you think super rich only have 3.5 million in assets? Obviously, for them whether the exception is $1million or 2million or 3 million, it doesn’t matter for them…They have plenty of tools to already reduce the estate taxes… VAR’s are just one such tools that might actually make sense for people who are wealthy to reduce estate taxes…Things that you and I probably wouldn’t do simply because it’s too expensive for people like us to. For practical purposes, most “average” people only have the option of setting up AB living trust that offers some slight relief. So who do you think this repeal is going to impact the most? And the other problem is that for families that will be paid that amount on death from a life insurance, there’s nothing one can really do to activity manage how that amount is taxed, because generally it’s not “real” until the policy pays (unlike the more expensive annuity options)…Compare this to the other situation in which truely more wealthy people have millions cold hard assets right now…Do you really think they aren’t already taking legal steps right now to shelter that money? It’s a completely different game if the amount is available right now…Plenty of tools that can be used to shelter it that estate tax repeal itself won’t be able to address.
I laugh when i here about these things about not raising taxes for the middle class. Because the default “no action” that our government is taking on both the dividend tax and the estate taxes, yup the more frugal/saver middle class are going to get hit the most I believe, because unlike the wealthy people who have already been planning this, most middle class folks probably haven’t…. Heck, most people probably don’t even know what an AB living trust is, or don’t even have one setup for the family. I guess we’re quickly redefining what middle class means as people who are dirt poor and no savings, while as anyone that has savings is considered “rich/wealthy”…..But hey, it’s so typical of this country…Rather than encourage saving and taking care of one’s own family, punish savers and redistribute wealth to people who enjoyed life spending and didn’t take care of their family…Welfare for all those BMW/bling leasee’s ….Now where’s check I need to write to Mercedes to pay for my financing that I couldn’t afford…
