Re: how to compare living standards

On Thu, 27 Apr 2006 13:04:52 -0500, "Jim Blair" <jeb@xxxxxxxx> wrote:

"tonyp" <tonyp@xxxxxxxxxxxxx> wrote in message

"S. Doo" <none@xxxxxxxxxxxx> wrote

IRS Statistics of Income show that the largest estates pay a lower
effective tax rate than smaller estates. Easy enough to see at
www.irs.gov

The IRS has a largish site. Care to narrow your citation down to the
specific table(s) that back up your assertion?

Hi,

Related to this, last night I attended a presentation on topics including
estate planning, and saw an interesting slide.

The estate of Marylin Monroe was somewhere in the $800,000 range and the
estate tax took about 80% of it.

The top estate tax rate was 77% when Marilyn Monroe died in 1962.

The estate of Elvis Presley was larger (missed the figure) and the estate
tax claimed 70 + % of it.

And the top rate was 70% when Elvis Presley died in 1977.

(neither of them had planned to die when they did :-(
But both estates have done well since they died :-)

It's likely that probate courts, lawyers, and accountants had a field
day tapping the estates of both, especially if they died without wills
or trusts.

The estate of John D. Rockefeller III was huge (hundreds of millions) and
the estate tax took 3% of it.

Not surprising. The Rockefellers know all the tricks.

<snip description of billionaire setting up foundation which then hires
his
children as well-paid but not-overworked directors etc. -- a scenario
which
I do not dispute>

Which enables the whole family to live like a billionaire family, not
being able to actually sell the foundation's stock for their own
account itss true -- but in all other ways taking a heck of lot more
income out of the stock, and receiving a whole lot more billionaires's
perks, than if Daddy was still alive, * or* if the billion had been
left taxably and been cut by 50% each generation.

Where to begin?

First, it is neither surprising nor objectionable that a billionaire's
children live more lavishly than yours or mine. If we _must_ have
billionaires, who _else_ is going to live that way? If you think the
lifestyle of the children of the rich and famous is somehow objectionable,
how exactly would it become _less_ objectionable if they get to inherit
daddy's capital, tax-free?

I think the point here is that the kids of the smart rich will make out just
fine with the current estate tax situation (which my TIAA/CREF newsletter
says can tax an estate up to 90% if no planning is done). Those who
benefit from the current situation are estate planners and lawyers, not the
IRS.

I can't believe the figure 90% is true with the top rate now at 47%.

Did you ever wonder how all those Kennedys who flunk the bar exam
and have otherwise poor academic records always seem to be
employed by conservation groups and non-profits that leave them
with plenty of time and income to enjoy politics and playboying,
generation after generation after generation?


Actually I don't share S Doo's distain for the Kennedy and Rockerfeller and
such family's role in politics and running "save the world" foundations.
If I had that kind of money and connections, I would be tempted to live like
a lazy party bum. While I don't agree with most of Teddy Kennedy's
particular ideas, I admire his willingness to hold public office and thus
expose himself to nut cases and fanatics, especially after 2 of his brothers
were killed by them.

And I would also like to help "save the world", it's just that I have some
rather unorthodox ideas about how to.

Second, salaries for no-show jobs and fees for do-nothing board meetings
are
_income_, and are _taxed_ as income, whether the old man is still alive or
already dead. That's as it should be. Or do you object to taxing
incomes,
too?

I say keep the marginal income tax rate low enough that people will decide
to take the money as income and pay the tax.

Is 35% low enough, Jim?

Rather than to keep their "taxable income" low, and take the foundation's
benefits and perks. Free health care and the clinic, use of the
company/foundation car and private jet, free vacations and business
meeting. Some jobs even offer free food and housing, country club
memberships, etc.

Even my jobs have had some interesting "perks" including health care,
internet access, a bus pass, library access, and sometimes being sent to
interesting places including Toronto, New Orleans- twice, Salt Lake City,
Cedar Falls, De Moines, and Iowa City, and Milwaukee. (OK so some of the
places aren't so interesting, but at least they had all expenses paid)

And a special perk is a trip to Philadelphia.

In my view, an outright inheritance is income to the heir, just like
lottery
winnings.

My understanding is that money in a trust can be passed on and it becomes
taxable income only when it is sent from the trust to the individual. That
is, your daddy or rich uncle can die and leave you his million dollar trust
fund tax free. But when you have some of the interest or dividends sent to
you, that then becomes taxable income for you. (and if dividends, it is
taxed at a lower rate than if you had earned that same amount as wages).

Any experts out there know if I am correct? (Hint WFH)

Income earned from the estate assets is taxable, both for the estate
owner and for the beneficiaries of the estate. However the assets
themselves are not income taxable or estate taxable to the heirs.
However when the assets are sold, any price appreciation relative to
their market value at the time of death of the estate owner is income
taxable as capital gains to the beneficiary.

Again I ask: how would abolishing the estate tax make "all those
Kennedys"
_less_ inclined to "politics and playboying"?

Probably would't change that. But it might redirect some lawyers effort to
more productive uses.
Or maybe not--maybe they would be freed up to cause other mischief ;-(

You were correct the second time :-)
.

Relevant Pages

  • Re: how to compare living standards
    ... Name any marginal tax rate ... the IRS collects around $4 million in "estate tax". ... My understanding is that money in a trust can be passed on and it becomes ... taxable income only when it is sent from the trust to the individual. ...
    (sci.econ)
  • Re: The poor rich work harder
    ... -- from work, money worries, household chores and screaming kids (via ... These people pay at about the same income tax rate ... A prime example is the estate tax. ...
    (soc.retirement)
  • Re: The poor rich work harder
    ... -- from work, money worries, household chores and screaming kids (via ... These people pay at about the same income tax rate ... A prime example is the estate tax. ...
    (soc.retirement)
  • Re: how to compare living standards
    ... The gift tax exemption in 2005 was $1.5 million. ... But if the estate were worth $5.0 million, for example, the tax ... you must pay income tax as ... Regarding the overall tax rate on IRA distributions, ...
    (sci.econ)
  • Re: how to compare living standards
    ... piecemeal, as ordinary income. ... how would abolishing the estate tax make "all those Kennedys" ... You keep $0 for your heirs, and give $100 to the Red Cross. ...
    (sci.econ)
Loading