Re: how to compare living standards


"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote

Jim Blair" <jeb@xxxxxxxx> wrote:
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?


What a sense of irony you have there, William. Name any marginal tax rate
you like, and Jim will _always_ favor a lower one :-)

But seriously: I would still like to clarify something for Jim's benefit,
or maybe mine. A man's net worth at the time of his death is $100 million.
Is that his "estate" for tax purposes?

The day _before_ he dies, he sets up a charitable foundation with $90
million of his net worth. His heirs directly inherit the other $10 million.
Is _that_ his "estate" for tax purposes?

If the latter, the IRS collects around $4 million in "estate tax". Is
_that_ what we call "4% tax on a $100 million estate"?

-- TP
















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 tru
st
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 :-)


.

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