Retirement-Savings Cap?

[mmmmmbeer]

If you inherit a house that's been fully paid off and you decide to live in it, should you be expected to pay the chunk of tax that the house is valued at?

Yes!

It's the The People's house is it comrad?

[mjedlin66]

The idea that "the money has already been taxed" is a flawed perspective. We don't tax money, we tax income. An inheritance is income to the recipient.

Also, saying that recipients are being "punished" because they got a free inheritance is ridiculous. Your parents left you a million dollars. You pay 250k in taxes and keep the rest. You just got 1 million dollars gross for no effort on your part. You paid the taxes and still had 750k for no effort on your part. What a harsh punishment!

I think the estate tax should only exempt inheritances of 100k or less. Almost everyone should pay the estate tax.

Maybe we were both wrong. It's not money, and it's not income. It's property, which is forcibly taken from us at the point of a gun by the government. If you don't pay your taxes, you eventually get arrested and thrown in jail. In other words, it's theft if it were done by you or I to another person. Forcibly taking anybody's property is theft, no matter who does it.

We must have some level of government, else anarchy exists (which is never permanent and only a transitional state of affairs), thus we must have taxes. Some level of theft must happen, but it should only happen with the consent of the governed. And the end payers are always the consumer, even if you tax the company the costs will be passed on in the form of higher prices or shoddier products.

If we must have a government and therefore taxes to fund said government, in order to limit the infringement of personal liberties and freedoms we must therefore insist that such government be as minimal as possible. Since the government is minimal, taxes will also likewise be minimal.

If taxes are minimal, then there will be no need of exorbitant levels of taxation such as death taxes or excessive income taxes. Until 1913 the government functioned without an income tax of any kind, and the government was likewise small. The government has exploded in the last 100 years, especially compared to the 150 years before that. 1913 was the worst year ever.

Taxation isn't theft. If it were theft, you would never benefit from it. In return for your taxes, you have representation at all levels of government, public roads to drive on, public airports to fly out of, labor law enforcement, public education to send your kids to, game wardens, etc. Etc.

You gain government services from your taxes. Also, you have representation. So it is not theft. By definition, you elected the government that has control over taxes, and you thus consented to the tax law they create.

If we are going to have an income tax, then we must have an inheritance tax. Inheritances are income. In its present form, our inheritance tax does almost nothing. Poor people who work for everything they have are taxed on every dollar they earn. People who are born rich don't pay any tax on their unearned income. That is a rigged system.

I don't want equality of outcome. I want equality of opportunity. Tax inheritances like income. Then, and only then, is the income tax fair and consistent. The revenue from the inheritance taxes can help lower the taxes on the poor, so that a little more of their earned income stays with them. It isn't welfare or "redistribution of wealth." It just creates a better environment for poor people to change their own situation.

[mjedlin66]

If you inherit a house that's been fully paid off and you decide to live in it, should you be expected to pay the chunk of tax that the house is valued at?

Yes!

It's the The People's house is it comrad?

It is your house with a fair and just income tax slapped on what you never earned for yourself.

Is your check "The People's Check" because you pay income tax on it? No. It is your check.

[never_nuff]

Well, that sucks. Got to worry about property tax as well. You would think all the tax the government collect, the US would be out of debt.

[Aitrus]

Taxation isn't theft. If it were theft, you would never benefit from it. In return for your taxes, you have representation at all levels of government, public roads to drive on, public airports to fly out of, labor law enforcement, public education to send your kids to, game wardens, etc. Etc.

You gain government services from your taxes. Also, you have representation. So it is not theft. By definition, you elected the government that has control over taxes, and you thus consented to the tax law they create.

If we are going to have an income tax, then we must have an inheritance tax. Inheritances are income. In its present form, our inheritance tax does almost nothing. Poor people who work for everything they have are taxed on every dollar they earn. People who are born rich don't pay any tax on their unearned income. That is a rigged system.

I don't want equality of outcome. I want equality of opportunity. Tax inheritances like income. Then, and only then, is the income tax fair and consistent. The revenue from the inheritance taxes can help lower the taxes on the poor, so that a little more of their earned income stays with them. It isn't welfare or "redistribution of wealth." It just creates a better environment for poor people to change their own situation.

Regardless of whether or not you agree it's theft, it's Legal Plunder as defined by Frederick Bastiat and is forced confiscation of my property without my agreement. Why do you support forcing somebody who has committed no crime to do something at the point of a gun? Why do you believe force is justified when it's used to make people do the things you want them to do?

Of the things you state above that my taxes go toward, most are unconstitutional. Law enforcement is the only one that you list that is authorized, and then in it's present form it's grossly overlarge. Most federal crimes aren't breakages of law, but of regulations (which aren't laws), and most of the federal-level laws should be State-level laws anyway.

As for the other things you say I get in return for paying taxes: the US government's job is not to take property from me just to take it's cut and give me poorly run "services" in return. Lots of countries in Europe do that, and I don't want to live there. I don't care if the government decides that what it's giving me is equal to what I pay - it's not worth nearly 50% of my paycheck (and others pay more than 50%). In any case, most of the "services" aren't Constitutionally copacetic.

By voting I consent to a government that is run IAW the Constitution. My vote does not give consent for unelected individuals to enact taxation or fineable regulations that completely bypass the Congress. Congress makes all laws, not bureaucrats, and only Congress has the authority to lay and collect taxes. I do not vote for all of the entities that exist at all levels of the government that create laws, regulations and taxation rules. I am subject to taxation without representation because the majority of the entities that create the rules governing taxation I was not party to electing - they were either appointed or hired.

I agree, I don't want equality of outcome, and we shouldn't enact government policies based on outcomes. But your definition of "equality of opportunity" isn't equitable. It's not a rigged system - nature rewards those who work hard and are successful all the time, but you disagree with that. You want to artificially punish the successful by seizing the fruits of their labor in the form of forcibly taking from their progeny. I see no problem with a person who works hard all his/her life being selfless and bequeathing their bounty on whomever they choose without penalty. It could be the kids / grandkids, a charity, a check to the U.S. Treasury, an endowment, etc. The point is that it should be the earner's choice as to what happens to the results of his hard work and good choices without the government infringing on that choice or cheapening it.

Again - inheritance is not income. Just because some regulation enacted by an unelected non-Congressperson says it doesn't make it so.

The tax system is in no way fair and consistent. Roughly 53% (or is it 56%? I'm not sure on the current number...) of wage earners pay income tax. The rest don't. Taxing those who leave a large inheritance (i.e. - they are punished for another family member's success) enables those who are poor to not pay their share. The poor don't need the government's help to change their situation, and the government is historically bad at helping poor people climb up the economic ladder.

There are three things that will keep a person out of poverty, and if you are in poverty will get you out within 10 years.

First, graduate from high school.
Second, wait until after you're 21 to get married and don't have kids until after you do get married.
Third, have a full-time job and live below your means.

If you do all of these things, statistically, you have a 2% chance of falling into poverty. And these rules apply to all races and demographic groups. Notice how the government need not be involved in any of these?

It's interesting that you describe exactly what distribution of wealth is, and then say that it isn't distribution of wealth. I wonder, what is your definition of wealth?

Also: you seem to advocate strongly for an income tax to fund the government at either present levels of spending or greater. Question: in what society would you be considered a conservative? In other words, at what point would you start arguing for a lower tax rate instead of a higher one? At what point would you be satisfied?

[honkytonk]

Taxation isn't theft. If it were theft, you would never benefit from it. In return for your taxes, you have representation at all levels of government, public roads to drive on, public airports to fly out of, labor law enforcement, public education to send your kids to, game wardens, etc. Etc.

You gain government services from your taxes. Also, you have representation. So it is not theft. By definition, you elected the government that has control over taxes, and you thus consented to the tax law they create.

If we are going to have an income tax, then we must have an inheritance tax. Inheritances are income. In its present form, our inheritance tax does almost nothing. Poor people who work for everything they have are taxed on every dollar they earn. People who are born rich don't pay any tax on their unearned income. That is a rigged system.

I don't want equality of outcome. I want equality of opportunity. Tax inheritances like income. Then, and only then, is the income tax fair and consistent. The revenue from the inheritance taxes can help lower the taxes on the poor, so that a little more of their earned income stays with them. It isn't welfare or "redistribution of wealth." It just creates a better environment for poor people to change their own situation.

Sounds like redistribution to me.

[sunburn]

The Wall Street Journal's Anne Tergesen and Richard Rubin on Friday reported that GOP tax writers on the House Ways and Means Committee were considering a proposal that would cap the amount people are allowed to put into a traditional, tax-deferred 401(k) account or IRA. Those who go over that cap would be forced to contribute to a Roth account.

WTH

The prez said it ain't happening.

[mmmmmbeer]

It is your house with a fair and just income tax slapped on what you never earned for yourself.

Is your check "The People's Check" because you pay income tax on it? No. It is your check.

I can see this will go nowhere with you. You've strong socialist blood running through your veins. Anyone with family money or who gains anything on their own MUST PAY their FAIR SHARE!

Woof... don't bother responding. It won't convince me, and I won't convince you. Let's just leave it at that.

[mjedlin66]

Anyone with family money or who gains anything on their own MUST PAY their FAIR SHARE!

Exactly. Hence the inheritance tax.

[mjedlin66]

Taxation isn't theft. If it were theft, you would never benefit from it. In return for your taxes, you have representation at all levels of government, public roads to drive on, public airports to fly out of, labor law enforcement, public education to send your kids to, game wardens, etc. Etc.

You gain government services from your taxes. Also, you have representation. So it is not theft. By definition, you elected the government that has control over taxes, and you thus consented to the tax law they create.

If we are going to have an income tax, then we must have an inheritance tax. Inheritances are income. In its present form, our inheritance tax does almost nothing. Poor people who work for everything they have are taxed on every dollar they earn. People who are born rich don't pay any tax on their unearned income. That is a rigged system.

I don't want equality of outcome. I want equality of opportunity. Tax inheritances like income. Then, and only then, is the income tax fair and consistent. The revenue from the inheritance taxes can help lower the taxes on the poor, so that a little more of their earned income stays with them. It isn't welfare or "redistribution of wealth." It just creates a better environment for poor people to change their own situation.

Regardless of whether or not you agree it's theft, it's Legal Plunder as defined by Frederick Bastiat and is forced confiscation of my property without my agreement. Why do you support forcing somebody who has committed no crime to do something at the point of a gun? Why do you believe force is justified when it's used to make people do the things you want them to do?

Of the things you state above that my taxes go toward, most are unconstitutional. Law enforcement is the only one that you list that is authorized, and then in it's present form it's grossly overlarge. Most federal crimes aren't breakages of law, but of regulations (which aren't laws), and most of the federal-level laws should be State-level laws anyway.

As for the other things you say I get in return for paying taxes: the US government's job is not to take property from me just to take it's cut and give me poorly run "services" in return. Lots of countries in Europe do that, and I don't want to live there. I don't care if the government decides that what it's giving me is equal to what I pay - it's not worth nearly 50% of my paycheck (and others pay more than 50%). In any case, most of the "services" aren't Constitutionally copacetic.

By voting I consent to a government that is run IAW the Constitution. My vote does not give consent for unelected individuals to enact taxation or fineable regulations that completely bypass the Congress. Congress makes all laws, not bureaucrats, and only Congress has the authority to lay and collect taxes. I do not vote for all of the entities that exist at all levels of the government that create laws, regulations and taxation rules. I am subject to taxation without representation because the majority of the entities that create the rules governing taxation I was not party to electing - they were either appointed or hired.

I agree, I don't want equality of outcome, and we shouldn't enact government policies based on outcomes. But your definition of "equality of opportunity" isn't equitable. It's not a rigged system - nature rewards those who work hard and are successful all the time, but you disagree with that. You want to artificially punish the successful by seizing the fruits of their labor in the form of forcibly taking from their progeny. I see no problem with a person who works hard all his/her life being selfless and bequeathing their bounty on whomever they choose without penalty. It could be the kids / grandkids, a charity, a check to the U.S. Treasury, an endowment, etc. The point is that it should be the earner's choice as to what happens to the results of his hard work and good choices without the government infringing on that choice or cheapening it.

Again - inheritance is not income. Just because some regulation enacted by an unelected non-Congressperson says it doesn't make it so.

The tax system is in no way fair and consistent. Roughly 53% (or is it 56%? I'm not sure on the current number...) of wage earners pay income tax. The rest don't. Taxing those who leave a large inheritance (i.e. - they are punished for another family member's success) enables those who are poor to not pay their share. The poor don't need the government's help to change their situation, and the government is historically bad at helping poor people climb up the economic ladder.

There are three things that will keep a person out of poverty, and if you are in poverty will get you out within 10 years.

First, graduate from high school.
Second, wait until after you're 21 to get married and don't have kids until after you do get married.
Third, have a full-time job and live below your means.

If you do all of these things, statistically, you have a 2% chance of falling into poverty. And these rules apply to all races and demographic groups. Notice how the government need not be involved in any of these?

It's interesting that you describe exactly what distribution of wealth is, and then say that it isn't distribution of wealth. I wonder, what is your definition of wealth?

Also: you seem to advocate strongly for an income tax to fund the government at either present levels of spending or greater. Question: in what society would you be considered a conservative? In other words, at what point would you start arguing for a lower tax rate instead of a higher one? At what point would you be satisfied?

Reducing taxes on the poor is not a government aid program. Actually, it just gets the government out of the way so they can help themselves, which is exactly what you are advocating for. But in this scenario, we can only afford to give them that tax break if we enact the inheritance tax.

An inheritance is definitely income. You are born with nothing. If a family member dies and you inherit their wealth, you just got a whole lot of income all at once. It has nothing to do with a Congressman's definition. It is the mathematical definition of income.

The only difference between earned income and inheritance income is that the laborer pays taxes and the heir doesn't. That doesn't make any sense.

The inheritance tax does not tax the deceased. Once you earn your wealth and pay income tax on it, we aren't going to tax it again. And when you croak, you can leave 100% of it to whoever you like. But it is income to them, so it needs to be taxed.

[evilanne]

Reducing taxes on the poor is not a government aid program.

The poor are not required to pay any federal income tax.

You do not even need to file a tax return if you make less than certain amounts based on your filing status. Most low income earners do file federal tax returns in order to either get most if not all the federal withholding back or to get more money back through various Tax Credits e.g. Earned Income Tax Credit, Child Tax Credit etc. Some get refunds of thousands of dollars and pay no federal income tax--not sure what you call that other than a government aid or a social program. Not saying that this is either good or bad, just pointing out that congress uses the tax code for many purposes such as assistance or encouraging certain behaviors such as Educational Credits or paying off your student loans.

[mjedlin66]

Reducing taxes on the poor is not a government aid program.

The poor are not required to pay any federal income tax.

You do not even need to file a tax return if you make less than certain amounts based on your filing status. Most low income earners do file federal tax returns in order to either get most if not all the federal withholding back or to get more money back through various Tax Credits e.g. Earned Income Tax Credit, Child Tax Credit etc. Some get refunds of thousands of dollars and pay no federal income tax--not sure what you call that other than a government aid or a social program. Not saying that this is either good or bad, just pointing out that congress uses the tax code for many purposes such as assistance or encouraging certain behaviors such as Educational Credits or paying off your student loans.

All I want is to keep the income tax at zero for the poor. I don't support most welfare programs. I am certainly open to discussion on eliminating those tax credits.

But if the poor pay zero already, that is great. That means that by implementing an accross the board inheritance tax, we can lower everyone's income taxes. Yes, I mean everyone's. Even the rich.

I am not against tax cuts and government spending cuts. I am all for the inheritance tax and the graduated tax system.

For the record, my household income is above the median, so I would personally gain from converting the graduated tax into a flat rate. However, I see the graduated tax as an absolute necessity for social mobility, so I am happy to pay the higher taxes.

[evilanne]

An inheritance is definitely income. You are born with nothing. If a family member dies and you inherit their wealth, you just got a whole lot of income all at once. It has nothing to do with a Congressman's definition. It is the mathematical definition of income.

The only difference between earned income and inheritance income is that the laborer pays taxes and the heir doesn't. That doesn't make any sense.

The inheritance tax does not tax the deceased. Once you earn your wealth and pay income tax on it, we aren't going to tax it again. And when you croak, you can leave 100% of it to whoever you like. But it is income to them, so it needs to be taxed.

If you inherit a pension or traditional 401K, IRA or TSP, beneficiary will pay taxes on any distribution. If you inherit a Roth, any earnings after the date of death become taxable (except if spouse chooses to treat as their own). So this is already set up to make sure the government get their share.

Per IRS Pub 17 "Your Federal Income Tax" https://www.irs.gov/pub/irs-pdf/p17.pdf or https://www.irs.gov/forms-pubs/about-publication-17

Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheri- tance isn’t included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
Inherited pension or IRA. If you inherited a pension or an individual retirement arrangement (IRA), you may have to include part of the inherited amount in your income. See Survivors and Beneficiaries in Pub. 575, if you inherited a pension. See What if You Inherit an IRA? in Pubs. 590-A and 590-B, if you inherited an IRA.

Property does not equate to income and should not be taxed unless such property generates income. In many cases property such as a home have expenses such as a mortgage/loan, insurance, property tax etc or require repairs that would result in beneficiary having to sell the home just to pay taxes. Same argument is applied to family businesses and the reason for the current exemption amount. Whether the current amount is reasonable, should be higher or nonexistent is debatable but I disagree that all inheritance should be taxed.

[evilanne]

All I want is to keep the income tax at zero for the poor. I don't support most welfare programs. I am certainly open to discussion on eliminating those tax credits.

But if the poor pay zero already, that is great. That means that by implementing an accross the board inheritance tax, we can lower everyone's income taxes. Yes, I mean everyone's. Even the rich.

I am not against tax cuts and government spending cuts. I am all for the inheritance tax and the graduated tax system.

For the record, my household income is above the median, so I would personally gain from converting the graduated tax into a flat rate. However, I see the graduated tax as an absolute necessity for social mobility, so I am happy to pay the higher taxes.

Check back with us in about 20 years and we'll see if your opinions have changed. It is unlikely that they will be able to take away existing credits without a big outcry. Just like entitlements, that are sacrosanct, politicians are afraid to touch them. Same problem congress now has with fixing ACA legislation. If you like paying taxes all your TSP contributions should be in Roth.

[mjedlin66]

If you inherit a pension or traditional 401K, IRA or TSP, beneficiary will pay taxes on any distribution. If you inherit a Roth, any earnings after the date of death become taxable (except if spouse chooses to treat as their own). So this is already set up to make sure the government get their share.

Per IRS Pub 17 "Your Federal Income Tax" https://www.irs.gov/pub/irs-pdf/p17.pdf or https://www.irs.gov/forms-pubs/about-publication-17

Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheri- tance isn’t included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
Inherited pension or IRA. If you inherited a pension or an individual retirement arrangement (IRA), you may have to include part of the inherited amount in your income. See Survivors and Beneficiaries in Pub. 575, if you inherited a pension. See What if You Inherit an IRA? in Pubs. 590-A and 590-B, if you inherited an IRA.

Property does not equate to income and should not be taxed unless such property generates income. In many cases property such as a home have expenses such as a mortgage/loan, insurance, property tax etc or require repairs that would result in beneficiary having to sell the home just to pay taxes. Same argument is applied to family businesses and the reason for the current exemption amount. Whether the current amount is reasonable, should be higher or nonexistent is debatable but I disagree that all inheritance should be taxed.

Property inheritance is indeed income, because property has value. If you didn't inherit the property, you would have to buy it. Similarly, if you inherit property tax-free, then you can liquidate it later tax-free. So property is income.

If you inherit a paid-off $400,000 home, you just had a $400,000 income. Say the inheritance tax is 25%. If you don't have $100,000 sitting around, you don't have to sell the house. You just mortgage it for 25% LTV. Compared to people without inheritances, who have to pay 100% of the home price with their taxed income, inheriting a house and then mortgaging 25% of it to pay the inheritance tax is a drop in the bucket.

If someone inherits a house with a high LTV, then they didn't really inherit a house. They inherited debt. The inheritance tax would be based on the equity, not the value of the home. So if that same $400,000 house was inherited with a 75% LTV mortgage on it, then the value of their inheritance is $100,000. If there is no exemption, then they would owe tax on the 100,000, or $25,000. They can easily refinance the whole house into one loan to cover the 25 grand. BUT, I already stated I would allow a 100,000 exemption. So that would cover most situations like this.

All of my TSP contributions are in Roth. Something like 90% of my account balance is Roth.