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June 07, 2018

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Did Obama do that?

You have already forgotten the tens of thousands, mostly minorities, who lost their homes, their equity, and their futures while Obama and his appointee Bernanke funneled trillions to the banks? Or has that history been erased already?

They missed me, although Medicare got hit and God knows Obama tried to go after entitlements. Simpson-Bowles also erased.

And there is the austerity Obama enthusiastically jumped onto after 2009, lots of gov't layoffs (no help to states) which again hurt blacks, and freeze on hires.

Or....NOT OBAMA'S FAULT!!! Of course.

But Obama did great, worth at least 9 figures already, and growing. Not even counting the foundations which are power.

Finally, looking at G7 and that perfect picture:

I don't like it either. China is gonna win. Waiting until most of the competitive economies were past-mature to go full-bore development was geopolitical genius. That's how it's done, America Japan they all got to the top by being luckily in a position to use latest technologies while being able to ignore sunk costs and vested interests. China did it deliberately.

China, Russia, and their allies are going to take over and rule. India has a hard choice.

The only thing that will stop this, which has been predicted for 150 years, is nuclear war.

Which is why the Russophobia of the Democratic Party is so terrifying.

Popular Front politics defeated fascism.

It always strikes me that the Soviet army gets short shrift in discussions of defeating mid-20th C fascism.

Not a defense of Soviet Russia, just an observation.

China did it deliberately.

I always figured it was that other thing not working out that got the Chinese to move toward development and a market-ish economy.

You could be right, they could just be truly world-historical chess players.

Sure the estate might last through a few not so productive kids or grandkids etc but usually only if they don't have access to the principal in the first place.

Let's consider Lukas Walton, who I mentioned above. (Again, I know nothing about Mr. Walton, and choose him only to provide a numerical example.)

He is worth $25 billion. Let's say he has five children, each of whom inherits $5 billion. Being wastrels, their estates are worth only $2.5 billion when they die. Since they each have five children the next generation inherits $500 million each. Repeat. The next generation gets $50 million each. The next $5 million.

So the seventh generation of Walton descendants are entitled to $5 million by virtue of being Sam Walton's great-great-great-great-grandchildren. But hey, they worked for it. Right?

Look. The economic system works in a context of law, custom, history, institutions, etc. Economic behavior does not take place in an abstract space unrelated to these things, no matter what the textbooks say.

It is far from unreasonable to think that, when someone accumulates a massive fortune, that this is at least a little bit due to the system being tilted their way. Untilting it slightly, in a way that does no real damage to the individual with the fortune, and not much to their heirs, doesn't strike me as evil.

The US (fuck Europe, collapsing before our eyes) is now in the position, maybe, that Japan and Germany were in the 1920s. Looking to become vassal states of an alien culture. Or go for broke.

You like gay rights, feminism, free press, democracy? Japan and Germany liked their cultures too, even if we disapprove of them.
You think your culture is the right one for everybody alltime, that's exceptionalism and imperialism, and not even looking at the bad stuff.

Thing is, we're gonna lose, just like them. You wanna go out like them? You wanna take everybody with you?

Hows it feel to be losing a war? The night they drove ole dixie down.

So Bob, to whom, to what culture, do you see us losing?

fuck Europe, collapsing before our eyes

the problem with the big theories is that they have to, at a minimum, save the phenomena. actually accounting for and explaining reality is also nice, but at a minimum, claims have to at least resemble the phenomena that are actually before our eyes, and as a bonus offer some predictive ability.

I have a number of friends who, from a wide variety of motivations, claim that Europe is all done. On its way out, a has-been continent, a dead letter.

FWIW, I'm not seeing it.

Were I to venture a claim, it would be that Europe is stepping up as the advocate of liberal democratic governance. We unfortunately seem to be letting that role slide, but that's on us.

We'll see what happens.

China has its own problems that are likely to get worse in the next couple of decades.

It has demographic problems. Its one-child policy is biting it back. Even though there's a shortage of women, the cultural bias against marrying older women with fewer childbearing years is so strong that it is leaving a lot of women and even more mem unmarried.

As its middle class grows, it will demand more amenities, like a clean environment, that the government will likely have trouble delivering on. The current economic and policial systems have already picked most of the low-hanging fruit.

Charles, my thought as well. At most, I would see us experiencing a temporary (although possibly rather long) setback to our own worse natures. But that's not the same as "losing a war."

Besides, to finance an actual war with China, the US would have to borrow money from, well, the Chinese.

Looks like the Evil Crew has decided on Gillibrand...

I'll bet right now that, if nominated, she loses the general. The Dems (and I'm a registered Dem) seem to have reached the point where they need the Dem- and Dem-leaning voters to get excited about the candidate, and in much of the country those voters refuse to get excited about a Dem candidate from the NE urban corridor. I don't know why, I just point it out. In 2016, Clinton got 104 EC votes in the NE urban corridor, 98 in the Census Bureau-defined West (ignoring faithless electors like whoever from Washington voted for Faith Spotted Eagle), and 30 from the rest of the country. It's that "rest of the country" that terrifies me.

You have already forgotten the tens of thousands, mostly minorities, who lost their homes, their equity, and their futures while Obama and his appointee Bernanke funneled trillions to the banks? Or has that history been erased already?

They missed me, although Medicare got hit and God knows Obama tried to go after entitlements. Simpson-Bowles also erased.

And there is the austerity Obama enthusiastically jumped onto after 2009, lots of gov't layoffs (no help to states) which again hurt blacks, and freeze on hires.

So Obama didn't make you homeless. And you have provided no reason to think a future Democratic President would either. Nor do you explain why you think Obama was responsible for a financial crisis that hit while Bush was still in office.

I'm not clear on your combined complaints about austerity and Simpson-Bowles. They seem to contradict one another, and I'd say it's a good thing Simpson-Bowles was abandoned.

For anyone interested in Chinese minutia, here're some video blog links:

ADVChina: Adventure Talk Show on Two Wheels

SerpentZA: The Original China VLogger

laowhy86: Videos about Living in China

Vivi Vlog

Hu Knows

Michael Cain: ... they need the Dem- and Dem-leaning voters to get excited about the candidate, and in much of the country those voters refuse to get excited about a Dem candidate from the NE urban corridor ...

I suppose that's one difference between Dem- and Dem-leaning voters, and the Rep- and Rep-leaning voters who voted for He, Trump. Is NY, NY not part of the NE urban corridor all of a sudden?

You may be right that politicians from the NE urban corridor will be poison for some time to come, though. The sturdy yeomen of the heartland may catch on to where He, Trump is from, eventually.

--TP

Is NY, NY not part of the NE urban corridor all of a sudden?

Staten Island appears to be the outlier. Suffolk County, too, out on Long Island. Suffolk is basically NY's Orange County, and I'm glad I no longer call it home.

Looking beyond NY, NY, to plain old NY, and there's a lot of red.

Gillibrand is from one of those patches of blue up along the Hudson valley.

Both sides need to stop running campaigns based on candidates and issues from the last century.

Just a random odd thought. The last few Democratic Presidents, going back 2/3 of a century**, were from:
- Illinois
- Arkansas
- Georgia
- Texas

Notice a commong thread there? Pretty much all from what are currentlt red states. (Although Illinois is arguably a marginal case, depending on just which office one focuses on.) Whereas Democratic presidential candidates from blue states have routinely lost.

Anyone arguing for a candidate from a solid blue state ought to at least be asked why he thinks this time is going to be different.

** I.e. since before the "Southern Strategy" came along.

I'd rather not look at one of the 540 US billionaires. Seems an amazingly small number of people to determine tax policy based on.

Do we think Lukas Walton has an outsized impact on our elections?

I'd rather not look at one of the 540 US billionaires.

me neither.

Seems an amazingly small number of people to determine tax policy based on.

Seems an amazingly large percentage of the country's resources to be concentrated in such a small # of hands.

Do we think Lukas Walton has an outsized impact on our elections?

Maybe directly, maybe not, but anyone with that outsized a proportion of the country's resources can hardly help having an outsized influence on any number of things, just by virtue of having decision-making control over an outsized proportion of our collective resources.

If 99% of the wealth was concentrated in one oligarch's hands, would you say that was just too amazingly small a number to worry about?

CharlesWT: Both sides need to stop running campaigns based on candidates and issues from the last century.

Issues from the last century have all been resolved, have they?

Another brand name I object to: New Ideas(TM)

Democracy is an old idea. Any "side" that wants to offer a New Idea(TM) in its place can bite me.

International trade is an even older idea. Any "side" that proposes to replace it had better be able to grow enough coffee domestically.

Civil rights is a pretty old idea at this point. One "side" (okay, the GOP) proposes New Ideas(TM) like it's okay to make it harder for black people to vote, or to base congressional districts on citizens rather than persons, so long as you have a good cover story. (Racism, alas, is an old idea too.)

"Nothing is ever settled until it's settled right." Millennia come and go. Certain "issues" linger.

--TP

I'd rather not look at one of the 540 US billionaires. Seems an amazingly small number of people to determine tax policy based on.

Yet you are screaming about them being treated unfairly. Which is it?

Do we think Lukas Walton has an outsized impact on our elections?

I doubt it, but I don't see the relevance of the question. Billionaires in general do have an outsized impact of course, but again that's not relevant.

I raise Mr. Walton and his hypothetical descendants to explain that your argument about how we are taking away hard-earned money is nonsense.

I might add that wealth, aside from its main value as money, also confers a lot of advantages in terms of opportunities, quality of education available, and so on. If your father has $5 million you will be be able to go to a nice private school, or a very well funded public one, and take that unpaid internship, for example. If he has 50 cents you'll go to an underfunded public school and flip burgers instead. And on and on.

anyone with that outsized a proportion of the country's resources can hardly help having an outsized influence on any number of things

do we think that Lukas Walton will be treated in the same way, in any context whether public private or in-between, as anyone whose personal net worth has fewer commas in it?

do we think that, if any member of the Walton family makes a call to the office of their US Senator, US House Rep, governor, state Senator or House Rep, country commissioner, local mayor or dogcatcher, their call will not be returned within a day?

money talks. if you have billions, you can be really loud.

go ahead and try to tell us it ain't so.

Let's assume that the "death tax" so detested by the Martys of the world accounts for a measly 1% of US government revenue.

Let's assume that reducing the "national" debt, as advocated by the McKinneys of the world, is a worthy goal.

Combining the two assumptions, let's agree that the Luke Waltons of the world should inherit tax-free and every bit of federal spending should be reduced by 1%. Every federal employee, armed or not, gets a 1% pay cut. Every recipient of Medicare, Medicaid, SNAP, LIHEAP, Pell Grant, or NIH research funding gets 1% less federal money. Every federal supplier, from Lockheed to Staples, gets 1% less for the "goods and services" they contract to provide.

It may seem like a lot of fuss and bother to make all those 1% cuts, but "fairness" demands it, right?

--TP

I don't care if we tax inheritances or not. Taxation is primarily about raising revenue, and secondarily about regulating stuff while pretending that we're not doing so.

I personally am fine with both of those things, the first in principle, and the second as a practical matter.

Do them in whatever way achieves the desired end with the least amount of overall pain, unfairness, and difficulty.

At present, if you inherit five and a half million bucks, or eleven million if from two parties (i.e., both parents), you pay no tax whatsoever. Lucky you, you are filthy stinking rich. Not Donald J Trump, shit in a gold toilet rich, just do whatever the hell you like, never have another minute of financial anxiety, never have to work another freaking day in your life rich.

Which is about as rich as anyone needs to be. Beyond that, it's all noise. I am 100% with wj on that point.

Anything above that, you pay almost exactly what anyone who works for a living makes on whatever they earn above $418K.

In my very humble opinion, that's a pretty damned good deal. As mentioned upthread, I'd take it and run in a heartbeat. All of my future ObWi posts would be from Barcelona or maybe the Cote D'Azur. And oh yeah, I will be driving a 1973 Alfa Veloce GTV or maybe an early 60's Giulia if I can find one in good shape. Not with Anouk Aimee, with my wife, and I will be one very very very happy fella.

Come visit, I'll buy you a Bellini.

In any case, as far as I can tell you have to squint pretty hard to make it look like injustice in any way shape or form.

Compared to all of the other horrifying bullshit going on, it simply does not register on the outrage-o-meter. Mine, anyway.

Not a blip. Undetectable. Non-existent.

We're all entitled to our opinions, that's mine.

Take the money and run. It's exceedingly bad form for very very very lucky people to bitch about not getting to have all the cookies. Lots of folks don't have any.

Recent Republican presidents:

He, Trump -- NY (lost popular vote)
Dubya Bush -- TX (lost popular vote)
Poppy Bush -- TX (or was it really ME?)
St. Reagan -- CA (what color was CA back then?)

I'm not sure I see a pattern there except "from a big state". You have to go back to Gerald Ford to find a GOP president from the heartland, but you gotta keep in mind he was not actually elected.

Nixon (CA, again) would be ancient history if not for his re-incarnation (except dumber and less honest) as He, Trump -- the non-NE non-urban-corridor heartthrob of the heartland.

--TP

Anything above that, you pay almost exactly what anyone who works for a living makes on whatever they earn above $418K.

Assuming there is only one offspring or other beneficiary. Apparently, you would treat each estate according to size rather than how thinly it gets sliced. Not criticizing, but it seems to defeat the purpose breaking up estates at some point if we don't view it as a pie. A pie breaks itself up. No need to tax it. For example, we have three grandchildren. We will fund three college trust funds before either of our children inherit anything. If there is only one recipient, well, I offer--modestly--a solution below.

From the get go, the estate beneficiary has inherited free and clear of all taxes, meaning that beneficiaries got and get the estate net of taxes. Maybe that needs to be rethought--tax the recipient--natural or corporate--above X level at graduated rates maxing out around 50%. For large estates with a small number of recipients, they will pay tax on the money they inherit.

For liquid estates. For going concerns--the family farm, the family store, what have you--I would treat the "business", i.e. the capital asset, like any other capital asset and tax it if and when a gain is realized on the sale. If Dead Founding Daddy didn't sell it and if Dead Inheriting Siblings don't sell it, but if Living Deadbeat Grandbabies sell it and move to Barcelona, that's when you tax it. Why? Because as a going concern, it's an economic player, consuming and growing (hopefully), employing others and paying earned income tax on every dollar in excess of deductions. So, let the business keep operating. Leave it alone. Even if it's a big-ass business. That means more people have a job. That's good.

In principle, I'm of the school that objects on fairness grounds to taxing an earned dollar twice notwithstanding BP's belief that there are large, unrealized and therefore untaxed components of large estates. Those unrealized gains are taxed when the asset is sold. The competing view is that--beyond a certain point--it can be a bit much. It's hubristic to some degree if not to a large degree to think that "we" have just the right "fairness" insight to dictate what others can and cannot do with what they've earned over their lifetimes. OTOH, if everything Richie Rich gets over 5M is taxed at 50%, Richie may have to start flying commercial. Into each life and all that.

So, I'd condition my compromise on principles with an iron-clad deal: all side agree on an estate tax regime and that is that for 50 years. No moving the goal line thereafter.


"Those who've received subsidies over the years...include a who's who of famous rich Americans who aren't farmers, including Paul Allen, Charles Schwab, Jon Bon Jovi, Bruce Springsteen, and Scottie Pippen.

..., the family farm owned by former Rep. Marion Berry (D-Ark.), averaged nearly the $100,000 per year in subsidies during the nine years Berry was in Washington,...

Former Rep. Michele Bachmann (R-Minn.), for example, 'received $251,000 in farm payments between 1995 and 2006,'..."
The Farm Bill for Billionaires: Farm subsidies are a menace, especially when they line the pockets of the wealthy.

McTX: For going concerns--the family farm, the family store, what have you--I would treat the "business", i.e. the capital asset, like any other capital asset and tax it if and when a gain is realized on the sale.

GAIN = SALES_PROCEEDS - COST_BASIS
Straight-up question: what cost basis do you propose? Grandpa's outlay to start up the family store 50 years ago? The amount Grandpa could have sold the store for, the day before he died?

Also a straight-up question: are we talking "cap gains rates" here? If so, "very favorable" rates compared to "earned income", or not?

McTX again: So, I'd condition my compromise on principles with an iron-clad deal: all side agree on an estate tax regime and that is that for 50 years.

McKinney, much as I wish you a long life, you are no more likely to be around in 50 years than I am. Yet you seem fixated on setting policy for those Americans who will be trying to muddle through life and politics in the "out years". You sure you're not lying about your age?

BTW, many of the Americans of 2068 will be people who remember that, in their youth, Americans elected a president and a party that reveled in cruelty toward the children of refugees, asylum seekers, and "illegal aliens", along with denouncing the "death tax". It may well influence their thinking.

--TP

St. Reagan -- CA (what color was CA back then?)

Then (actually from 1943 until 1999) all California governors not named Brown (father and son) were Republicans. If not for Pete Wilson's stupidity in embracing Prop 187 (an anti illegal immigrant measure, quelle surprise), we might well have continued so.

I'm of the school that objects on fairness grounds to taxing an earned dollar twice notwithstanding BP's belief that there are large, unrealized and therefore untaxed components of large estates.

I don't think anyone's been suggesting taxing earned income -- as defined by "what you pay Social Security taxes on", I believe. It's unearned income that's in question.

But I definitely agree that inheritances should be taxed per recipient, not by the estate overall.

Apparently, you would treat each estate according to size rather than how thinly it gets sliced

if i'm not mistaken, that's how the current law works.

i actually don't care all that much either way if we tax inheritances or not. ditto gifts. i just find the claims that having to pay taxes on inherited income is somehow uniquely unfair to be less than persuasive.

likewise the "but that money was already taxed" thing seems like weak beer. to me. there is no concept of a dollar being some tangible, distictly identifiable thing whose magnitude is somehow reduced when it is taxed.

we tax the transfer of money or other things of value. it's how we roll. it seems to work.

if we want to consider taxing wealth outright, ok with me. if we want to raise funds through tariffs and luxury taxes on cigars and madeira like the sainted founders did, ok with me. if we want to devote the entire computing capacity of the nation to bitcoin mining and pay our bills with that, ok with me, sort of.

i suspect none of those approaches would prove to be superior to what we do now. but i'm always open to a clever idea, if anyone has one.

we have bills. we need to pay them. raise the money in the most expeditious and least harnful way possible, and move on.

Poppy Bush -- TX (or was it really ME?)

Well, I count him as NE urban corridor because he spent all but four years from 1967 working there (two years if you include the time when he worked for the Council on Foreign Relations). I count any candidate who spent most of two decades working in the NE urban corridor leading up to their run as NE urban corridor. In 1988 and 2016, someone from the urban corridor had to win, since both sides ran candidates from there -- the (R) won both times. Otherwise, Carter, Reagan, Bill Clinton, Dubya, Obama -- the outsider won.

I've probably said it here before, but I have been concerned for years that Supreme Court nominees' prior judicial experience post-Reagan is overwhelmingly from courts in the NE urban corridor. I understand the reasons for some of that, but really wish my side were looking at opportunities to go a bit farther afield. In Arizona v. Arizona the eastern pundits all called it wrong, forgetting that Kennedy's past had him hearing a wide variety of cases involving ballot initiatives, the only justice for which that was true.

An online acquaintance advocates moving Congress, the White House, and the SCOTUS to North Platte, Nebraska (for the 48 contiguous states, almost exactly two full time zones west of there, and two east). I don't think it would accomplish what he hopes, but I'd love to see what would happen to the NYTimes and WaPo coverage :^)

I have been concerned for years that Supreme Court nominees' prior judicial experience post-Reagan is overwhelmingly from courts in the NE urban corridor.

I'd be at least as worried that they are overwhelmingly graduates of either Harvard or Yale law schools. Surely those aren't the only places that do a decent job teaching the law.

What about the fact that they're all either Catholic* or Jewish at this point? May we assume that too many "Protestants" are home-schooling their kids so badly that no good law school would take them?

*Wikipedia says Gorsuch was raised Catholic but now attends an Episcopal Church. Not quite "same difference" but close.

As I have said before, I don't expect to see the day when an avowed atheist can run for president as a credible candidate. Probably the same goes for the Court.

P.S. I say this as a parent who home-schooled, more or less.

Interesting side note from Wikipedia: No professing atheist has ever been appointed to the Court, although some justices have declined to engage in religious activity, or affiliate with a denomination. As an adult, Benjamin Cardozo no longer practiced his faith and identified himself as an agnostic, though he remained proud of his Jewish heritage

An online acquaintance advocates moving Congress, the White House, and the SCOTUS to North Platte, Nebraska

Has anyone asked the residents of North Platte NE how they feel about it?

McK,

A few points on family farms and businesses.

First, there are vanishingly few of these that pay estate taxes. They are a nice rhetorical device for opponents of estate taxes, but in real life they barely exist.

This ought to be clear. Remember that when Mom and Pop own a business it passes to the heirs tax-free if worth less than $11 million. Say it's worth $20M. Now the tax is $3.6M. And of course most businesses that have a value up in the range where estate tax is an issue have multiple owners.

Second, there is a provision of the Internal Revenue Code that permits the payment to be financed over fourteen years, at a favorable interest rate, with payments of interest-only for the first five years.

So spare us the tears over the small businesses and farms destroyed by the estate tax. It's a lie.

Say the business is worth $20M. (Of course most businesses that have a value up in the range where estate tax is an issue have multiple owners, but let's say that's not so here). Now the tax is $3.6M. For five years you pay interest only. At 5% that's $180K a year. I'll take that deal as an heir.

Third, there is a very nice thing I'm sure you are familiar with called "step-up in basis." Saying we should tax the gain when things are sold makes no sense unless we eliminate that.

I do agree that it would be better if the recipient were taxed, with a small exemption. But that should apply to all those semi-mythical going concerns threatened with destruction as well.

PS #1: I made the comment about the justices' religions mostly because it's such an amazing cultural change from when I was a ten-year-old Catholic child who had no grasp of why some people were so virulently against having a Catholic run for president. Catholics, as far as I could tell, were just folks. But there were a lot of people who were convinced that if Kennedy won, the country would be being governed from the Vatican about five minutes later.

PS #2: Not to defend the Yale/Harvard predominance (it rather resembles inherited wealth, doesn't it? ...), but there's more than one way to teach/learn law, and more than one pathway even through a given law school to a legal career. I think there's some degree of specialization, sort of like if you want to go to grad school in a given field, you want to end up at a place that has some faculty in your specialty. I say this not from direct experience but as someone who lived with one law student through the law school years (my ex, the other parent of my children) and raised another.

Janie, some of us recall that there was a time that the Supreme Court had a, single, "Jewish seat." Clearly progress has been made.

For an amusing thought experiment, consider the reaction, should a president nominate a Muslim (even a mostly non-practicing one) to the Court. Given the reaction to our one Muslim member of Congress....

Besides, to finance an actual war with China, the US would have to borrow money from, well, the Chinese.

Com'on Charlie, that is a ridiculously incorrect claim, and you know it. Jeebus.

For an amusing thought experiment, consider the reaction, should a president nominate a Muslim (even a mostly non-practicing one) to the Court.

We once had a brief discussion on this blog about whether the first gay president would precede the first atheist president. I say gay, no question. So now I'll ask: Muslim before atheist or v.v.?

Off the top of my head I'd bet the former. Muslims will eventually be as unremarkable as Catholics became. Atheists, not so much.

It's hubristic to some degree if not to a large degree to think that "we" have just the right "fairness" insight to dictate what others can and cannot do with what they've earned over their lifetimes

Similarly, it it not hubristic to construct a tax regime that favors certain "kinds" of income over others? Is it not hubristic to erect tariffs and subsidies that favor one type of economic activity others? Is it not hubristic to claim we know what people 50 years from now will have to do with respect to fiscal policy? Is it not hubristic to construct social policies that promote virtual private dictatorships as "engines of growth"?

I can only conclude that this whole hubris thingie is a bit of a distraction.

Pardon me while I ignore it.

Has anyone asked the residents of North Platte NE how they feel about it?

Since at least the property owners would suddenly be multi-millionaires, easily able to move west to Ogallala or east to Kearney, I suspect that the large majority would be pleased.

We once had a brief discussion on this blog about whether the first gay president would precede the first atheist president. I say gay, no question. So now I'll ask: Muslim before atheist or v.v.?

but i thought obama was our first gay muslim atheist president? plus communist and kenyan

you telling me that was all a lie?

It's hubristic to some degree if not to a large degree to think that "we" have just the right "fairness" insight to dictate what others can and cannot do with what they've earned over their lifetimes

people can do whatever the heck they want with their money, whether it was earned over a lifetime or over the last ten minutes, or not earned at all.

right after they pay their taxes.

right after they pay their taxes.

and if they don't want to do that, STFU and GTFO.

In principle, I'm of the school that objects on fairness grounds to taxing an earned dollar twice

Yet that is commonplace. Sales taxes do that. So do payroll taxes. So, under the GOP finger to the blue states, do state income taxes.

So I see no reason to shed tears for those who inherit millions.

t's hubristic to some degree if not to a large degree to think that "we" have just the right "fairness" insight to dictate what others can and cannot do with what they've earned over their lifetimes

I think is is hybristic for a person to think they can receive the benefits of living in a society while treating their membership dues as optional

This is an interesting theory:
https://www.theatlantic.com/science/archive/2018/06/toolmaking-language-brain/562385/

Are Chomsky and his acolytes ridiculous dogmatists in rejecting it out of hand ?

Chomsky has always rejected evolutionary explanations of language. I feel that is one of the reasons why Pinker has gone away from talking about language and talks about violence and evolution. The article suggests that Chomsky and Berwick suddenly came up with the argument that language popped out fully formed, but that has been implicit in everything that Chomsky's ever written. I mean, he's a Cartesian, so it comes with the territory. And as far as acolytes, there isn't really a lot of people following Chomsky. If you look at Berwick, his degrees are in Computer Science from MIT, so there's not a lot of diversity of thought involved.

My observation is that there's a fundamental difference in attitude to money which makes it problematic for left and right to understand each other when discussing tax.

To the right (I speak of what I've perceived), money is something to be accumulated and venerated. The more you can gather, the more worthy you are. Taxation means that the state is depriving a man of some part of himself. It's at best a necessary evil.

To the left (I speak for myself), money is no more than a tool created by the state to make the economy function. Using it we can have a market economy in which people offer goods and services other people want. And we accept that some concentration of capital is necessary for large enterprises. However, on the demand side the concentration of wealth tends to misdirect resources, especially when supply is relatively inelastic. For example, an extra litre of water does less good on a rich man's private golf course than when it gives a poor man enough to drink or wash in. Therefore, the left is keen to reduce private concentrations of wealth, by taxation.

The right sees any sort of inheritance tax as an assault on the rich man's right to do as he pleases with his money. The left sees large inheritances as a misdirection of resources, and their taxation as good in itself. We're pleased to raise some revenue in this good way, rather than by taxing ordinary people, which is not in itself good.

There's no chance that Marty and I will agree about it. It doesn't bother me if the idle rich are made much less rich. It doesn't bother him that ordinary people pay much more tax on earned income than very rich people pay on unearned inherited income. We care about different things.

"It doesn't bother him that ordinary people pay much more tax on earned income than very rich people pay on unearned inherited income"

If this were true it would bother me. But they don't pay more. And, much more important, the only real way from point A to point B is to allow ordinary people lower percentage taxes on the income generated from money they manage to save.

There is a primary effect of lower cap gains taxes which is the creation of more savings and a secondary effect of a few rich people getting a big tax break.

I am for the first and not concerned about the second.

I would also quibble with the characterization of my view as generating money. I don't think anyone's worth is based on how much they are worth monetarily, nor does "the right" if I speak for them since you have. I do value the financial security, or would if I had it, and would be thrilled to provide it for my kids, their kids and as many generations as I could.

I think the right doesn't understand why you wouldn't.

Plus,Acquiring assets, which is what people do, doesn't actually require money but it has proven a good way to facilitate commerce and provide a way to store their value. Taking chickens in payment was a less convenient store, gold was a vast improvement. So you quickly mix up money and assets,

Venerating money not generating.

Well, the religious right at least has rehabilitated Mammon.

Imo, propsperity gospel churches should be required by law to always keep a supply of microcamels and meganeedles and to perform a passing test at the beginning and ending of all services. And all gold has to be stored in calf-shape.

SF & Culture ..three quotes

"Despite the fact that most of us filter our world through popular culture, it’s very rare for characters in science fiction stories to do the same."

"But I also think that, especially for SFF worldbuilders, caring about culture is perceived as dangerously feminized."

"It certainly seems to be the reason why the few space operas that leave space for culture seem to be written by women."

At which point the thread runs with the fun, listing and talking about good SF by women about "culture."

And this is where I always get into trouble.

1) "Culture" for me includes forklifts and Krugman's macroeconomic models, not art and music. It is a perspective on production and ideology.

2) Culture (leaving it to arts music manners) is "feminized?" Did that happen recently? Seems I remember a very heavily masculinized attitude toward cultural production. Seems to me gamergate shows there may still be a little.

She uses the word "dangerously" Does this mean the "feminization of culture" is a very bad thing? Than why are we celebrating this submission to the patriarchy for page after page of comments? Shouldn't we rather push hard for women to write about tech, war, politics, economics rather than arts, manners, relationships? Or are those things "masculine"

(Or:"Of course women write about economics, 1 2 3, much better than men.")

(Is Austen really more about manners and culture than Dickens and Balzac? Why do we think so?)

Or is this resistance rather than capitulation cause it is women choosing it? Isn't that convenient and flattering?

Is this ghettoizing or siloing?

There is a lot more, but I go back to my contention that recent UMC liberal feminism is instrumentally re-embracing and embedding patriarchal forms recast as women's liberation.

"Women are better at that domestic and artistic stuff." is not progress and will get turned against them.

ok, let's try it this way.

i've been working for 45 years, and full time for about 40. i have not earned one dime that has not been taxed. i have not *spent* one dime that has not been taxed.

that was true when i lived on about $10k a year, and it's true now.

when i retire, if SS somehow still exists, my SS income will probably be taxed, because it will be supplemented by 401k income, which will be taxed when i receive it.

every time a dollar finds its way into or out of my hand, it is taxed. the hand from which it came to me, likewise. the hand to which it goes from me, likewise.

we'd all like to help our kids. if you have five and a half miilion, or eleven million, you can spread that around your progeny, before or after you go, and noone will pay a dime of tax on it.

that strikes me as a pretty freaking good deal.

beyond that, tax is due. unfair, not unfair, whatever. you got income, you are taxed on it, just like everyone else. join the club.

sapient, how did the immigration call go?

...they don't pay more...

You'll have to explain that to me. I see federal income and payroll taxes on median income amounting to about 10%. And federal tax on a $5m inheritance of zero.

I think the right doesn't understand why you wouldn't [want to provide financial security for your children].

My children will get a financial head start in life. But if they want to maintain the living standard they have now, they'll have to get good jobs.

I think they'll be more fulfilled by that than if they spend their lives living off daddy's trust.

. the hand to which it goes from me, likewise.

Not so. You can give any or all of your money to any 501(c)(3) without limit and without tax. You can burn your money. You can gamble it away. You can spend it whenever and wherever you want. However, you cannot gift it to another human being except your spouse beyond what is allowed by the tax code.

sapient, how did the immigration call go?

It ended up mostly being an explanation of what's happening, and a plea to lobby Congressional reps. I found some information that I'll mention below to be more helpful, and am going to be spending time keeping up with what's happening, as well as doing what I can to volunteer locally.

Alida Garcia is someone who I've begun following, and this is a good immediate action thread for people who can donate: https://twitter.com/leedsgarcia/status/1005467102046834688 . In addition to donation opportunities, that thread mentions two bills that are worth calling Congress about: The Help Separated Children Act, and the Keep Families Together Act. I have little faith that either of these will be passed - Republicans seem not to be interested in kids, but swamping Congress with phone calls will at least ensure that it doesn't drop from public consciousness.

I saw this in The Washington Post this morning, which makes me wonder whether there are children (or parents ripped from children) being incarcerated at a facility that is only an hour and a half away from me, in Farmville, VA (home of massive resistance to desegregation). I'm going to investigate that.

Our local legal aid organization, and IRC, does work with immigrant families. I've volunteered there some, and plan to do more after I finish some work commitments.

I feel that this issue is a red line. The comment section under the Post article is disturbing (even though many of the comments on other issues seem quite sane lately). The reason Republicans aren't supporting these kids is because plenty of people just don't see this as a problem.

Anyway, I'll keep posting as I find things that might be useful. Thanks for asking, russell.


I do value the financial security, or would if I had it, and would be thrilled to provide it for my kids, their kids and as many generations as I could.

Who wouldn't?

It would be nice to do that for *everyone's* kids and their kids and down the line. I think we'd have a better shot if the wealth weren't concentrated so unevenly. But then, that's me wishing for lazy people to get a handout from their betters, so never mind.

Not so.

My understanding of the federal gift tax code is as follows:

$14K, per year, per recipient, tax free, full stop.

Beyond that, it can be deducted from a lifetime gift tax exemption which is exactly equal to the inheritance tax exemption. So, above and beyond the $14K per person per annum, you can give away up to $5.49M over your lifetime. That will cause your inheritance tax exemption to be reduced by the amount of the gift.

So, you can do the $5.49M now, or later.

IANAL or accountant, so I could be mistaken. And, I'm only talking federal, states have their own thing going on.

But that's my understanding. It all seems adequately generous, to me.

Thanks for asking, russell.

You're welcome. Thanks for raising the issue, and thanks for the links etc.

Keep on keeping on.

Burning your money is not a transaction (but it is illegal). No changing of hands.

The vast majority of exchanges of money involve tax. You can spend it however you like, but you're going to pay sales tax in most places and cases. Even if you give your money to at 501(c)(3), sooner or later that money's going to change hands and leave the tax-exempt realm.

The point being that, most of the time, money gets taxed as soon as it moves. This isn't really in dispute, or shouldn't be.

I'm sure all the double-taxation hawks are really upset about the limits placed on deductions for state and local taxes, since that seems to be a thing when discussing estate tax, given the (mostly, or at least partly) after-tax nature of estates.

Sapient,

To borrow an often-misused phrase: "Thank you for your service."

--TP

Bob's link from 8:50 this morning includes this:
"try to remember the last time you encountered a character in a science fiction or fantasy story who had an artistic side, even just as a hobby."

To which my personal, instantaneous, reactions was: Heinlein - Double Star. The central character in which is a professional (albeit not enormously successful) actor. I can think of others, but that one is just too obvious -- how did they miss it?

Someone way back up thread asked whether we would first have an atheist or a homosexual as President. But we may have already done the latter. See the rumors about President Buchanan.

"try to remember the last time you encountered a character in a science fiction or fantasy story who had an artistic side, even just as a hobby."

Mahrai Ziller in Banks' Look To Windward was a composer.

Someone way back up thread asked whether we would first have an atheist or a homosexual as President. But we may have already done the latter.

"Someone" was YVT.

The point, which I guess wasn't as obvious as I thought it should be, was whether someone could run (and have any chance of winning) *openly* as an atheist or a gay person.

"try to remember the last time you encountered a character in a science fiction or fantasy story who had an artistic side, even just as a hobby."

To me more interesting than contradicting or refuting her statement is examining why she presumably believes and says it...

...and why I feel any need to respond.

Besides all the other issues

Oh, she mentioned Heinlein, did she hate read him, but I remembered instantly after fifty years and just now discovered there are entire subcultures built around...

...Jubal Harshaw and the Fallen Caryatid.

So, to put it all together: which kind of president do we expect first:
Atheist?
Homosexual?
NE urban corridor liberal?
Place your bets, ladies and gentlemen.

--TP

I'm sure all the double-taxation hawks are really upset about the limits placed on deductions for state and local taxes, since that seems to be a thing when discussing estate tax, given the (mostly, or at least partly) after-tax nature of estates.

If they aren't, they should be and for two reasons. First, as a matter of simple fairness, it isn't "income" if it's been taken away as a tax. There's nothing left to pay tax "on." Second, double taxation hawks tend toward economic and other forms of federalism, e.g if MA citizens are ok with higher taxes in exchange for more gov't services, fine. We should all be fine with that and be fine with not taxing MA citizens on the taxes they impose on themselves.

I guess there is a third reason: chicken-shitting blue states because you can just asks for repayment in kind when the worm turns. But that's a practical objection. The issues on principle do it for me.

Janie, at the time, Buchanan's relationship with William Rufus King was well known. And commented upon. They attended social functions together (sounds like a date), and Buchanan referred to their relationship as a "communion".

It's true that Buchanan never stood up and said "I am a homosexual." (But then, the first known use of the term wasn't until 1869, so he couldn't have....) But the whole thing was pretty darned open.

Posted by: McKinneyTexas | June 11, 2018 at 11:50 AM

Agreed on all 3 points. (Not that I'm necessarily concerned with double taxation personally, but that consistency for those who are would dictate the reasoning you describe, at least on the first two. The third "is what it is" - to borrow a phrase that annoys a lot of people.)

"It doesn't bother him that ordinary people pay much more tax on earned income than very rich people pay on unearned inherited income"

If this were true it would bother me. But they don't pay more.

The average effective estate tax is 17%.

That's just barely more than combined employee-employer payroll tax. So estate taxes do in fact take less than is paid by most workers. You have to get up to about a $9 million estate before the tax bite exceeds the payroll tax rate.

And, much more important, the only real way from point A to point B is to allow ordinary people lower percentage taxes on the income generated from money they manage to save.

There is a primary effect of lower cap gains taxes which is the creation of more savings and a secondary effect of a few rich people getting a big tax break.

I would like to see some amount of interest income be tax-exempt. Not a lot, maybe $1000. There used to be a $100 exemption, as I recall, a long time ago. It is interesting that dividends and capital gains, forms of capital income that go primarily to the wealthy, get favorable tax treatment, while the interest on savings accounts doesn't.

And what happened to the elimination of the "carried interest" provision?

McKinney: as a matter of simple fairness, it isn't "income" if it's been taken away as a tax. There's nothing left to pay tax "on."

And yet, isn't that exactly what is being done when the Congress removed the deductibility of state income taxes?

The third "is what it is" - to borrow a phrase that annoys a lot of people.)

I will start getting nervous when it isn't what it is. That will be bad, regardless of where you fall on the political spectrum.

And yet, isn't that exactly what is being done when the Congress removed the deductibility of state income taxes?

Yes, and that was the point I was making. Also, FYI, The 8-9K they take out for FICA--you pay tax on that too. Chickenshit IMO, but I'm an outlier in thinking that's a bit too much.

For anyone who hadn't realized quite how one-of-a-kind President Trump is:
https://www.politico.com/story/2018/06/10/trump-papers-filing-system-635164

The mind truly boggles.

McKinney,

I'm still interested to know your answer to my question at 6:08PM yesterday, regarding your 5:27PM offer on estate taxes: what cost basis do you propose?

--TP

I go away for a bit and here people are discussing taxes without me!

The SALT itemized deduction at the federal level is, other things being equal bad tax policy. That said, they should have phased out the deduction rather than chopping it right to $10k.

I wouldn't quite think of it as a double tax, you are paying for federal and state government services. Two different services, so you pay for one and the other. Think of it as a single tax at a higher rate, if you prefer.

If you want to talk about people avoiding tax, foreign investors in publicly traded US equities are arguably the biggest beneficiary of the TCJA as they have seen a run up in stock prices combined with share buybacks. Neither of which is subject to US tax (might be subject to tax in the investors' home countries).

To follow up on wj's last, this seems double plus ungood. To me.

Stuff is getting broken that took generations to build. It got built in the first place in no small part as a response to our apparently natural human habit of slaughtering each other.

Trust and respect cannot be commanded. They can only be earned. They can, however, be lost quite easily.

We are governed by children.

We are governed by children.

We are children. Or at least, enough of us are to elect one of their kind President.

We're America! We're invincible! And scared of the monster under the bed....

We are governed by children.

Make that "petulant and badly raised children" and you might have a point. Otherwise you are slandering an enormous number of children who are better than these characters.

Mahrai Ziller in Banks' Look To Windward was a composer....

Not to mention the four armed cellist Vyr Cossont in Hydrogen Sonata...

The mind truly boggles.

I’m all boggled out.

To follow up on sapient's series of posts on immigration policy....

I was trying to think of concrete, tangible things to do. Contacting Senators and House Reps is a very good thing to do, but can be frustratingly indirect and inefficient.

Maybe have all undocumented workers stay home for a week? Then we'd see the value that they actually create for us. But, then they wouldn't get paid. Plus, it will call attention to who is, and who isn't, undocumented.

Maybe everyone who works in industries where undocumented labor is common could stay home as well, as a show of support? But then, nobody gets paid.

This popped up in my news feed, and seems like it could make a dent, however small.

You mess with the undocumented workers, you get no food. Extend that to all of the other services that are provided by undocumented people in this country.

Time to get creative. These folks are being abused, in our name. There have to be ways to turn it around.

I'm still interested to know your answer to my question at 6:08PM yesterday, regarding your 5:27PM offer on estate taxes: what cost basis do you propose?

Because it's a going concern, the basis is its equity at the time of sale. It's not like a share of Microft purchased in 1998 (or whenever) that is passed down after 4 decades. Otherwise, you'd calculate--I assume this is what you are getting at--the value of the business on date of death for one tax and the net value of the business after date of death for tax number two. I would add both values together and tax as a single transaction.

I don’t understand. Someone buys a business for $10,000.
They keep it for decades and are successful.
When they die it is worth $5 million. Their daughter inherits and after
Another ten years sells for $20 million.
How should this be taxed?

I don’t understand. Someone buys a business for $10,000.
They keep it for decades and are successful.
When they die it is worth $5 million. Their daughter inherits and after
Another ten years sells for $20 million.
How should this be taxed?

"Worth"?

It will have a book value on both dates (date of death and date of sale) which will have no relation, or not much of a relation to the selling price. Because it's a closely held asset, you don't have market data that can tell you what it was worth on date of death, just book value. Whatever the ultimate sale price is, it will be some multiples of EBDITA, not book value. The basis in the business is what is subtracted from the sales price to determine taxable income. You could, in theory, determine the basis on date of death and subtract that from book value and impose a tax, or have the business appraised for sale and subtract the basis from that and charge a tax effective on date of death. I would not do that. I would let the basis in the business increase over time as the business presumably grows and then tax the entire gain at the time of sale at cap gains rates, i.e. 20%.

Under the current estate tax you are required to pay tax on the "fair market value" of your assets. "Fair market value" is defined as "he price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts."

For closely held assets, such as a non-publicly traded business, this requires things like appraisals.

Note that the TCJA increased the individual estate tax exemption for 2018 to $11.18M, twice that if you are married and can use your spouse's exemption.

"Sessions asylum"

McKinney,

Maybe Bernie understands your reply, but I don't. Why mention "book value" only to say it doesn't have much relevance? Let's take it one step at a time:

1) Grandpa buys a business 40 years ago for $10K. He diligently operates it, expands it, and finally gets sick of it. He sells it for $5M today. What is his "capital gain" per your definition of "capital gain"?

2) What tax, if any, should Grandpa (still alive and kicking) pay on the above cap gain?

3) Alternatively, Grandpa drops in harness while pondering the $5M offer for his "going concern". Daughter inherits the business and chooses to turn down the offer; she prefers to keep operating the business. What is the value of her inheritance, in dollars, according to you?

4) Assuming you do NOT want Daughter to pay an inheritance tax at that point, fast forward another decade or so. Daughter, having grown the business some more, sells it for $20M. What do you consider her capital gain on the sale to be? Is it $19,990,000? Or $15M? Or what?

5) What tax rate should she pay? After what exemption? If it's a cap gain and not an inheritance tax, should there even be an exemption?

6) Suppose Daughter inherits Grandpa's "going concern" but sells it for $10M less than 1 year afterward. What is her cap gain? Is it $5M of short-term gain? Is it $9,990,000 of long-term gain? Or what?

Please note: I have assiduously avoided "book value" (which you say is pretty irrelevant anyway) and I have avoided "cost basis" because you seem to use the term differently from how I, if not Bernie, understand it.

--TP

1) Grandpa buys a business 40 years ago for $10K. He diligently operates it, expands it, and finally gets sick of it. He sells it for $5M today. What is his "capital gain" per your definition of "capital gain"?

What is his basis,i.e. how much does he have invested in the business? Subtract that from the total sales price and the difference is taxed as a capital gain.

3) Alternatively, Grandpa drops in harness while pondering the $5M offer for his "going concern". Daughter inherits the business and chooses to turn down the offer; she prefers to keep operating the business. What is the value of her inheritance, in dollars, according to you?

If I were writing the rules, she would pay nothing until the business is sold, at which time, she'd pay the difference between the basis and sales price, taxed as a capital gain, i.e. 20%.

4) Assuming you do NOT want Daughter to pay an inheritance tax at that point, fast forward another decade or so. Daughter, having grown the business some more, sells it for $20M. What do you consider her capital gain on the sale to be? Is it $19,990,000? Or $15M? Or what?

It's never anything other than sales price minus basis X .20%. It's not an inheritance, so it's taxed at first net dollar above basis.

6) Suppose Daughter inherits Grandpa's "going concern" but sells it for $10M less than 1 year afterward. What is her cap gain? Is it $5M of short-term gain? Is it $9,990,000 of long-term gain? Or what?

For me, it's still the sale of a capital asset and taxed as such. You only tax the gain. A CPA or tax lawyer could tell you how basis is determined in an closely held entity. Whatever the process is what yields the "basis". Conceptually, it is the owner's total investment less depreciation or something like that.

basis in the business depends in part on the form in which you run it. E.g., if you capitalized a C-corporation with $50k in 1991, never put in any more $$, and reinvested all the C-Corps profits for 20 years such that the C-Corp stock FMV was $50 million in 2011, if you sold your stock your capital gain for tax purposes would be $49.95M.

If you ran the business as a pass-through or sole proprietorship, the analysis would differ - essentially, your basis in the pass-through/sole proprietorship would increase along the way, but you'd also be paying tax (personally - as opposed to the entity paying tax) along the way.

The difficulty in keeping track of basis is one of the big reasons why there is a "step-up" in basis of assets at death to FMV.

McTX: What is his basis,i.e. how much does he have invested in the business?

The stipulation was that he bought "the business" for $10K.

Over 40 years, he surely bought some equipment, or his own building, say. Are you suggesting that outlays like that somehow "increased his cost basis" even though he took depreciation and amortization deductions for them, against his gross revenue, on his annual tax returns? If you're not, what does your question mean?

--TP

This popped up in my news feed, and seems like it could make a dent, however small.

I agree that calling Congresspeople is the absolute minimum, and isn't very satisfying for those of us who are outraged. But it's still worth something. An organized boycott or strike might be really effective, especially locally. In order to be effective on the level of federal policy, it would have to approach general strike levels (it seems to me, anyway).

I know that most people here are with me on this issue, but here again comes Jeff Sessions today. This really has to be our first priority. We need to stand with these kids. That includes the recognition 1) that they should be with their parents, if possible, and 2) that many of them will be murdered at home, so asylum must be made available.

What is your immigration story, people? My family has several. Most families do. What's different now?

Thanks for weighing in, ugh. I posted before I saw your last comment. Maybe you can give me an idea of how a sole prop increases his "cost basis".

Frex: Does buying (and depreciating or expensing) a $20K milling machine for the machine shop business I originally paid $10K for make my cost basis $30K now?

--TP

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