Inheritance tax. How does your country do it? Opinions?
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    Default Inheritance tax. How does your country do it? Opinions?

    This thread is about inheritance taxes as the title says. I'm wondering how other counties besides the USA handle this.

    I will state that I'm not an accountant but have a lot of life experiences in financial dealings. I'm relating how I see our estate tax system and may be mistaken on some things so if that's the case please enlighten me.

    During my many decades of working for employers I had taxes withheld from my paychecks like most employees do and paid taxes on my income when I filed my 1040 for the year. Of course I got standard deductions that everyone that qualifies for them gets but for the most part I paid taxes on every dime of my income that I earned during my working years the same as my coworkers did and most Americans do.

    Now compare that to a business owner. If a business owner incorporates they can take a salary from the business and leave the rest of the profits in the business to reinvest. Say the business makes $500K profits but the owners only take a salary of $50K. They pay income taxes on the $50K but nothing on the other $450K as long as they reinvest it in the business.

    Fast forward a few decades and the business now makes a profit of 500 million a year and the owners only take a salary of $100K yearly. Now there is $499.9 million that has no taxes paid on it as long as they reinvest the profits or otherwise find a way to shelter it.

    What happens when the owners die and leave the business to their children. Currently the children are exempt on $23.4 million for a married couple. I believe this number is about double of what it was before trump cut taxes on the very rich. Many very rich people would like to see the cap taken entirely off of estates because they consider it a death tax, which it is. But it is also a way for our government to balance the books between the rich business owners that paid taxes on a very small fraction of the profits that the business made over the years.

    It's my understanding that many of today's billionaires in the USA pay little taxes on their corporate profits because they reinvest most of the profits and only pay on their salaries. How fair is it that they can pass along $23.4 million dollars that should have been taxed to their heirs with no taxes at all. And they still aren't happy. They don't want to pay any taxes at all.

    I think my lifetime social security earnings is a little less than 2 million and that's likely the case for most of my fellow American citizens in my age group. And we paid taxes on it all. I understand that we need businesses to provide goods and services but I also don't think they should be able to do it with no tax liability.

    What say you?

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    What say you?
    100% corporate tax is the ONLY logical solution.

    A great man once said, "You didn't build that".

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    The above makes very little sense.
    I will make a very wild ass guess that you do not own a C corp and have been reading too much on the internet.
    How does the reinvest thing work to bring the tax to zero?
    For sure if end of year good one may stock up on perishable tooling but machines and buildings do not count. These are deprecated assets not write offs.
    I do understand the feeling of outrage but most stories are .. stories, not quite telling it all and lies to rev people up.
    Simplify the tax code would be nice. Unfortunately that might mean a hit to the middle which is why it will never happen.
    Agree it is a mess and full of holes.
    Should a farmer be able to pass his land and equipment that taxes have been paid on to his son or daughter without more taxes added on at the time of death?
    If Dad passes and leaves you a machine shop? That is a huge gain to you. Should that value be taxed as income to you in that year? I can see the yes and no.
    How about if Dad leaves one a house on nice land or island in Florida. Is this part of your yearly income? If I sell the house are the gains from when Dad bought it many years ago or value when I inherited it?
    Bob

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    Quote Originally Posted by Thunderjet View Post
    100% corporate tax is the ONLY logical solution.

    A great man once said, "You didn't build that".
    You obviously only got the part of that speech that rush told you about. The "You didn't build that" was about how no company could be as successful in the USA without the help of our government with roads, bridges, airports, postal service and hundreds of other things that make it possible for a common person to become very successful.

    But that's OK. I didn't really expect to reach those like you.

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    Quote Originally Posted by CarbideBob View Post
    The above makes very little sense.
    I will make a very wild ass guess that you do not own a C corp and have been reading too much on the internet.
    How does the reinvest thing work to bring the tax to zero?
    For sure if end of year good one may stock up on perishable tooling but machines and buildings do not count. These are deprecated assets not write offs.
    I do understand the feeling of outrage but most stories are .. stories, not quite telling it all and lies to rev people up.
    Simplify the tax code would be nice. Unfortunately that might mean a hit to the middle which is why it will never happen.
    Agree it is a mess and full of holes.
    Should a farmer be able to pass his land and equipment that taxes have been paid on to his son or daughter without more taxes added on at the time of death?
    If Dad passes and leaves you a machine shop? That is a huge gain to you. Should that value be taxed as income to you in that year? I can see the yes and no.
    How about if Dad leaves one a house on nice land or island in Florida. Is this part of your yearly income? If I sell the house are the gains from when Dad bought it many years ago or value when I inherited it?
    Bob
    Correct that I don't own any type of corporation and never have. A few sole proprietorship's but no corporations.

    As to having to depreciate machines, I have been under the impression that most businesses can use the section 179 accelerated depreciation to take the deduction all in one year. I google it and it appears to still be a thing. How else can huge corporations skate with no taxes year after year?

    I don't see any reason that the middle class would take a hit. Lower the number on the exemption of estate taxes more to a level that covers most Americans but still taxes the rich who can afford to pay our countries bills.

    If parents leave their children a machine shop or farm they should be exempt on part of it but it seems like when the average American in my age group has a total lifetime income of less that two million dollars it seems excessive to let people pass 23 million dollars to their children with no taxes at all. At least have them pay taxes at a capital gains rate after they reach a reasonable threshold instead of giving them a tax holiday of millions of dollars. Same thing for inheriting real estate like the hypothetical place in Florida. I just settled my parents estate last year and sold a house and some land at a big profit, mostly because my parents had bought them over 50 years ago but I was within the limits for not having to pay estate taxes. In fact I was within limits to the tune of about 2% of the 23 million dollar exemption. The limit on the exemption could have been one million dollars and still been far beyond the threshold for estate tax exemption. The proceeds went to myself and a bunch of siblings so nobody got rich there.

    If we weren't stacking up debt in the the USA like cord wood I wouldn't have such a problem with it but when we as a country are almost 25 trillion dollars in debt it seems like we might want to start looking at ways to pay our bills.

    I consider myself a social liberal but a fiscal conservative and the fiscal conservative part of me screams for a little more fairness in our tax policies.

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    A quick google search says that Canada doesn't have one. Any outstanding taxes by the deceased will need to be covered when the estate closes. I'm actually a little skeptical of this as the tax man always gets his share.

    As to fair taxes, how's about a flat 15% income tax rate and no VAT or retail sales taxes? Get rid of all the special interest groups (from both sides of the aisle) fighting for reduced taxes or special spending.

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    Quote Originally Posted by Big B View Post
    As to having to depreciate machines, I have been under the impression that most businesses can use the section 179 accelerated depreciation to take the deduction all in one year. I google it and it appears to still be a thing. How else can huge corporations skate with no taxes year after year?
    I believe section 179 is up to $1 mil a year. A large corporation can only write off so much due to typical business expenses and maxing out qualifying section 179 write offs. A business can't go out and buy a $5 mil yacht as an expense to entertain clients and write the whole amount off, it has to be depreciated. Business can pay out all profits in employee bonuses and share holder dividends and pay no corporate tax, the employees and share holders are paying taxes on the money. How that is considered tax avoidance is beyond me. I had a friend who worked for a company that did that, big fat end of year bonus checks to the machinists and engineers. They definitely ended up paying way more income tax on those bonus checks than the current corporate tax rate. By paying no corporate tax, Uncle Sam ended up with more money in his pocket.

    The corporation not paying enough taxes is just another false narrative played by Democrats, plain and simple,either the corporations pay the taxes or the share holders and or employees do if the business is profitable.

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    Quote Originally Posted by Big B View Post
    This thread is about inheritance taxes as the title says. I'm wondering how other counties besides the USA handle this.

    I will state that I'm not an accountant but have a lot of life experiences in financial dealings. I'm relating how I see our estate tax system and may be mistaken on some things so if that's the case please enlighten me.

    During my many decades of working for employers I had taxes withheld from my paychecks like most employees do and paid taxes on my income when I filed my 1040 for the year. Of course I got standard deductions that everyone that qualifies for them gets but for the most part I paid taxes on every dime of my income that I earned during my working years the same as my coworkers did and most Americans do.

    Now compare that to a business owner. If a business owner incorporates they can take a salary from the business and leave the rest of the profits in the business to reinvest. Say the business makes $500K profits but the owners only take a salary of $50K. They pay income taxes on the $50K but nothing on the other $450K as long as they reinvest it in the business.

    Fast forward a few decades and the business now makes a profit of 500 million a year and the owners only take a salary of $100K yearly. Now there is $499.9 million that has no taxes paid on it as long as they reinvest the profits or otherwise find a way to shelter it.

    What happens when the owners die and leave the business to their children. Currently the children are exempt on $23.4 million for a married couple. I believe this number is about double of what it was before trump cut taxes on the very rich. Many very rich people would like to see the cap taken entirely off of estates because they consider it a death tax, which it is. But it is also a way for our government to balance the books between the rich business owners that paid taxes on a very small fraction of the profits that the business made over the years.

    It's my understanding that many of today's billionaires in the USA pay little taxes on their corporate profits because they reinvest most of the profits and only pay on their salaries. How fair is it that they can pass along $23.4 million dollars that should have been taxed to their heirs with no taxes at all. And they still aren't happy. They don't want to pay any taxes at all.

    I think my lifetime social security earnings is a little less than 2 million and that's likely the case for most of my fellow American citizens in my age group. And we paid taxes on it all. I understand that we need businesses to provide goods and services but I also don't think they should be able to do it with no tax liability.

    What say you?
    So you will only make 2 million in your life. Cry me a river, why did you not get off your ass and start a company and take advantage of the the tax breaks. Just because you are to lazy to do it does not mean no one else should be able to do it. I am for a flat tax, 15% for EVERYBODY, no deductions, loopholes or anything else. No death tax. Now the dems have pushed through the 300.00/month per kid payment. WTF! WTF!! Is it retroactive??? I raised 2 kids without government handouts. I paid for my university education Now the dems want it to be free, what a load of bullshit. All it is is dems using tax dollars to buy votes.

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    Quote Originally Posted by moonlight machine View Post
    I am for a flat tax, 15% for EVERYBODY, no deductions, loopholes or anything else. No death tax. Now the dems have pushed through the 300.00/month per kid payment. WTF! WTF!! Is it retroactive??? I raised 2 kids without government handouts.
    C'mon now, it's only fair when they tell you it's fair.

    Seriously though, in an effort to make things fair, I'm not sure how these handouts help. They forget about those of us who don't have, nor had, kids. It seems that when these benefits are setup and handed out, that those who are adversely affected by the pendulum swing feel resentment (both real and feigned). This applies to anyone's political affiliation - too much social welfare that begins to encourage remaining in the lifestyle gets the political right fired up and too much coporate welfare gets the political left fired up. Where does it end and how do we find that proper equilibrium?

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    I doubt the very rich have any concern over any kind of tax ,inheritance or otherwise.....any mulinational minimizes tax to near zero by profit shifting and paying vast sums for licences and business systems......Why do you think the EUro states are going to give Google,Ebay.Amazon,Microsoft,Facebook, etc a 15% flat rate tax haircut.....because there is no other way they will ever get any tax out of these giants,above the pittance they offer states as "go away" money on a take it leave it basis.

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    Quote Originally Posted by Talinthon View Post
    C'mon now, it's only fair when they tell you it's fair.

    Seriously though, in an effort to make things fair, I'm not sure how these handouts help. They forget about those of us who don't have, nor had, kids. It seems that when these benefits are setup and handed out, that those who are adversely affected by the pendulum swing feel resentment (both real and feigned). This applies to anyone's political affiliation - too much social welfare that begins to encourage remaining in the lifestyle gets the political right fired up and too much coporate welfare gets the political left fired up. Where does it end and how do we find that proper equilibrium?
    No welfare at all. Want more? Get off your ass and EARN it.

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    I dont think big b understands the tax code very well, if he had to write a few 100,000.00 checks to the feds his attitude might change. if you make money you pay taxes period. most business owners do there best to not make money. a lot of the huge companies its all paper wealth not actually money. apple doesn't have a trillion dollars in the bank.
    hard assets appreciate, or depreciate, the biggest deal with death taxes is the assets may not be liquid and may have to be sold at less than value to pay the taxes. i grew up working on rental units, we ate rice and noodles, while dad was trying to get the properties profitable. we would salvage drywall from one house to use in another to patch holes, horrible memories. I hate rentals, but 30 years later they are now paying and providing him a very comfortable living, he worked the long game, didn't get a divorce, and its paying off for them. but now the tax man and the lawyers are working at getting the gravy off. when my parents pass the tax man will take another bite.
    Proverbs 13:22: A good man leaves an inheritance to his children's children
    so how much is fair to be taken and given to people who dont play the long game?, who trust that the government will take care of them and that dont think about their children.
    wealth is built for enjoying, and for leaving, to others or for a legacy, no reason to make 500,000 a year while living on 50 if the governments going to take it when you die, may as well go buy a boat and lay a bunch of people off have and have a life.

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    Quote Originally Posted by moonlight machine View Post
    So you will only make 2 million in your life. Cry me a river, why did you not get off your ass and start a company and take advantage of the the tax breaks. Just because you are to lazy to do it does not mean no one else should be able to do it. I am for a flat tax, 15% for EVERYBODY, no deductions, loopholes or anything else. No death tax. Now the dems have pushed through the 300.00/month per kid payment. WTF! WTF!! Is it retroactive??? I raised 2 kids without government handouts. I paid for my university education Now the dems want it to be free, what a load of bullshit. All it is is dems using tax dollars to buy votes.
    I've never felt a need to become a billionaire or hoard money like some billionaires do. And I have no problem with people that do aspire to be filthy rich. The ones that I have a problem with are the ones who use all that this country has to offer to get rich but don't think they should have to pay any taxes. Most of the right wing billionaires fall into this category. The left leaning billionaires don't seem to mind paying taxes because they know that they can squeak by on the remaining billions that they still would have. Like Bill Gates and Warren Buffet.

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    Quote Originally Posted by Talinthon View Post
    C'mon now, it's only fair when they tell you it's fair.

    Seriously though, in an effort to make things fair, I'm not sure how these handouts help. They forget about those of us who don't have, nor had, kids. It seems that when these benefits are setup and handed out, that those who are adversely affected by the pendulum swing feel resentment (both real and feigned). This applies to anyone's political affiliation - too much social welfare that begins to encourage remaining in the lifestyle gets the political right fired up and too much coporate welfare gets the political left fired up. Where does it end and how do we find that proper equilibrium?
    That's what I'm talking about. A government that represents the middle 80%. The 10% on the left, we'll listen to you but don't expect miracles and the right, we're keeping our eyes on you.

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    Quote Originally Posted by john.k View Post
    I doubt the very rich have any concern over any kind of tax ,inheritance or otherwise.....any mulinational minimizes tax to near zero by profit shifting and paying vast sums for licences and business systems......Why do you think the EUro states are going to give Google,Ebay.Amazon,Microsoft,Facebook, etc a 15% flat rate tax haircut.....because there is no other way they will ever get any tax out of these giants,above the pittance they offer states as "go away" money on a take it leave it basis.
    This is exactly the problem with letting people keep billions of dollars personally. Pretty soon they can afford to take on entire governments and the governments can't afford to fight it so the rich people are above any and all laws as we've seen many times over the years. I've seen it with a grocery chain that wanted to build a store in a resort area. The public was against it in a big way but the huge grocery chain had enough money to break the small township in legal bills and ended up building the store in spite of a large majority of the local citizens being against it.

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    Quote Originally Posted by idacal View Post
    I dont think big b understands the tax code very well, if he had to write a few 100,000.00 checks to the feds his attitude might change. if you make money you pay taxes period. most business owners do there best to not make money. a lot of the huge companies its all paper wealth not actually money. apple doesn't have a trillion dollars in the bank.
    hard assets appreciate, or depreciate, the biggest deal with death taxes is the assets may not be liquid and may have to be sold at less than value to pay the taxes. i grew up working on rental units, we ate rice and noodles, while dad was trying to get the properties profitable. we would salvage drywall from one house to use in another to patch holes, horrible memories. I hate rentals, but 30 years later they are now paying and providing him a very comfortable living, he worked the long game, didn't get a divorce, and its paying off for them. but now the tax man and the lawyers are working at getting the gravy off. when my parents pass the tax man will take another bite.
    Proverbs 13:22: A good man leaves an inheritance to his children's children
    so how much is fair to be taken and given to people who dont play the long game?, who trust that the government will take care of them and that dont think about their children.
    wealth is built for enjoying, and for leaving, to others or for a legacy, no reason to make 500,000 a year while living on 50 if the governments going to take it when you die, may as well go buy a boat and lay a bunch of people off have and have a life.
    Spoken like a true republican. I did the same thing that your parents did with rental homes. Lots of work but in the long run it pays off. I spent so many years paying taxes by withholding's that I'm used to paying them.

    It just seems very unfair to let people skate on the taxes on up to 23.4 million dollars when us little people pay it from dollar one year after year.

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    Quote Originally Posted by Big B View Post
    That's what I'm talking about. A government that represents the middle 80%. The 10% on the left, we'll listen to you but don't expect miracles and the right, we're keeping our eyes on you.
    “ The 10% on the left, we'll listen to you but don't expect miracles and the right, we're keeping our eyes on you.”

    “ Tax income from investments like income from work. Billionaires like Warren Buffett pay a lower tax rate than millions of Americans because federal taxes on investment income (unearned income) are lower than the taxes many Americans pay on salary and wage income (earned income). Because Buffett gets a high percentage of his total income from investments, he pays a lower income tax rate than his secretary. Currently, the top statutory tax rate on investment income is just 23.8%, but it’s 43.4% on income from work. To reduce this inequity, we should raise tax rates on capital gains and dividends so they match the tax rates on salaries and wages. These loopholes lose $1.3 trillion over 10 years.”

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    The question....in Oz there is no inheritance tax,state or federal......for this we have Jelky to thank....He abolished state inheritance tax around 1980,at the urging of his buddies in the white shoe brigade ,Big Russ Hinze ,a kind of boss hog character ,and Top Level Ted an ex farmer with extensive real estate holdings in a red hot tourist area.......Within a few months other states realized they must follow suit ,or see a massive flight of capital from rich oldies ...so within a year,no death duties.

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    When I look at a picture of the first Jelky Petersen govt,its surprising how young they all were....doubt there was anyone over 45.....the boom years of the 60s,a $100,000 bribe to Jelky would get you a $50m coal mine.....Everyone was young then ,and money grew on trees.....We were drilling 2 foot deep seismic holes and getting $100 a hole...and never paid a penny in tax ,all cash from Yankee exploration companies like Utah & Brown and Root.

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    Get 33% of my paycheck taxed away... 7% of every purchase taxed away... 20% of each gallon of gasoline taxed away... 6.5% of the value of my vehicle taxed away... several hundred dollars a year taxed away to keep it registered...

    Add it all up and it probably comes out to a little shy of half of every dollar I make going straight back to Uncle Sam.

    And then half of it again will probably somehow get taxed away when I die.

    If getting a third to half of my earnings taxed away isn't insanity then I don't know what is. And then we want to tax inheritance? Pff.

    The fat cats in our government getting paid to do nothing and/or wasting the majority of that percentage (i.e. laundering it internationally) need to get cut out of the equation. If I and everyone earning more than me are losing nearly half of our paychecks and yet the national debt is *still* getting bigger, something's not right.

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