Big B
Diamond
- Joined
- Jun 26, 2009
- Location
- Michigan, USA
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?
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?