Republican Tax Plan 2017

[jean]

Although it’s been mentioned over and over again on this thread, the obvious and simple solution to the estate tax is to eliminate the stepped-up basis for everyone.  Then you can inherit unlimited wealth for no tax consequences.  The tax is only collected when you actually benefit from the asset (sell it).

This is reasonable.  I don't think the estate tax should be repealed at all, but one can make an argument that it should in the case where the step up basis doesn't exist.

I think it is nuts that the plan is to repeal the estate tax and keep the stepped up basis.  This is not something I've seen widely reported in the media. Then again, media attention is somewhat irrelevant since it doesn't really matter what the public thinks.  The law will pass or not pass without any say from normal taxpayers. 

[A Definite Beta Guy]

Because it's a tax loophole. Employer perks are wage income and should be taxed. If they are not taxed, they are tax loopholes (like your employer-based health insurance, which is the biggest tax loophole in America). It's no different at a university just because the perk happens to be reduced tuition.

Is the bill closing even one CORPORATE tax loophole???  Corporations keep their SALT deduction and get a 20% rate, but all of a sudden the Republicans think it makes sense to take away loopholes for individuals??  They keep the carried interest loophole benefiting hedge fund managers but make tuition waivers for grad students taxable???

I don't see why the existence of some loopholes makes other loopholes justified. I also am not really worried about corporations: the best corporate income tax rate is 0%. Corporations should only pay tax on the unimproved land value of their property and whatever surtaxes are assigned to their utilities. They shouldn't get a deduction for those taxes anymore than individuals do, because Uncle Sam should not be subsidizing local and state governments through the tax code.

I guess you could say they should pay a VAT too, if support that kind of taxation.

I don't particularly care about the carried interest taxation. I am more interested in imposing a general tax on financial transactions than changing tax codes for hedge funds. Carried interest only seems to be a really huge issue for people who care majorly about income inequality, which is not something I'm interested in.

You're dodging the point.

How so?

I don't see why the existence of some loopholes makes other loopholes justified.

If we're writing a new tax bill to close all these alleged loopholes, why are we 1) not closing ANY corporate ones, and 2) lowering the corporate rate further?

Then again, you don't care about income inequality so I suppose you might actually be looking forward to the old days when the .1% lived in castles and everybody else were peasants. Unless, of course, I've misread your post entirely.

It's not a tax bill to close all loopholes. GOP House leadership picked this particular one to make up some of the money on their bill so they can give a tax cut elsewhere. There's probably a bi-partisan tax overhaul bill that will close more loopholes, but this bill obviously isn't it, and the GOP did not even make an attempt at it.

Why would it bother me that the corporate tax rate is going down? I support that. Like I said, I think the corporate income tax rate should be zero. You're also correct that I don't particularly care about income inequality, but even if I did, I don't think the tax code is the place to reduce inequality. We should be raising tax dollars in the least distortionary matter possible. If that means Warren Bufffet is charged 0% tax, it means Warren Buffet doesn't pay tax. You should address inequality on the SPENDING side, by ensuring money goes to poor kids, poor schools, poor whatever, instead of Warren Buffet. This makes intuitive sense to me.

The specific question is why conservatives aren't up in arms about the graduate student hit, though. At least that's the way I read it. It's because it's a tax loophole. It's also not a tax loophole that will affect me much (unlike the tax loophole on medical insurance, which I would like to keep...everyone likes their own tax loopholes).

[ZiziPB]

Why would it bother me that the corporate tax rate is going down? I support that. Like I said, I think the corporate income tax rate should be zero. You're also correct that I don't particularly care about income inequality, but even if I did, I don't think the tax code is the place to reduce inequality. We should be raising tax dollars in the least distortionary matter possible. If that means Warren Bufffet is charged 0% tax, it means Warren Buffet doesn't pay tax. You should address inequality on the SPENDING side, by ensuring money goes to poor kids, poor schools, poor whatever, instead of Warren Buffet. This makes intuitive sense to me.

The problem with your thinking is that there would be nothing or precious little to spend if corporations and the Warren Buffets of the world pay zero tax.  You can address income inequality with spending but the money has to come from somewhere...

[Glenstache]

Just wow. This seems like an inconscionable case of kicking US citizens when they are down. I was not aware of this previously. One provision of the tax bill is to place a 20% excise tax on goods sent from Puerto Rico to the mainland.

http://thehill.com/policy/finance/362309-san-juan-mayor-gop-tax-bill-would-be-more-devastating-to-puerto-ricos-economy

This will destroy parts of their economy. Why? What is the possible justification for this? Why would this have even been put into the bill in the first place? The only thing I can think of is if a competitor to some industry on the island wanted more market share and lobbied a representative to slip it in.

Don't forget that PR does not get a voice in congress. Taxation without representation, anyone?

[sokoloff]

Don't forget that PR does not get a voice in congress. Taxation without representation, anyone?

Is it taxation without representation?

I thought it was "no taxation and no representation" as PR residents are not federally taxed on PR-sourced income.

Assuming that is the case, it seems reasonable to levy a cross-border tax or some other means of putting PR-based manufacturing companies onto a similar footing as non-PR-based US-based companies.

[Glenstache]

Don't forget that PR does not get a voice in congress. Taxation without representation, anyone?

Is it taxation without representation?

I thought it was "no taxation and no representation" as PR residents are not federally taxed on PR-sourced income.

Assuming that is the case, it seems reasonable to levy a cross-border tax or some other means of putting PR-based manufacturing companies onto a similar footing as non-PR-based US-based companies.

...except that corporations and individuals are taxed in PR.
https://tradingeconomics.com/puerto-rico/corporate-tax-rate
https://en.wikipedia.org/wiki/Implications_of_Puerto_Rico%27s_current_political_status#Taxation

[Dancin'Dog]

Death should not be an event that our government collects taxes on.

The amount that has been accumulated in one's lifetime is irrelevant. 

The money was hard earned & taxed all along the way. 

Why not tax corporations %40 each time a CEO retires? 

[ZiziPB]

Death should not be an event that our government collects taxes on.

The amount that has been accumulated in one's lifetime is irrelevant. 

The money was hard earned & taxed all along the way. 

Why not tax corporations %40 each time a CEO retires? 

Not quite.  You are forgetting the step up in basis.  Any capital gains would go completely untaxed.

[sokoloff]

Don't forget that PR does not get a voice in congress. Taxation without representation, anyone?

Is it taxation without representation?

I thought it was "no taxation and no representation" as PR residents are not federally taxed on PR-sourced income.

...except that corporations and individuals are taxed in PR.
https://tradingeconomics.com/puerto-rico/corporate-tax-rate
https://en.wikipedia.org/wiki/Implications_of_Puerto_Rico%27s_current_political_status#Taxation

Your first link details the Puerto Rico taxes imposed (not the federal US government taxes) and your second link says that "Puerto Rico residents who work for the federal government pay US income taxes".

I don't think either of those refute the "no taxation [on PR-sourced income] and no representation" claim. (Yes, they pay into and take out of Social Security; I'll give you that.)

[OurTown]

Senate Republicans, shorter version:  "Fuck the poor!"  (hat tip to Mel Brooks, History of the Word Part One).

[OurTown]

Senate Republicans, Christmas version:  "Are the no prisons?  And the workhouses, are they in good working order?"

[OurTown]

Senate Republicans, Christmas version, now with healthcare policy:  "Let them die and decrease the surplus population."

[ixtap]

Don't forget that PR does not get a voice in congress. Taxation without representation, anyone?

Is it taxation without representation?

I thought it was "no taxation and no representation" as PR residents are not federally taxed on PR-sourced income.

...except that corporations and individuals are taxed in PR.
https://tradingeconomics.com/puerto-rico/corporate-tax-rate
https://en.wikipedia.org/wiki/Implications_of_Puerto_Rico%27s_current_political_status#Taxation

Your first link details the Puerto Rico taxes imposed (not the federal US government taxes) and your second link says that "Puerto Rico residents who work for the federal government pay US income taxes".

I don't think either of those refute the "no taxation [on PR-sourced income] and no representation" claim. (Yes, they pay into and take out of Social Security; I'll give you that.)

The very first google hit says "Puerto Rican corporations who intend to send funds to the US...pay federal income taxes."

[Glenstache]

Don't forget that PR does not get a voice in congress. Taxation without representation, anyone?

Is it taxation without representation?

I thought it was "no taxation and no representation" as PR residents are not federally taxed on PR-sourced income.

...except that corporations and individuals are taxed in PR.
https://tradingeconomics.com/puerto-rico/corporate-tax-rate
https://en.wikipedia.org/wiki/Implications_of_Puerto_Rico%27s_current_political_status#Taxation

Your first link details the Puerto Rico taxes imposed (not the federal US government taxes) and your second link says that "Puerto Rico residents who work for the federal government pay US income taxes".

I don't think either of those refute the "no taxation [on PR-sourced income] and no representation" claim. (Yes, they pay into and take out of Social Security; I'll give you that.)

In short, economic activity that stays within PR is not taxed by the Feds. If it extends beyond, then they pay Fed taxes just like everybody else.

[sokoloff]

In short, economic activity that stays within PR is not taxed by the Feds. If it extends beyond, then they pay Fed taxes just like everybody else.

If my economic activity stayed fully within Massachusetts, I would still be taxed federally. The fact that PR doesn't work the same way substantially undermines the "taxation without representation" claim, IMO.

Want representation? Become fully subject to federal taxation (basically, petition to become a state, which has its own quagmire of pros and cons to different constituencies).

[mizzourah2006]

Although it’s been mentioned over and over again on this thread, the obvious and simple solution to the estate tax is to eliminate the stepped-up basis for everyone.  Then you can inherit unlimited wealth for no tax consequences.  The tax is only collected when you actually benefit from the asset (sell it).   That mythical unicorn, the family farm, could stay in the family indefinitely without tax consequences.  Don’t know what the historical tax basis for the asset was?  Fine, make it $0.  It was free to you anyway.  If the dearly departed didn’t bother to keep records on the tax basis how are you harmed by that?  But sadly, eliminating the step-up in basis is a fantasy rendered impossible by our current plutocracy.  Inconsolably grumpy about current tax plan, in case you can't tell.

I completely agree with this. Now that brokerages and investments are tracked via computer it would not be that difficult to calculate the original price paid and tax the gains if/when the investments were sold. It's not like people are walking around with hundreds of stock certificates today and the govt. can't find out how much was paid for them.

[sol]

Death should not be an event that our government collects taxes on.

The estate tax is not a tax on death, it is a tax on heirs who receive vast sums on unearned wealth.

An inheritance is income, just like winning the lottery is income.  Why are lottery winnings taxed but inheritances are not?  The person receiving the money should owe taxes on their income.  The dead person owes nothing.

[sokoloff]

Now that brokerages and investments are tracked via computer it would not be that difficult to calculate the original price paid and tax the gains if/when the investments were sold. It's not like people are walking around with hundreds of stock certificates today and the govt. can't find out how much was paid for them.

The groundwork is being laid for such a system to be workable, but the data is nowhere near covering the purchases of people who are most likely to die today.

It covers only:

• Shares of stock, including exchange-traded funds (ETFs) that are not treated as regulated investment companies (RICs) for taxation purposes, you acquired on or after January 1, 2011;
  
• Shares of stock in RICs and stocks acquired in connection with dividend reinvestment plans acquired on or after January 1, 2012;
• Specific debt securities (for example bonds with a fixed rate of interest and fixed maturity date), securities futures contracts, options, rights and warrants purchased or acquired on or after January 1, 2014; and
• All other debt securities (for example zero coupon bonds that convert into interest paying bonds) purchased or acquired on or after January 1, 2016 (this tax information will be reportable on 1099-B forms filed in 2017).

These regulations were passed to reduce the tax compliance slippage, but also sets us up for a reasonable way to eliminate the step-up in basis upon death in 50 years.

[mizzourah2006]

Now that brokerages and investments are tracked via computer it would not be that difficult to calculate the original price paid and tax the gains if/when the investments were sold. It's not like people are walking around with hundreds of stock certificates today and the govt. can't find out how much was paid for them.

The groundwork is being laid for such a system to be workable, but the data is nowhere near covering the purchases of people who are most likely to die today.

It covers only:

• Shares of stock, including exchange-traded funds (ETFs) that are not treated as regulated investment companies (RICs) for taxation purposes, you acquired on or after January 1, 2011;
  
• Shares of stock in RICs and stocks acquired in connection with dividend reinvestment plans acquired on or after January 1, 2012;
• Specific debt securities (for example bonds with a fixed rate of interest and fixed maturity date), securities futures contracts, options, rights and warrants purchased or acquired on or after January 1, 2014; and
• All other debt securities (for example zero coupon bonds that convert into interest paying bonds) purchased or acquired on or after January 1, 2016 (this tax information will be reportable on 1099-B forms filed in 2017).

These regulations were passed to reduce the tax compliance slippage, but also sets us up for a reasonable way to eliminate the step-up in basis upon death in 50 years.

so given what you are saying is true (I'm not debating it at all) if I am a 75 year old with some of these investments today and I decide to sell them, how do I pay taxes on them if it isn't trackable by the govt? Do I not pay taxes on the gains?

[sokoloff]

so given what you are saying is true (I'm not debating it at all) if I am a 75 year old with some of these investments today and I decide to sell them, how do I pay taxes on them if it isn't trackable by the govt? Do I not pay taxes on the gains?

You self-report the basis, calculate the [edit: basis gain] from that, and put it on schedule D. Absent an audit, it's on the honor system.

I used to file a 20+ page schedule D with a generated list of open and close dates (extracted from my online trading records and formatted by excel or python/lisp code). The chance the IRS ever looked at any given line item is approximately zero in my estimation, particularly since I listed some open and close transaction dates as "various", "various ST", or "various LT". I played it entirely straight, but the opportunity for abuse and fraud was rampant.

The reason for the step-up in basis being more practical at death versus before death (IMO) is that before death, you have access to the living taxpayer who might remember when or where they bought the asset, either exactly or approximately. Obviously, in an estate situation, that same inquiry is not possible.

[ZiziPB]

Now that brokerages and investments are tracked via computer it would not be that difficult to calculate the original price paid and tax the gains if/when the investments were sold. It's not like people are walking around with hundreds of stock certificates today and the govt. can't find out how much was paid for them.

The groundwork is being laid for such a system to be workable, but the data is nowhere near covering the purchases of people who are most likely to die today.

It covers only:

• Shares of stock, including exchange-traded funds (ETFs) that are not treated as regulated investment companies (RICs) for taxation purposes, you acquired on or after January 1, 2011;
  
• Shares of stock in RICs and stocks acquired in connection with dividend reinvestment plans acquired on or after January 1, 2012;
• Specific debt securities (for example bonds with a fixed rate of interest and fixed maturity date), securities futures contracts, options, rights and warrants purchased or acquired on or after January 1, 2014; and
• All other debt securities (for example zero coupon bonds that convert into interest paying bonds) purchased or acquired on or after January 1, 2016 (this tax information will be reportable on 1099-B forms filed in 2017).

These regulations were passed to reduce the tax compliance slippage, but also sets us up for a reasonable way to eliminate the step-up in basis upon death in 50 years.

so given what you are saying is true (I'm not debating it at all) if I am a 75 year old with some of these investments today and I decide to sell them, how do I pay taxes on them if it isn't trackable by the govt? Do I not pay taxes on the gains?

Presumably the sale would be reported to IRS by your broker with a $0 basis and it would be up to you to show your actual basis.  If you can't, you pay taxes on the entire sale proceeds.

[jean]

The reason for the step-up in basis being more practical at death versus before death (IMO) is that before death, you have access to the living taxpayer who might remember when or where they bought the asset, either exactly or approximately. Obviously, in an estate situation, that same inquiry is not possible.

I hear you, but lack of paperwork and complexity is no excuse for capital gains incurred during the duration of the now-dead person's life to go untaxed, forever.   Do you agree?  What do you propose as a solution, if not an estate tax or simply making the basis $0 if you can't figure it out?

[sokoloff]

I don't find a loophole that requires the death of a human being to take advantage of to be particularly objectionable or exploitable and would rather the government forgo the taxes on some income than to excessively tax the inheritance (by a zero basis determination) or to create a bunch of wasteful human activity (to guesstimate the basis and potentially audit the same) particularly for those under the stress of the death of a beloved family member.

So, I think I just don't agree with your premise, though I completely understand your position and agree that it has a different though equally logical consistency as mine does.

I think that an estate exemption in the single-digit millions per deceased person (to avoid taxing "nuisance estates") and a step-up in basis for recipients is practical and pragmatic, even if as an engineer, I can identify certain small unfairnesses about that outcome.

[seattlecyclone]

Death should not be an event that our government collects taxes on.

The estate tax is not a tax on death, it is a tax on heirs who receive vast sums on unearned wealth.

Not exactly. The estate tax pays no attention to how much you inherited. It is charged on the total value of the deceased person's estate, and is the same amount whether the whole inheritance goes to one person or is split up across 100 far-flung relatives.

Some states do actually have an "inheritance tax" that is calculated based on how much a living person receives from an estate. Nothing like that currently exists at the federal level.

[loyalreader]

Death should not be an event that our government collects taxes on.

The amount that has been accumulated in one's lifetime is irrelevant. 

The money was hard earned & taxed all along the way. 

We can quibble over your third point, but not your first. The government does not collect taxes on death. That's a ridiculous statement and calling it a death tax is false. 

The tax is on your estate. Yes, it is taxed when you die, but it is not a tax on your death. It is a tax on your heir's inheritance. 

I don't think it's unreasonable to think that someone who stands to inherit $11m when their parents die has been given a leg up on... everything... in their life. I don't feel bad for people who have to pay more taxes on inheritances over $11m.

If everyone who had an estate of more than $11m gave the excess to the charity of their choice that would be great. We probably both agree that would be better than the government taking it as a tax. But you can't legislate moral responsibility, only rights.

[sokoloff]

Death should not be an event that our government collects taxes on.

The amount that has been accumulated in one's lifetime is irrelevant. 

The money was hard earned & taxed all along the way. 

We can quibble over your third point, but not your first. The government does not collect taxes on death. That's a ridiculous statement and calling it a death tax is false. 

The tax is on your estate. Yes, it is taxed when you die, but it is not a tax on your death. It is a tax on your heir's inheritance.

If there's something ridiculous written above, I don't agree with you on which statements are ridiculous.

"My labor isn't taxed; it's an income tax after all."

"My purchases aren't taxed. It's a sales tax, not a purchase tax."

Those both seem equally valid as "It's not a tax on a death event; it's an estate tax."

[sol]

You've misunderstood.  The estate tax is not an extra tax you pay after death, it is an exemption from the gift tax because of your death.  You are allowed to make a one time tax free gift of your estate after death, without being subject to the normal gift taxes on such a transfer.  You're welcome!

I would be totally in favor of "repealing" the estate tax if it meant we just went back to using normal gift tax rates.  If you want to give huge sums of money to someone, that person should pay the normal taxes on it.  no more special treatment just because you died first.

[jean]

I think that an estate exemption in the single-digit millions per deceased person (to avoid taxing "nuisance estates") and a step-up in basis for recipients is practical and pragmatic, even if as an engineer, I can identify certain small unfairnesses about that outcome.

I agree with that!  Let's let Congress know of our plan!  Ha.

[seattlecyclone]

You've misunderstood.  The estate tax is not an extra tax you pay after death, it is an exemption from the gift tax because of your death.  You are allowed to make a one time tax free gift of your estate after death, without being subject to the normal gift taxes on such a transfer.  You're welcome!

I would be totally in favor of "repealing" the estate tax if it meant we just went back to using normal gift tax rates.  If you want to give huge sums of money to someone, that person should pay the normal taxes on it.  no more special treatment just because you died first.

I think you might misunderstand how the gift tax works. The primary reason it even exists is to limit the opportunity for elderly folks to make an end run around the estate tax by giving away all of their wealth shortly before death. The transfer of the estate value on death is taxed essentially the same way as gifts during life would be.

You start with a large lifetime exemption (currently about $5.5 million, adjusted annually for inflation). You only have to report any gifts that exceed $14k per giver/recipient pair in a year. Any reportable gifts eat into your lifetime exemption. Only after the exemption is exhausted do you start owing any gift taxes on future gifts. Whatever amount of the exemption that remains at death then becomes exempt from estate tax. The transfer of wealth is thus taxed the same whether it happens before or after death. Death does have a nice tax benefit in that the cost basis of appreciated assets gets reset to current market values. Otherwise there's no real difference.

[simonsez]

Death does have a nice tax benefit.

Damn straight, if you die you don't have to worry about taxes.

[JLee]

You've misunderstood.  The estate tax is not an extra tax you pay after death, it is an exemption from the gift tax because of your death.  You are allowed to make a one time tax free gift of your estate after death, without being subject to the normal gift taxes on such a transfer.  You're welcome!

I would be totally in favor of "repealing" the estate tax if it meant we just went back to using normal gift tax rates.  If you want to give huge sums of money to someone, that person should pay the normal taxes on it.  no more special treatment just because you died first.

I think you might misunderstand how the gift tax works. The primary reason it even exists is to limit the opportunity for elderly folks to make an end run around the estate tax by giving away all of their wealth shortly before death. The transfer of the estate value on death is taxed essentially the same way as gifts during life would be.

You start with a large lifetime exemption (currently about $5.5 million, adjusted annually for inflation). You only have to report any gifts that exceed $14k per giver/recipient pair in a year. Any reportable gifts eat into your lifetime exemption. Only after the exemption is exhausted do you start owing any gift taxes on future gifts. Whatever amount of the exemption that remains at death then becomes exempt from estate tax. The transfer of wealth is thus taxed the same whether it happens before or after death. Death does have a nice tax benefit in that the cost basis of appreciated assets gets reset to current market values. Otherwise there's no real difference.

Or..."other than erasing capital gains entirely, there's no difference."

Small details.

[seattlecyclone]

Erasing capital gains is worth a few percent of the overall value of the estate, give or take a bit depending on how much the assets have appreciated and what tax bracket the heirs are in. Compared to the strategy of giving your assets to your heirs during life, this advantage is counteracted a bit by the ability to give $14k per year completely free of any tax tracking. I still consider the two taxes to be roughly equivalent. This was the intent all along.

[bacchi]

Corker is holding his party's feet to the fire re: the deficit. It's amazing what not being up for reelection can do to one's spine.

It's tough to find a viable solution if your corporate masters are preventing you from getting off your knees.

[ZiziPB]

Corker is holding his party's feet to the fire re: the deficit. It's amazing what not being up for reelection can do to one's spine.

It's tough to find a viable solution if your corporate masters are preventing you from getting off your knees.

I certainly hope this dog's breakfast of a bill goes up in flames!  Not that our system is good now, but neither the House bill nor the Senate one are an improvement to the system.

[MustachianAccountant]

The estate tax should stay.  Nobody receiving over $11M is hurting. 

Not only should it stay, it should be lowered!  Why are we exempting $11 million from estate taxes?  That's more cash than anyone needs, because it will fund more than an entire lifetime at median salaries.  It's just a gift to the super-rich.

Just curious - do you think the number of beneficiaries should play into it? So, instead of the estate being taxed based on the lump sum, individuals are taxed based on what they receive. The more people to whom it is distributed, the less likelihood it has of hitting the limit.

Here's an example - right now, father in law's estate hovers near the current $6.5mm limit. He has three children who will be beneficiaries. At least half of his estate is real estate and he's directing DH and I to receive the family house, which may be valued at nearly a third (and meaning we'd receive little cash) of the value of the estate. If we had to pay a significant tax upon inheriting it, we'd have to sell or mortgage it to pay taxes.

Anyway, point is, $6.5mm split between 3 people is not the same as if all of it is given to 1 person. It seems like treating the estate tax more like the gift tax would be reasonable.

I was thinking the same thing this morning, and I think it's also a workable solution. Each inheritor pays income tax on the inheritance, and gets a certain exemption amount (like, maybe $500,000 or something similarly low). But, to my mind, the step up in basis would still have to go.

[jim555]

What a difference a few hours makes.  Now they say it is in trouble.  The billionaire boys club must be upset.

[NoStacheOhio]

PhDs aren't the only kind of grad students that receive tuition waivers

Such as? And in large numbers? Genuine curiosity - can't think of a field where Masters or JD candidates are given waived tuition.

My wife got tuition as part of her TA package as a Master's student in Journalism

[StarBright]

Just curious - do you think the number of beneficiaries should play into it? So, instead of the estate being taxed based on the lump sum, individuals are taxed based on what they receive. The more people to whom it is distributed, the less likelihood it has of hitting the limit.

Here's an example - right now, father in law's estate hovers near the current $6.5mm limit. He has three children who will be beneficiaries. At least half of his estate is real estate and he's directing DH and I to receive the family house, which may be valued at nearly a third (and meaning we'd receive little cash) of the value of the estate. If we had to pay a significant tax upon inheriting it, we'd have to sell or mortgage it to pay taxes.

Anyway, point is, $6.5mm split between 3 people is not the same as if all of it is given to 1 person. It seems like treating the estate tax more like the gift tax would be reasonable.

If one of the goals of an estate tax is to reduce the concentration of wealth, making it a per person tax would encourage the distribution amongst more people (though admittedly, it would probably still be the same family).

Anyway, I have agreed with your arguments about the estate tax, etc. Though selfishly, I'd like to not pay a whole bunch of taxes, I don't think it's right to have huge amounts of wealth concentrated in the hands of so few.

I've never given it much thought but your idea makes a bit of sense to me. We are in a similar situation to you where my in-laws have a fair amount of real estate in a VHCOL area. DH's grandfather specified that he wanted the family property (several acres and a house) to go to my DH and my in-laws plan to follow his wishes, but there is frankly no way we could afford to keep the property paying 40% tax on it. We've always assumed we would sell the land to a developer and do our best to keep the house. But we'd be able to come closer to paying the taxes and keeping a historic family property if we were only paying taxes on the house and land rather than my in-laws entire estate.

[DarkandStormy]

https://www.politico.com/story/2017/11/30/mccain-to-vote-for-gop-tax-bill-270511

The GOP doesn't even yet know what's in its tax bill...still want to vote on it today.

Idiots.

[DrumAllDay]

PhDs aren't the only kind of grad students that receive tuition waivers

Such as? And in large numbers? Genuine curiosity - can't think of a field where Masters or JD candidates are given waived tuition.

My wife got tuition as part of her TA package as a Master's student in Journalism

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

[fuzzy math]

Just curious - do you think the number of beneficiaries should play into it? So, instead of the estate being taxed based on the lump sum, individuals are taxed based on what they receive. The more people to whom it is distributed, the less likelihood it has of hitting the limit.

Here's an example - right now, father in law's estate hovers near the current $6.5mm limit. He has three children who will be beneficiaries. At least half of his estate is real estate and he's directing DH and I to receive the family house, which may be valued at nearly a third (and meaning we'd receive little cash) of the value of the estate. If we had to pay a significant tax upon inheriting it, we'd have to sell or mortgage it to pay taxes.

Anyway, point is, $6.5mm split between 3 people is not the same as if all of it is given to 1 person. It seems like treating the estate tax more like the gift tax would be reasonable.

If one of the goals of an estate tax is to reduce the concentration of wealth, making it a per person tax would encourage the distribution amongst more people (though admittedly, it would probably still be the same family).

Anyway, I have agreed with your arguments about the estate tax, etc. Though selfishly, I'd like to not pay a whole bunch of taxes, I don't think it's right to have huge amounts of wealth concentrated in the hands of so few.

So you're going to receive a $2 mil + house... your family should be thinking 1) move into the home (and sell yours) or 2) sell the home and keep the $$. If paying taxes on a large property is a hinderance, do you currently have the ability to pay the property taxes and upkeep on this and have it leave it empty as a "2nd home"?
It might be more reasonable for your dad to sell or gift it to you while he is still alive.

I know nothing about the process personally, but if this is true there's a lot of wiggle room in that $2 mil price tag https://legalbeagle.com/6148229-transfer-property-gift.html

[NoStacheOhio]

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

It depends on how they structure it too. My understanding is that scholarships (whether need- or merit-based) would remain non-taxable. I think there's some wiggle room with regard to money classification for some of the people who would be affected by the new rules (set up a new "University Family Scholarship").

[ixtap]

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

It depends on how they structure it too. My understanding is that scholarships (whether need- or merit-based) would remain non-taxable. I think there's some wiggle room with regard to money classification for some of the people who would be affected by the new rules (set up a new "University Family Scholarship").

That isn't just restructure. A scholarship has to be funded: there has to be an established pot to move the money around. A tuition waiver does not (usually) require this extra pot.

[NoStacheOhio]

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

It depends on how they structure it too. My understanding is that scholarships (whether need- or merit-based) would remain non-taxable. I think there's some wiggle room with regard to money classification for some of the people who would be affected by the new rules (set up a new "University Family Scholarship").

That isn't just restructure. A scholarship has to be funded: there has to be an established pot to move the money around. A tuition waiver does not (usually) require this extra pot.

Yeah, but it's kind of all funny money anyway. I work at a hospital, and we basically self-insure through a third-party administrator. It amounts to sending ourselves a bill and then pretending we paid it.

I'm sure there's a creative solution here that fits within the new box. It's when the employee and the student are the same person that you get less wiggle room.

[DarkandStormy]

https://www.cnbc.com/2017/11/29/it-started-as-a-tax-cut-now-it-could-change-american-life.html

Economists and tax experts are overwhelmingly skeptical that the bills in the House and Senate can generate meaningful job growth and economic expansion. Many view the legislation not as a product of genuine deliberation, but as a transfer of wealth to corporations and affluent individuals — both generous purveyors of campaign contributions. By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut, according to the Joint Committee and the Congressional Budget Office.

https://www.americanprogress.org/issues/economy/news/2017/11/27/443316/millions-working-middle-class-americans-see-tax-increase-senate-gop-tax-plan/

According to the Tax Policy Center, even when benefits to individuals from the bill’s corporate tax cuts are included, 87 million families making less than $200,000 nationally would experience a tax increase under the Senate tax plan by 2027.

Again, this "tax bill" is a steaming pile of shit for nearly all Americans.  If you're lucky enough to be making more than $200,000 annually, you win out in 2027.  If not...tough luck I guess.

This is no longer a "tax reform" bill or a "tax cut."  It's a bunch of bull shit designed by the GOP to benefit their donors.  That's it.  It's a massive transfer of wealth to the billionaires who fund their campaigns.  And they're paying for it by adding $1.5 trillion to the national debt (party of fiscal responsibility, my ass) and kicking the can down the road for the NEXT (next, next, next) generation to pay for it.  It's that simple.

The economic environment is not screaming for tax cuts in any way.  Record stock numbers, record low unemployment, corporations recording record profit, sitting on record piles of cash.  Does anything about the current economic picture scream "TAX CUTS?"  Hell no.

This is just another bullshit GOP gimmick like the Bush tax cuts.  We had, hard to believe, a budget SURPLUS when W took over and he immediately added hundreds of billions of dollars to the deficit with his tax cuts.  Did we see record job growth?  Did we see huge economic expansion?  No.  It's a bunch of bullshit.  We got stagnant growth while adding a record number to the deficit.  Thanks, W.

Trickle down is a bullshit lie used a talking point by the GOP to make it sound like they care about the "working class people" as a cover to pay off their billionaire donors.  That's all this is.

[fuzzy math]

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

I moved across the country to take a job with a university simply for this benefit for my 3 kids. Now in reality, even if I have to pay taxes on the benefit its still going to be at my marginal rate (what, 12% ?) which is better than paying the 100% of the cost I would have otherwise had to pay. Does it piss me off YES, but its not completely gone I suppose.

[Malloy]

https://www.cnbc.com/2017/11/29/it-started-as-a-tax-cut-now-it-could-change-american-life.html

Economists and tax experts are overwhelmingly skeptical that the bills in the House and Senate can generate meaningful job growth and economic expansion. Many view the legislation not as a product of genuine deliberation, but as a transfer of wealth to corporations and affluent individuals — both generous purveyors of campaign contributions. By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut, according to the Joint Committee and the Congressional Budget Office.

https://www.americanprogress.org/issues/economy/news/2017/11/27/443316/millions-working-middle-class-americans-see-tax-increase-senate-gop-tax-plan/

According to the Tax Policy Center, even when benefits to individuals from the bill’s corporate tax cuts are included, 87 million families making less than $200,000 nationally would experience a tax increase under the Senate tax plan by 2027.

We are in that over 200k group, and it looks like this bill is a wash or involves a 1-3k tax increase for us until 2027, depending on our level of itemization.  After that point, the doubled standard deduction goes away AND we still lose SALT.  So it seems slightly worse after 2027.  I still don't know if personal exemptions are going away after 2027, but we are in an income group for which they are phased out anyway.

This isn't a panic situation for us, more like "well, I hope it doesn't blow up the economy."  But, my shrug about the tax changes of +/- a few thousand tells me that the people above us on the income scale are also not scraping by wondering how they will buy crutches for little Timmy if this tax bill doesn't pass.  I don't need a tax cut, and I'm guessing Larry Page doesn't either.  And, before some edgelord comes in to tell me that I'm free to send my tax cut to the treasury or to them if I don't need it, I'd like to add that I'm OK paying my current taxation level so long as it results in services that we need to help our country function, which doesn't happen if people just  turn in tax money when they feel like it.  If my cohort's share of the tax bill results in keeping our national parks open, funding CHIP and cancer research, etc., let's make it happen.  And if there are spending cuts that are needed, I'd start with the military-so just about the opposite of our current national priorities for taxation and spending.   

[DrumAllDay]

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

I moved across the country to take a job with a university simply for this benefit for my 3 kids. Now in reality, even if I have to pay taxes on the benefit its still going to be at my marginal rate (what, 12% ?) which is better than paying the 100% of the cost I would have otherwise had to pay. Does it piss me off YES, but its not completely gone I suppose.

Yes that's true, you still make out way ahead compared to paying full tuition but it just goes along with what most have been saying on this thread. This is just one more example of this tax bill being a tax cut for corporations and the wealthy at the expense of the middle class. In this case higher ed too. This is not what this country needs right now!

[NoStacheOhio]

The University I work at, immediate family members receive tuition benefits for undergraduate degrees. This is a huge benefit for many employees (administration, maintenance, food service, as well as faculty) and a reason why they choose to work at a University, where often times pay is less than working for a for profit company.

Being taxed on the tuition benefit would certainly be a hit for an employee who was counting on putting their children through college without being taxed on $30,000 or so per child of taxable income.

I moved across the country to take a job with a university simply for this benefit for my 3 kids. Now in reality, even if I have to pay taxes on the benefit its still going to be at my marginal rate (what, 12% ?) which is better than paying the 100% of the cost I would have otherwise had to pay. Does it piss me off YES, but its not completely gone I suppose.

Yes that's true, you still make out way ahead compared to paying full tuition but it just goes along with what most have been saying on this thread. This is just one more example of this tax bill being a tax cut for corporations and the wealthy at the expense of the middle class. In this case higher ed too. This is not what this country needs right now!

something something ELITISTS something LIBRUL COLLEGE PROFESSORS something IVORY TOWERS something something

[sol]

This is no longer a "tax reform" bill or a "tax cut."  It's a bunch of bull shit designed by the GOP to benefit their donors.  That's it.  It's a massive transfer of wealth to the billionaires who fund their campaigns.  And they're paying for it by adding $1.5 trillion to the national debt (party of fiscal responsibility, my ass)

That's what we've been saying all along.  The GOP tax plan basically only does one thing: it permanently cuts the corporate tax rate by increasing the deficit.  Everything else is a sideshow.  The individual rate adjustments, the ACA mandate repeal, the tuition wavers, all of that is temporary small potatoes compared to the juicy steak of trillions of new debt to increase the profit margins of companies that currently have record profit margins.

The economy is surging, some say dangerously so, so now is the time to increase corporate tax rates to pay down the national debt, when we have so much surplus cash laying around.  You cut taxes to spur growth during a recession, as a way to juice corporate profits, not during a boom.  They're doing it exactly backwards, which means we'll have bigger booms and bigger busts instead of government stabilizing the business cycle like it's supposed to.