Quote:
Originally Posted by Papa_Complex
That isn't the issue though, is it? Generally speaking it's Republicans, who are complaining about tax rates on the wealthy, that they don't seem to pay anyway. Start talking about things like inheritance taxes, that really are taxes on money that has already been taxed, and I'll be right there with you. Not on this.
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While inheritance tax is somewhat taxes on money that has already been taxed, it's not completely that way. The biggest example is unrealized capital gains. If someone bought, or built, a good sized house in the right area and stayed in it most of their lives (a lot of older people have been in the same home for YEARS), that house would have greatly appreciated in value. The gain isn't recognized until the house is sold. If the house is left to someone in an estate, that property doesn't get taxed without an inheritance tax. Granted, there is a 500k exemption for married couples on the gain of a house, but there is also a threshold for inheritance tax.
So lets talk about stocks/bonds. Same situation. If someone holds onto them for years upon years, they've greatly appreciated in value. When they're left to someone in an estate, the new owner gets the basis on date of death. So those stocks could have dramatically appreciated, but that gain is never taxed since they were left in an estate, if there's no inheritance tax. This is where an inheritance tax makes SOME sense.
However, the inheritance tax RATE is what is insane. Also, if someone simply had boatloads of cash/liquid securities where the interest has been taxed over the years, then I don't think that money should be taxed upon death either.