Inherited Wealth &
The Income-Payroll Tax System
The Income-Payroll Tax System
An article posted at accountingtoday by Ben Steverman entitled, “Americans To Inherit $764B This Year, Mostly Tax-Free”, explains how inherited wealth isn’t taxed and, to correct this wrong, in his opinion, he discusses a proposal to tax inheritances. Some of his points are:
- Americans will pay an average tax of just 2.1% on projected inheritances of $764 billion this year
- The estimated tax on work and savings is between 15.8% and 37%
- NYU law professor Lily Batchelder is proposing the existing estate tax be scrapped and replaced by levying income and payroll taxes on inheritance income
- Ms. Batchelder’s calculations predict her tax would raise “as much” as $1.4 trillion over the next 10 years
There are 2 main reasons why some in Congress are taking this proposal to tax inheritances seriously. Obviously, there is the idea the proposal will generate more money for them to spend on programs they believe are important.
The second reason is the feeling it’s just not fair for some people to receive an inheritance while others don’t. Therefore, the only correct action is for the government to take a significant portion of the inheritance income from those fortunate enough to be receiving one, and redistribute the money to the unfortunate ones who aren’t.
Problems With The
Proposed Taxes On Inheritances
Proposed Taxes On Inheritances
Even if you ignore the fairness issue, there are a number of reasons why this proposal isn’t as simple as it sounds. Some of these are:
- The people who have the most to lose are wealthy people who are the most able to hire the best tax professionals to find ways to reduce or eliminate any tax on their heirs
- The proposed tax assumes people will continue to robotically leave money to their heirs even when the government is taking up to 50% of it
- Many inheritances aren’t in cash but in, for example, farm land or a business. In those cases, there wouldn’t be enough inherited cash to pay the tax, and the heir would have to sell the farm or the business in order to satisfy Uncle Sam
- To administer and enforce this new tax, a new army of bureaucrats will need to be hired. Of course, taxpayers aren’t going to sit idly by while their wealth is confiscated, so they will have to hire expensive tax professionals who claim to be experts in this area.
The FAIRtax Solution
Why do people earn money? They earn it to spend it now, spend it later or to provide for their heirs who will in turn either spend it or provide for their heirs. Why then are Members of Congress not considering taxing the consumption of inherited wealth when consumption occurs?
Why would Members of Congress prefer a complicated plan to tax inherited wealth under the income-payroll-tax-system?
How many people do we know who received an inheritance, and then went out and bought new cars or went on trips or spent the money on their children or grandkids? These expenditures, to the extent they were on new goods or retail services, will be subject to The FAIRtax.
With The FAIRtax, you won't need a new layer of bureaucracy or an army of tax professionals to effectively tax inheritance. Why is this solution not appealing to The Ruling Class and their minions in Congress and D.C.?
The Ruling Class loves these income tax proposals because:
- The wealthy groups most affected will pay lots of money for benefits and exceptions
- This is yet another way of controlling the wealthy because if they don’t obey, then their heirs will pay even more tax
- They know better but are happy to let the bureaucrats think, if on paper, a tax proposal raises a certain amount of tax revenue from certain groups, the affected groups will not alter their behavior to try to reduce the actual tax paid
Conclusion
In the discussion about taxing inheritances, much of the rhetoric goes to “fairness” issues. Some of the commentators actually seem to be delighting in “punishing” those people who have deferred spending on themselves and have the audacity to provide money to their heirs for the heirs to spend.
The purpose of the tax system is to fund the government and the programs the people want, so there is no need to continually add layer after layer of complex rules imposing a great deal of difficulty on both the payor and the collector.
The purpose of the tax system is to fund the government and the programs the people want, so there is no need to continually add layer after layer of complex rules imposing a great deal of difficulty on both the payor and the collector.
The dirty little secret is
there is a group of people in this country,
encouraged by "The Ruling Class",
who always benefit from conflict.
there is a group of people in this country,
encouraged by "The Ruling Class",
who always benefit from conflict.
These people are constantly seeking to do things through the income-payroll-tax-system they would have a great deal of difficulty doing directly.
If we had The FAIRtax and one group wanted to “confiscate” a portion of someone else’s inheritance, it would be much more difficult to do. All of us would know if we allow inheritances to be confiscated, what’s to prevent them from confiscating our other assets?
Martin Niemoller was a Lutheran pastor living in Germany when Hitler came to power. When he saw the Nazi abuses, he became opposed to the Nazis but only spoke out after WW II began. He was arrested and died in a concentration camp. The following statement was made by Pastor Niemoller after he was arrested:
First they came for the socialists,
and I did not speak out
because I was not a socialist
Then they came for the trade unionists,
and I did not speak out
because I was not a trade unionist
Then they came for the Jews,
and I did not speak out
because I was not a Jew
Then they came for me
and there was no one left to speak for me
and I did not speak out
because I was not a socialist
Then they came for the trade unionists,
and I did not speak out
because I was not a trade unionist
Then they came for the Jews,
and I did not speak out
because I was not a Jew
Then they came for me
and there was no one left to speak for me
Pastor Niemoller’s words should never be forgotten by freedom-loving Americans. We can still speak out, and there won’t be Gestapo agents knocking on our door to drag us away to a concentration camp.
However, if we don’t speak out and demand the solution benefitting everyone, The FAIRtax, the only “Fair tax”, we are in danger of losing many more of our freedoms under the cloak of “taxation" and "fairness".
It’s time we demand the solution benefitting everyone!
Pass The FAIRtax—the only “Fair tax”?
Pass The FAIRtax—the only “Fair tax”?
The author George Bernard Shaw said these words in a play he wrote, You see things; and you say “Why?” But I dream things that never were; and I say “Why not?”
Isn’t it time for us to ask, “Why not?”
President Trump, “Embrace the FAIRtax, the only Fair Tax the only fair tax and the only real tax reform! Stand up to the Swamp. They will oppose you anyway because they see you as a threat. What have you got to lose?”
The truth is the truth. Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
Take Back America Again! Pass The FAIRtax Now!
FAIRtax Online Resources
Americans For Fair Taxation - Home Page
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Americans For Fair Taxation - YouTube Channel (The Chairman's Report is now posted here)
Americans For Fair Taxation - Twitter Page
Americans For Fair Taxation - Chairman's Report Podcast on Spreaker posted Fridays at 6am-ET
Americans For Fair Taxation - Chairman's Report Podcast on Apple
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Official FAIRtax Logo Store
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PopVox - The People’s Voice On All Things Legislative
Read Evasion Study Summary
The FAIRtax Guys
Ron Maiellaro & Bob Paxton perform their FAIRtax Power Digital-TV Show & Podcast. When the show streams to Facebook, The FAIRtax Guys plus a few AFFT experts are responding “live” to your comments and questions. A free app is available for iOS and Android.
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Digital TV are available on The FAIRtax Guys
This week's Episode #198 - "Back To Square One"
Why was the "Tax Cuts & Jobs Act of 2017" NOT tax reform? What do we mean by tax reform? What is it about the current tax code which necessitates tax reform?
Why is The FAIRtax the only bill in Congress which will truly reform the tax code.
If you find someone who isn't familiar with The FAIRtax, refer them to this episode. This episode is for all who are new to The FAIRtax and serves as a good review for others. So, when you find someone who wants to learn about REAL tax reform, this episode is place to begin.
As always, the AFFT is looking for volunteers to help their efforts. Watch or listen to see if there is some small way you can help.
There’s always more in FAIRtax Power Radio such as a reminder of the promotional items available now at Our Store and a review of Jim Bennett’s Grassroots Corner Report.
What Can Each Of Us Do?
Call the local and DC offices of your Representative and 2 Senators. Use the following script:
- I am sure Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws
- After they assure you their boss is not in favor of anyone breaking the law, ask if they are aware of the Cebula study showing $9 trillion of evaded income-payroll taxes over the next 10 years
- Since most will say they don’t believe their boss has seen the study, drop off a copy, email a copy or click Read Evasion Study Summary and copy/paste the link into an email
- Say you are going to call back in a week and ask what the Representative or Senator is going to do to stop this evasion
- In a week, call back and ask specifically what the Representative or Senator is going to do to enforce the law
- They probably will say their boss believes simplifying the income tax will handle the problem
- Explain, when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So, it’s unlikely they are going to pay 30-40% when they were paying 0% because they have already decided it’s okay to cheat
- Say, the only way to reduce evasion is to increase by tens or hundreds of thousands the number of comprehensive IRS audits done each year
- Point out Evaders do not self-identify by putting an “E” on their income tax return
- 80% of the people likely to be audited are trying to comply, but they will be forced to endure these IRS audits as well
- Ask if the Member is in favor of this?
- If they say no, then ask again how the Member proposes to stop people breaking the income tax laws
- Then explain the way to handle evasion without unleashing the IRS audits is The FAIRtax
- If you meet with your Representative or attend a town hall and ask these questions, you will be even more effective
American's Big Solution - The FAIRtax Primer America Needs
Hard to believe but there still are people who have not heard of The FAIRtax. For those people, America’s Big Solution provides a starting point in their study of The FAIRtax and is meant for any age.
America’s Big Solution is an introduction to The FAIRtax written by Terry Tibbetts, author of “A Spartan Game: The Life and Loss of Don Holleder”, with help from Ron Maiellaro, President The Florida FAIRtax Educational Association. You can buy an electronic version for only $2.99 for the Amazon Kindle, the Barnes & Noble Nook and Apple iOS. You can purchase a print copy at the same Amazon link above for $9.25.
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Thank you for staying FAIRtax strong!
Yours In Liberty!
Steve Hayes
Chairman, Americans For Fair Taxation