5 Jun 2023 4:24 pm
Point of order...I didn't say YOU were jealous.Skans » 05 Jun 2023, 3:46 pm » wrote: ↑ First, I am not jealous over what others have. That really does not matter to me.
But, I find it interesting that you would eliminate the "free" step-up in basis of an asset that transfers upon death. So, you are not a purist when it comes to taxing wealth. Some forms of wealth are ok to be taxed.
But, let's say that you eliminate the death tax (state and federal) but also eliminate the step-up basis on death. How are smart wealthy people going to side-step that step-up basis problem? I'll tell you how they will do it:
- First, no more "growth" investments.
- Next, only invest in dividend investments. These would be companies with high dividend growth rates and high pay-out ratios. Sure, you will be taxed on the dividend income, but what's left over will be plowed right back into buying more shares. More shares = more income, and the "nest of investments" can grow to infinity (theoretically) from generation to generation.
- Dynasties get richer, and working class people are priced out of ever being able to afford these types of investments. Why? Because Trillionaire dynasties will price them out. Don't believe me? Berkshire Hathaway Inc. - Class A NYSE: BRK.AAs of June 5, 2023 • 3:59 PM EDT$499,088.98 / Share
With the exception of bonds, virtually every investment is a "growth" investment. Publicly traded companies see their stock prices change daily. And I don't care if "dynasties" get richer. The stock price you mentioned has no bearing on anyone else amassing personal wealth. Nobody has the constitutional right to own stock in a particular company. If you can't afford the stock of one company...tough ****. Buy stock in something else.
The wealthy paid taxes on the money they used to purchase their investments. They pay taxes on the dividends. They (or the corporation) paid taxes on the income generated each year by the business. They pay taxes when they have to sell (or trade in barter) stocks...I'm sure you've heard of capital gains. Real estate holdings pay property taxes on their assessed values (something else I would eliminate). Death SHOULD NOT BE a taxable event...and having the step-up in basis creates a "gain" for the person who died. I don't think someone should be forced to sell the family business because their parent died...and that often happens because of the increase in basis. Take an extreme example. In 1989 Jerry Jones paid $140 million for the Dallas Cowboys and the corporation that owned the exclusive rights to Texas Stadium. Today, the Dallas Cowboys are valued at $5.6 billion (Jerry is worth $13.1 billion). Those amounts aren't in cash sitting in some bank account. Is it right for the Jones family being forced to sell assets to cover $1.6 billion in tax when there was no financial transaction, simply because their hard work caused the value of one asset to increase?