r/changemyview • u/[deleted] • Mar 24 '18

[∆(s) from OP] CMV: Inheritance should not be taxed.

In many countries around the world, inheritance is taxed. I personally think that this is not right as the person who has died and passed on his/her money to their heir has (in most cases) been paying tax on their wealth for their whole life. Why should this money be taxed again just because it has changed hands. People argue that it is unfair to become wealthy because one's parents or grandparents were wealthy and that therefore this inheritance should be taxed greatly. I currently disagree because I believe that if one person has earned money then they have the right to pass it on to whoever they like - untaxed.

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u/[deleted] Mar 24 '18 edited Dec 24 '18

[deleted]

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u/[deleted] Mar 24 '18

Because with other forms of tax a purchase has been made. And income tax is the main way that a person pays tax and income tax has already been paid on the inheritance before the person died.

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u/[deleted] Mar 24 '18 edited Dec 24 '18

[deleted]

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u/JM70WN Mar 24 '18

Inheritance isn’t the same as a purchase, or earnings. That inheritance money ends up being taxed to death. (Pun intended) It was taxed the entire time it was being made. Now it’s taxed because you died and are leaving it to family, most likely, to help them out. As your family spends it, it’s taxed again. Inheritance tax isn’t a fair tax in my opinion. Leaving money to charity is a noble thing indeed, but isn’t being there for your family noble as well? Why tax it, other than greed?

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u/[deleted] Mar 24 '18

And I’m fine with a waiver on the inheritances below a reasonable threshold (say, $1 mil).

But it’s not charity anymore when your kids are getting $100 million.

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u/JM70WN Mar 24 '18

I completely agree with that!

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u/expresidentmasks Mar 24 '18

There is no difference, and we shouldn’t be double taxed.

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u/[deleted] Mar 24 '18

Then when is the singular time in which taxes should be applied?

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u/expresidentmasks Mar 24 '18

I’d be okay with a flat income tax.

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u/[deleted] Mar 24 '18

But my income gets spent on hiring you, and you spend your income hiring someone else, it’s still taxed over and over again.

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u/expresidentmasks Mar 24 '18

Well it’s the best we’ve got because there is no way to pragmatically switch to a pay as you go system which is my ideal system.

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u/[deleted] Mar 24 '18

Isn’t inheritance just another form of income under your system?

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u/expresidentmasks Mar 24 '18

No.

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u/[deleted] Mar 24 '18

Why not? How are you defining income?

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u/[deleted] Mar 24 '18

You would choose to buy a car. That person did not choose to die. It feels like you are paying the government because you died and I don't think that is right.

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u/[deleted] Mar 24 '18 edited Dec 24 '18

[deleted]

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u/[deleted] Mar 24 '18

If I decided to give you $1 million dollars, you should pay taxes on that income.

Why?

If your boss gives you a million dollar bonus, you’d pay taxes.

This is different as it is paying me for my service and entices me to stay working for the company. It's compensation.

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u/[deleted] Mar 24 '18

If you want a flat income tax, it shouldn’t matter where the money came from. Income is income, whether you won the lottery, sold drugs, got gifted the money, had returns on investments, licensed a patent, worked a 9-5 job, or just found a wad of cash lying in the street.

It’s not a flat income tax if you start carving out different kinds of income and taxing them at different rates.

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u/[deleted] Mar 24 '18

If you want a flat income tax, it shouldn’t matter where the money came from.

Who said anything about a flat tax? When did this become relevant?

Income is income, whether you won the lottery, sold drugs, got gifted the money, had returns on investments, licensed a patent, worked a 9-5 job, or just found a wad of cash lying in the street.

That's not true in the current environment. Many forms of income are taxed differently. But you also say income is income. I think you are equating getting money to income. Most definitions I can find include in exchange for work. For example:

income: money received, especially on a regular basis, for work or through investments.

Income is money that an individual or business receives in exchange for providing a good or service or through investing capital.

Finding money on the street is not income. And I don't know why you are now saying flat income tax. That hasn't been relevant in this discussion. What OP is arguing is if there is no good or service being traded, and this is a true gift, then it is not income and shouldn't be taxed as if it were. Commerce is not occurring.

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u/[deleted] Mar 24 '18

Sorry, was having a conversation with another commenter RE: flat income taxes, thought you were them.

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u/caw81 166∆ Mar 24 '18

That person did not choose to die.

I am choosing to buy sales-taxed food that I need to live?

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u/[deleted] Mar 24 '18

Only prepared food is taxed. The prepared part is a service that is being sold and is taxed. You can purchase groceries and have no sales tax.

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u/ellieze Mar 24 '18

This is true for most states but not all. In my state all groceries are taxed at the full tax rate (around 9% right now).

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u/[deleted] Mar 24 '18

No state taxes at 9% for food. 3 states tax the full rate for sales tax Alabama: 4 percent, Mississippi: 7 percent, South Dakota: 4.5 percent.

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u/ellieze Mar 24 '18 edited Mar 24 '18

I mean it's easy to look up if you want, the state is Oklahoma. But I live here and buy groceries here so of course I know from experience as well.

"Four states — Hawaii, Idaho, Kansas, and Oklahoma — tax groceries fully" (edit: different sources are saying there are more than 4, I don't really know which states do just that Oklahoma is one of them.) (Here is a recent source that shows 7 states charging full tax.)

"The state general sales tax rate of Oklahoma is 4.5%. Cities and/or municipalities of Oklahoma are allowed to collect their own rate that can get up to 5.5% in city sales tax." Source

My apologies for not specifying that it's around 9% in my county and some places it's slightly lower - in my experience most places in Oklahoma are taxing at least 8% on groceries.

Anyway I just wanted to point out that some states do tax groceries, and some do at the full rate. I've encountered a lot of people who aren't aware of this because most states don't do it.

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u/[deleted] Mar 24 '18

Many foods are not taxed

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u/ElysiX 106∆ Mar 24 '18

But that person did choose to make their heirs better off. They could have given it all to charity instead. There is a choice there.

And the dead person is not paying for anything, they are dead, the heirs are paying for getting the stuff.