Taxes on Inheritance and Lottery Winnings

[nclib]

*If you think either tax should be eliminated, vote 'lower'.


I vote Option 2. The absence of an inheritance tax makes the rich richer and the poor poorer. A lottery, however, can be won by anyone.

[A18]

The absence of an inheritance tax makes the poor poorer? You are a brain dead kook.

If people stopped stealing from the rich, would they be 'making' the rich richer?

[Inverted Things]

If nothing else, stealing from the rich circulates money and helps the economy. The Egyptians would have fallen long before they did had theives not plundered the tombs to circulate the money.

[A18]

Wow. You don't understand money, and you don't understand banking.

[Inverted Things]

Money is funny stuff. It is actually completely useless. Very few people actually want money.

[A18]

That truism conflicts with your earlier statement.

[Inverted Things]

It most certainly does not. Very few people want money. They want the stuff they can buy with money. This is why people are more than happy to take your money. The more stuff that can be bought with money, the more people want money, which creates a booming economy.

If everyone wanted to keep their money rather than spend it, then you wouldn't be able to buy much of anything with money, and so there would effectively be no economy.

[A18]

Having more money in circulation does not add to the number of things you can buy with money, and therefore does not improve the economy in any way at all.

Money that exits circulation simply has a deflationary effect that, under our banking system, will be offset by the Federal Reserve.

[opebo]

Inheritance tax should be quite high (say 50%) above a certain level - somewhere between 2 and 10 millions.  I do think it is appropriate to treat it differently from regular income, as an inheritance typically represents some 40-50 years of grueling ass-kissing for most heirs.

Lottery winnings should simply be taxed as regular income for that year, since that is clearly what they are.  The top marginal income tax rate should be about 70%, but should only kick in at quite high levels.

[Giant Saguaro]

Ideally both eliminated, but I'd settle for dramatically lowering the lottery tax while eliminating the inheritance tax.

[dazzleman]

Both taxes should be eliminated.

I disagree.  Lottery winnings should definitely be taxed as income in my opinion.  There's no reason to give people who win the lottery a free pass when working people are taxed.

Inheritance is a bit different, since it was already taxed at the time it was earned.  Truthfully, I am ambivalent about inheritance taxes.  

On the one hand, the money has already been taxed, so it is in a way double taxation on the same money to tax it again when the holder of the money passes.  But the money does represent a form of income to the person receiving it.  I think the right answer on inheritance taxes is to tax only large estates, with the amounts indexed to inflation, at a low rate.

[Speed of Sound]

Inheretance the same, lottery lower

[dazzleman]

Inheretance the same, lottery lower

I'm curious as to why people think lottery earnings should be taxed at a lower rate than income.

Is it because of the expectation that poor people win the lottery?

Why should working people pay more tax, effectively, so lottery winners can pay less?  I can justify lower taxes on activities that CREATE wealth, which is why I think it is appropriate to have a lower capital gains rate, but lotteries don't create wealth at a macro level; they only redistribute it.  I see no reason the person receiving free wealth should get a free pass.

[dazzleman]

Both taxes should be eliminated.

I disagree.  Lottery winnings should definitely be taxed as income in my opinion.  There's no reason to give people who win the lottery a free pass when working people are taxed.

Inheritance is a bit different, since it was already taxed at the time it was earned.  Truthfully, I am ambivalent about inheritance taxes. 

On the one hand, the money has already been taxed, so it is in a way double taxation on the same money to tax it again when the holder of the money passes.  But the money does represent a form of income to the person receiving it.  I think the right answer on inheritance taxes is to tax only large estates, with the amounts indexed to inflation, at a low rate.

I agree on inheritance, that it was already taxed when it was earned (not that large estates should be taxed, though) but the lottery, at least the way I see it, is more of a donation than an income.  Or kind of like insurance even.

How can receiving potentially millions of dollars be considered a "donation?"  It is also far too random to be considered insurance.  It is gambling, and gambling earnings are taxed as income.  To call it insurance is a perversion of the whole idea behind insurance, since insurance has a guarantee that it can be collected under circumstances, while the lottery offers nothing of the sort.

[ATFFL]

How about we just declare them both income and be done with it?

[A18]

Why don't we declare bank withdrawals income?

[ATFFL]

Why don't we declare bank withdrawals income?

Because you already own that money.

For inheritance, money should be taxed and property should not.  If someone inhreits a farm and $250,000 in cash, they should be taxed only on the cash. 

For a lottery win, it is simply money coming in and should be treated like all other sources of income.

[© tweed]

inheritance lower/lottery the same

The inheritance tax is a bad idea.

[A18]

Why don't we declare bank withdrawals income?

Because you already own that money.

For inheritance, money should be taxed and property should not.

Um, rich old people will just put all their money in assets so they can pass on their wealth tax-free.

[ATFFL]

Why don't we declare bank withdrawals income?

Because you already own that money.

For inheritance, money should be taxed and property should not.

Um, rich old people will just put all their money in assets so they can pass on their wealth tax-free.

And you have a problem with this why?

[A18]

I don't, but why not just repeal the tax?

This would be the equivalent of only taxing dollars, while everybody conducts commerce in euros.

[dazzleman]

Being hit by a drunk driver is pretty random, too.  And the lottery has a guarantee that it can be collected if you pick the same numbers as they do.  I'm looking at it as a completely black and white situation.  In both insurance cases and with the lottery, you give them money and if something specific happens, they give you a huge load back.  It's up to the lottery commision/insurance company to decide what has to happen.

I really don't buy into your argument at all.  Insurance provides financial protection against certain specified events, and insurance money in theory is to cover the cost of those events, and usually not fully.  The lottery is based on a contrived picking of numbers, and there is no pretense that lottery earnings are anything but massive amounts of additional income.

[dazzleman]

I understand your arguement and I see how mine is flawed but I still really don't see the lottery as an income. That's all I can say at this point.

We'll have to agree to disagree.  When you have a check for $1,000,000 or whatever the amount is arrived every year, believe me, it's an income.

[Moooooo]

I disagree.  Lottery winnings should definitely be taxed as income in my opinion.  There's no reason to give people who win the lottery a free pass when working people are taxed.

Inheritance is a bit different, since it was already taxed at the time it was earned.  Truthfully, I am ambivalent about inheritance taxes.  

On the one hand, the money has already been taxed, so it is in a way double taxation on the same money to tax it again when the holder of the money passes.  But the money does represent a form of income to the person receiving it.  I think the right answer on inheritance taxes is to tax only large estates, with the amounts indexed to inflation, at a low rate.

Sounds good to me.

[jokerman]

Taxes on wealth gained by luck (including the luck of being born into a wealthy family) are some of the most important taxes we have.