The terrible, awful, horrible day that the VAT went up

So maybe you didn’t feel it where you are, but today was the day — and they’ve been building up to it for the whole week that we’ve been in the UK, with sales urging people to come out and buy before it happened — that the VAT went up from 17.5 percent to 20 percent.

Guess what — I didn’t feel it, either.

There are several things that it’s taken some time to get used to here in the UK:

  • People driving on the left. This is maddening when you’re riding in a bus. And I’ve almost been hit from behind by buses several times walking along a road too close to the curb, with the road on my right (you expect to see traffic oncoming, but it sneaks up behind you — and is really close, because the lanes are so narrow).
  • The fact that tips aren’t expected. We made friends with a barman from Sri Lanka in Greenwich (a really nice guy), and he explained that they don’t get tips. We left him one anyway. But it’s really weird to leave, say, 15 quid for a bill of 12 pounds 52 pence, and have the server chase you out of the place trying to give you change. It happens time and again.
  • The fact that you NEVER feel the tax, no matter how high it is. That’s because it’s built into the price of the things you buy. If something is listed as 99p, and you give the clerk a pound coin (and why is it we haven’t had a dollar coin, or two or three dollar coin, catch on in this country? they’re so convenient), you get back a penny.
  • The fact that I’m in a country where the conservative party is raising taxes (OK, technically it’s a coalition government), and the dominant party of the left (Labour) is griping about what a terrible burden taxes are on ordinary families.

But both The Times and The Guardian are going on about this big, monstrous, huge increase. To which I say, who crosses the street to get a 2.5 percent discount on anything? I mean, really? This increase would amount to 25 p on 10 pounds. Or say you spend a thousand pounds on something — which is a lot more than a thousand dollars, mind — what’s the increase in tax? Twenty-five pounds. Like you’re going to worry about that if you can afford a thousand. (Oh, and by the way — that 600 pounds a family The Times predicts is on families that make 70,000 pounds or more. The burden is much less on median incomes.)

All that aside, the most amazing thing, the thing hardest to get used to, is that I’m in a country where the government has decided to deal with the deficit by — now get this — cutting spending and raising taxes. Of course, back home, the recent huge compromise between President Obama and the Republicans was to raise spending and lower taxes. That’s how we deal with deficits in the U.S. of A.

Riding through London on the magnificent Tube — which as far as I’m concerned is one of the marvels of the world, a testament to the ingenuity of Man — and asking directions from the helpful bobbies (“just 200 metres more on your roight, mate”), reading the extremely clear directions on where the buses that come every few minutes go, or going to the fantastic museums and paying nothing (except a few pounds voluntary contribution now and then), I personally feel that the tax I’m paying is one of the great bargains of all time.

And I’m wondering how well I’ll adjust when I get back home to a place where folks don’t want the gummint doing anything, ever, if it’s going to cost a penny more…

No, folks, I’m not a convert to socialism. I worry about the burdens of the welfare state, and I know that increasing taxes too much can have a nasty cooling effect on growth. But I have enjoyed some amenities here that seem more than worth the taxes I’ve paid here. All I’m saying.

122 thoughts on “The terrible, awful, horrible day that the VAT went up

  1. Kathryn Fenner (D- SC)

    Used to be, and maybe still is, that if you saved receipts on items subject to VAT that you were taking with you, as opposed to consuming in country, you could get a refund–there was an office at the airports with the paperwork.

  2. William Tucker

    How many people in the US state “12 dollars, 52 cents” or “12 bucks, 52 pennies” when it’s easier to read and write $12.52. I believe they have the same usage over there. The use of quid, pence, pounds, etc… is just annoying.

    Yes we all get it, this week you’re getting to pretend you’re a blue-collar British working stiff. It reminds me of going to a Mexican restaurant and sitting next to Jane Doe and all of a sudden she thinks she’s Juanita Rodriguez and has to try to impress the minimum wage earning waitress by ordering and tries to carry on a conversation in Spanish… when in reality the waitress probably grew up in Cleveland, and doesn’t know any more Spanish than what’s on the menu.

  3. Emerson

    Great blogs Brad. Makes us want to be there. We envy you.

    In Europe tips (called “service” posted on a menu or in a shop) are often included in the price of the meal or service in addition to the VAT. A really good UK tip when service is not included is 10%. In France, look for “service compris” at a restaurant or store where tipping is rarely expected. In Australia, there is no tipping because the service workers are paid,by law, a $15 wage. It’s always acceptable to leave several small coins on the table that were given as change anywhere or something more substantial in a posh restaurant.

    Visitors to the UK and the Continent can get a refund of VAT paid if they show up at the airport VAT office with receipts for goods you’re being back to the US. Get to the airport early.

    Taxes are a lot in the UK, but, as you say, taxpayers get a lot in terms of great health care, excellent public transportation, and other services that we do not pay for and do not get in the US.

    When you get back to the US, write a blog on how you think an Englishman feels when visiting the US and expecting to find the government services he has in the UK.

  4. Doug Ross

    If you like giving 20% of your money to the government, you’re gonna love it when it’s 30%.

    Are the Brits expecting to get 20% more/better government for the 20% increase in the VAT?

    What else from would you expect from the nation that invented the phrase “on the dole”?

  5. Ted D Mauro

    I must admit I love the United States so much and nothing is like home however…You can see how negative labels are – they don’t drive on the “wrong: side of the street but a different side. When people have their basic needs taken care of they are not lazy they become happier and less panicked- they refuse a tip because they have pride in their work (something money can’t buy nor status) Taxes are part of the price if you put them in it as a separate line or in the total, the consumer pays them both. “Socialism” can’t be confused with clean neighborhoods, affordable healthcare, happy public employees and safe streets these things are just good and right- It is call the “general welfare” and America should have more of it because it is worth it to everyone. And of course, we will have to get less services and pay more taxes to get out of this debt starting with thopse who don’t need the service and can afford to pay more.
    The lack of a viable public transportation system is a problem however some would say that the car is that in the US- the problem is the cost is high for the poor and the wealthy do not get a better highway and the environment suffers. We have good system in our cities but your right the Tube is one of the best 
    We should have a $1 dollar coin, and $3- its cheaper than paper (doesn’t wear out) and I find that people spend them faster (maybe since coins are considered “not real money” or since they don’t go in their wallets to get it out?) I wonder why we have had such bad ones for so long but they have been and are awful (Nothing like those heavy small coins to make you feel like the King of the World!)
    I am so happy you are seeing and living in another country – something that more Americans should do since as Voltaire said “traveling expands the mind” and the lessons from our Anglo brothers are the most valuable to us in our country as any

  6. Steve Gordy

    This discussion reminds me of something I read years ago, i.e., that the difference between Reagan and Thatcher was that Reagan was all Hollywood, all feelgood in his approach to government finances. OTOH, Thatcher was prone to “sit up straight and drink your milk” lectures to the British public. That difference in styles has persisted to the point that no Republican dares suggest that, to deal with deficits, both tax increases and spending cuts are needed.

  7. Doug Ross

    Seriously, aside from TV shows and gossip about the royals, what has come out of the U.K. in the past twenty years that would cause one to think of it as a major player in the world?

    It’s so silly to read people’s comments about “Oh, if we just had England’s transportation system” or “If we just had Canada’s healthcare system”. It’s fairy tale thinking. Attempting to do either of those in the U.S. would have unintended consequences that the “pie in the sky” thinkers never consider.

    You want England’s transportation system? Are you willing to accept England’s population density of 660 people per square mile versus 80 in the U.S.?

  8. Brad

    In a word, Doug, yes. My greatest dream for Columbia is for a subway system, because I love me some subways. But I know not to expect that during my lifetime, because of said lack of density.

    We can’t even seem to keep our inadequate bus system running because people (about half the people, anyway) have an absolute conniption over increasing OUR tax by a lousy 1 percent. Much less a bus system where the buses come every five minutes and there is COMPLETE information on what bus to take where at every stop, some of them updated electronically in real time.

    Today, we went from Oxford to Woodstock to do a bit of sightseeing. How did we get there? We walked a few blocks and took a bus that cost 5 pounds for a round trip.

    Oh, and speaking of pounds, William — I always say it “X pounds, Y pence” in order to remind myself. Otherwise, I’d see “12.50” for lunch and think “that’s not bad” — and it wouldn’t be, in dollars. I need to remind myself, in order to keep the spending somewhat in check.

    And Kathryn and Emerson — I appreciate the advice, but I consider the VAT a bargain in terms of paying for the services I’m enjoying here. If the Brits have to pay it, I certainly think I should. But I’m funny that way; I realize not everyone is so phlegmatic when it comes to taxes.

  9. Brad

    Not that I’m particularly phlegmatic in the normal course of things. I often get that and “sanguine” confused. So I just went and looked them up. I suspect that I’m actually melancholic. Although when it comes to taxes, I’m phlegmatic (while many of my SC brethren are positively choleric on the subject). In any case, it’s not as precise a system as Myers-Briggs

  10. bud

    We can’t even seem to keep our inadequate bus system running because people (about half the people, anyway) have an absolute conniption over increasing OUR tax by a lousy 1 percent.

    At least Brad didn’t call it a one penny increase. Let’s try this again with a provision to repeal the hospitality tax. I’ve seen others suggest that. Why is city council so unwilling to at least consider that approach? Many folks, including me, absolutely dispise the hospitality tax. Seems like a pragmatic approach to me.

  11. Doug Ross

    Maybe I have the endpoints wrong, but it looks like Oxford to Woodstock is about a 10 mile trip one way. And you paid US 7.50 for that?

    How many Columbians would pay $7.50 to ride a bus from the Main Street to Sandhills Mall?

  12. Doug Ross

    And say you have a family of four – would it be worth it to pay $30 for the same ride?

    What the bus system really is in Columbia is a taxpayer subsidized giveaway to people who would never pay the true cost.

  13. Mark Stewart

    What bothers me about a VAT is the hidden nature of it. As you said, the prices are inclusive of the tax. So people don’t really think about the taxes paid.

    An add-on sales tax at least gives people an opportunity to think about their tax burden (as they can with income and property taxes as well). In Europe many taxes are hidden away. We seem to be headed that way, too, in America and it’s not a positive trend.

    Columbia will never have a subway system. Ever. It wouldn’t be a bad thing if people began to contemplate what benefit light rail might be to the area, However. As Doug said, as long as the population densities remain low nothing other than a basic bus-based transit system makes any financial or societal sense. Sorry, Doug, I know you really don’t even want to help pay for this, but your density point is spot-on.

  14. Phillip

    @Doug, depends how you define “major player.” If we accept the neocon definition (which I would not expect from you), maybe Britain doesn’t quite measure up to the US, with our military global footprint. But even so, by most rankings of military might, the UK still comes in somewhere in the top 6 or 7 in the world.

    They are of course experiencing economic turmoil and grappling with deficits, but they are hardly alone in this. Standing back from the current crisis for a larger perspective, the UK is also somewhere around the 6th largest economy in the world, with many of the world’s most significant companies.

    Then there are the intangibles: in literature, in music, in the visual arts, Britain continues to contribute mightily to what might be termed “humanity’s conversation.” If I think of the most significant writers, composers, artists of this era, a great number of these would be British.

    I just saw “The King’s Speech” and the film reminds us at the beginning that not so long ago, the British monarch essentially presided over one-quarter of the world’s population. For all of its current challenges, the UK seems to have made a successful transition from “THE dominant world power” to “ONE OF the handful of most successful, productive, important nations in the world.” Will America make that transition as successfully in the century ahead? I wonder what is to be feared more: America no longer being the unquestioned dominant power of the world, or what internal fearful, reactionary, and demagogic politics may emerge in America in order to prevent that change in status by any and every means necessary?

  15. Doug Ross


    I’m talking about things like high tech, medical research, etc.
    Other than Ricky Gervais, I’m not sure what else they’ve exported that has a whole lot of value. 🙂

    As a corollary to your fears, I would suggest that the inevitable downfall of the United States will be due to a similar path to Great Britain’s : overextending its reach into other areas of the world, high taxes and increased government dependence, and significant increase in immigration causing great change to the social fabric of the country.

  16. bud

    The development of two ways to calculate longitude reliably cause the rapid, vast expansion of the British Navy and merchant fleets in the 18th century, which made the Empire possible.

    Are you suggesting the British Empire was a good thing? Seems like it was an imperialistic endevour that belongs on the scrapheap of history alongside the secession of the southern states.

  17. Brad

    I wasn’t suggesting good thing or bad thing. I was talking about what was, and is, and the scope of British influence that every thoughtful person in the world acknowledges, however they may FEEL about it.

  18. Kathryn Fenner (D- SC)

    If I didn’t have to have a car, I’d gladly pay $7.50 to get to Sandhills, in the unlikely event I actually wanted to go there.

    I did not have a car when I lived in England and got around fine. I did not have a car the first two years I lived in Chicago, and rented one if I wanted to go to the woods on weekends–now I could do a Zip Car.

    I did not have a car the first semester in law school in Atlanta, and I suffered mightily.

    So yes, Doug, I’d pay a lot more taxes so everybody can ride and everybody can have decent health care. If we had a decent transportation system, we could the kind of density that preserves wild spaces and allows people to walk everywhere.

  19. Brad

    Amen, Kathryn.

    As for Doug’s “a taxpayer subsidized giveaway”… I’ll set aside the problems with the thinking that could produce such a sentence, which is based in thinking of society as these people over here vs. those people over there (you know, “I don’t want THEM taxing ME to provide something for THOSE people”), rather than thinking of a civilization as being something that we all build together… and merely say, yep, it’s a “giveaway.” If the roads are a giveaway. And the parks. And the libraries. And police and fire protection. And everything else we support with our taxes rather than user fees. Because it makes sense to do so. And building a proper, comprehensive, efficient, reliable system of transportation fits perfectly well into the category of those other things.

  20. bud

    Ok, lets tax everyone in order to build a great bus system in Columbia. Most people understand that. Most people actually support that. But what Doug and I try to point out over and over and over and over and over again is that our taxes don’t alway go toward paying for necessary functions like the bus service. Even the proposed “penny” increase initiative included a bunch of other stuff like widening roads. For gosh sakes Brad why is this so difficult to understand. It’s like you’ve built up a Kevlar barrier to prevent your brain from understanding why the “penny” tax didn’t pass. Folks want honest, simple, fair and reasonable taxes for legitimate programs. Calling this a “penny” increase was, for starters, a completely dishonest and disgusting why of framing the issue. Treat people like adults and call things what they are. And don’t complicate issues with a bunch of add-ons like the roads. Folks don’t want all this complicated crap. That’s why the tax failed. It simply did not pass the smell test. It was too broad and didn’t address the glaring problem with the city’s extremely unpopular hospitality tax for junk projects like the Township. The only mystery is why the proposal came so close to passing.

  21. Doug Ross

    “, “I don’t want THEM taxing ME to provide something for THOSE people”),”

    Wasn’t that the argument The State editorial board used against using tax dollars to build a minor league baseball stadium in Sandhills?

    And there is a big difference between providing parks, libraries, and roads that are available to all versus providing subsidized bus service to a SPECIFIC group of people using revenues from people who will never have any use for the service. Can’t you see the difference between the two?

    I already subsidize the availability of libraries, parks, police, roads, etc. to the citizens of Richland County based on the fact that I pay more in property taxes than probably 75% of the residents. But at least I can take advantage of those services. A subsidized bus service serves only those people who NEED to ride the bus or WANT a cheaper alternative that is paid for by someone else.


    Would you pay $15 to go to Sandhills and back with your husband? How many times a week would you make a trip like that?

    There’s a big old world outside the five mile radius of USC/State House. The vast majority of people living in Richland County have no use for a bus system.

  22. Doug Ross

    And I might even be willing to support subsidizing the bus service if the subsidy was relatively small, say 10% of the total cost as compared to the price paid by riders.

    I could be wrong, but I would guess that the bus riders don’t even pay the majority of the true cost.

  23. William Tucker

    Does Kathryn realize that not everybody wishes to live in a highly urban area? Would buses go out to suburban areas around Lexington or the Northeast?

  24. Mark Stewart

    Most people call the things society needs “infrastructure”. I am alarmed at the world view that enables some people to believe that they pay the true cost of all that they use AND subsidize the things that other people use. Locally, it’s hard to fathom how someone could question a public transit system even as they drive on public roads. That’s myopic in my view.

    We invest in infrastructure to leverage our individual efforts and investments. Well, at least we should – South Carolina’s record on this has never been too forward-thinking in this arena. Without contributing to the things that are good for society (like schools, transportation systems, utilities, etc.), how do we expect to obtain what we think are individually good for ourselves and our families?

    That’s the big thing the British Empire brought to the world – they built systems. The English invested in infrastructure. They benefited from colonialism; but then so did the colonies. They were left with a legacy that they could capitalize on.

  25. Doug Ross


    There are cities that can support a public transportation system. They are normally quite large and dense and have all sorts of businesses in the area served by the transportation.

    Columbia is not that kind of area. And building a system in the hopes that Columbia will somehow transform into Atlanta, New York City, or London is a waste of resources.

    First we need to prove that there are enough riders to support the system. THEN we can talk about how to fund it.

    In Columbia’s case, the users of a public transportation system are limited. It would be unbelievably expensive to develop a system that would serve all of the Midlands to the level that people would give up their cars.

    We have the bus system we deserve. In fact, based on what we know now, we have MORE than we need.

  26. William Tucker

    I wonder if Kathryn and her husband would be willing to participate in a little experiment. Have them both turn over their keys to their cars for a month, only use public transportation and come back in 30 days and report that their lifestyle is much better by using just public transportation.

  27. Mark Stewart


    This is South Carolina. Do you not realize how many poor people there are? Do you not sit in horrendous rush hour traffic (to the population of the region)? Do you never wonder what kind of decent bus based regional transit system could do for all commuters and students – in addition to the economically compelled rider base?

    Bud is all torqued about adding sidewalks and bike lanes and you just seem adrift in suburban denial. Society by its very nature is a combination of ever subgroup. We don’t need to provide services based upon individual need; but we do need to provide services to assist each subgroup.

    You get good schools and cheap property and income taxes. Other groups should have the opportunity to get around this metro area. Its a need; people ride the bus because they need to – whether to work or school. Lets give them that basic opportunity.

  28. Brad

    William, you don’t get it — Kathryn and husband couldn’t rely on public transport in Columbia without a significant drop in quality of life. That’s what we’re talking about here. In London they could (in Oxford, too). In New York they could. In Columbia they can’t. That’s why we need a better system.

    And Mark, I’m with you — but as far as providing transport to those who need it are concerned, it’s not just for them. WE need them to get to their jobs at hospitals and stores and everywhere else. It’s part of the economic life of our community. This is a central concept in communitarianism (the kind I like, anyway): It’s not about what this person or that person “gets”. It’s about what all of us need. And all of us need for those folks to be able to get about.

  29. Doug Ross


    Are you telling me there is no traffic in cities with public transportation?

    I’ve spent plenty of time in Atlanta, NYC, D.C., San Francisco to know that traffic there is worse than anywhere else.

    The vast majority of people do not want to use public transportation and Columbia does not have the ridership to support it. Simple as that.

    You and Brad want a transportation system for a fairy tale city that doesn’t exist. Brad envisions a Columbia that looks like 18th century London with men in top hats bowing to the ladies as they saunter from pub to apothecary to haberdashery. “G’day, my lady, shall we take the trolley over to Ye Olde Yesterday’s Pub for a dram of ale?”

    People left downtown Columbia over the past twenty years for a reason. There’s nothing there.

    Create the reason for the bus system to exist before you build it. Otherwise we end up with an Innovista-style bus system. Lots of grand ideas and an empty bus to take people to look at it.

  30. bud

    While we’re on the subject of what our community NEEDS let’s look at stuff we really don’t need. Do we really need the Township Auditorium? Do we need bike lanes that won’t get used? (Cyclists don’t use them because debris builds up in them). Do we need fancy signs to tell people how to get to the Township Auditorium? Let’s take a look at some of the crap we don’t need along with funding stuff we do need.

  31. Doug Ross


    And do you know how many “poor” people there are riding the bus to get to work or to the hospital? If that is the problem we are trying to solve then I would propose two solutions:

    1) Make the employers of those people subsidize the bus system

    2) Offer taxi cab vouchers to poor people who need to get to medical treatment. That would be MUCH cheaper I would imagine than running a multi million dollar bus system.

  32. bud

    Here’s a story for all you folks who, against all logic, still believe the rich actually ‘earn’ their wealth:

    Bristol Palin, who bought a five-bedroom house in Maricopa, Ariz., now has a job offer to go with her new digs.
    USA Today

  33. William Tucker

    No I get it, but wonder why it’s even being discussed. Why even bring up things like mono-rails, subways, etc… in Columbia when the bus system doesn’t even work and won’t work no matter how much money is thrown at it. We might as well discuss putting a bus system like Columbia’s in rural Kansas. Actually the ridership numbers would probably be about the same.

    If someone wants or has to live using public transportation, why would they come to Columbia? Columbia, like 99% of cities it’s size and layout, will never have a good public transportation system. The overwhelming majority of the people will not use it. Until we have a centralized population where people move back into the city there’s no sense even talking about it.

    Unless the people whining can come up with a solution, all they’re doing is whining. If these people want a subway, move to New York or Chicago. If they want to drive, Columbia is your city.

  34. Phillip

    Gas is now $3 a gallon, which has made us all sit up a bit. What turn would this debate take, I wonder, if and when gas hits $4 or possibly $5 a gallon?

  35. William Tucker

    Comparing Columbia to London/New York City is comparing apples to oranges. The logistics and demographics aren’t even close to being the same. Is there a parking problem in Columbia? Is there enough ridership to support a bus system or other public transportation system that will cover the entire Midlands? Would a strike by public transportation workers tomorrow shut down the city or any business? No… no… and no.

  36. Kathryn Fenner (D- SC)

    Y’know, I was talking to a woman whose son works in retail and has to forego medical care b/c there’s no health insurance (YET!). The hospitals warn that if the bus service shuts down, their low paid workers won’t be able to get to work.

    If we all paid what our goods and services really cost, instead of externalizing the costs onto the backs of the powerless–those who work low paid jobs or are overseas or children….if we all paid what our goods and services really cost, we’d be paying a lot more, but we’d have a functioning transportation system and a cleaner environment. There’s be some serious corrections in the economy, but given that the marginal propensity to consume is inversely related to income levels (the less you earn, the greater the percentage of your income you spend), increasing the spending power of those who make less would most likely IMPROVE our economy.

    How much people make is not inscribed in stone or immutably written by the Invisible Hand of the Market; it’s all about how much government allows businesses to externalize costs!!

  37. Steve Gordy

    It will be highly interesting in twenty years when traffic in Lexington County is gridlocked from border to border. One wonders how the powers that be will handle that one.

  38. Doug Ross


    We can start paying full price for goods and services when we deport all the illegal immigrants who hold down the wages on low skill jobs. But then we can also pay full price when we eliminate unions that cause price inflation by forcing above market salaries.

    The whole issue comes down to one segment of the population who think the ideal solution to any problem is to take money from someone else to give to a third party. There’s no honor in that.

  39. Mark Stewart

    All – its a vision thing. Where do we want to see Columbia be in 40 years? By Columbia I mean the region spanning from Leesville to Camden, Chapin to Gaston. Columbia vs the ‘burbs is just more them vs us thinking.

    I for one – and I’m hardly alone in this – am not satisfied with our progress to date. We need to envision the future. If someone is content to keep things as they are today, then you are an anchor and an impediment to growth and economic vitality.

    Who said anything about being a world city? I would simply like to see the Midlands become the dominant region of the state. That’s an achievable goal.

  40. Kathryn Fenner (D- SC)

    I disagree that unions force above-market rate salaries. They redress the bargaining disparities Big Business enjoys.

  41. bud

    The whole issue comes down to one segment of the population who think the ideal solution to any problem is to take money from someone else to give to a third party.

    That perfectly describes the situation with inheritance. We have folks who basically steal money by taking huge corporate bonuses from companies that ultimately fail (ENRON, Goldman Saks) then turn around and pass it down to their children in one form or another. That’s why the inheritance tax should be very high on anything above a million dollars.

  42. Doug Ross


    Do you have any examples of that inheritance scenario happening?

    Isn’t the money earned taxed at the highest rates in the first place?

    Your million dollar level will impact millions of Americans who work all their lives and save their money wisely.

    If you have a problem with Enron crooks, there are already laws in place to punish them.

    Stop being jealous of people who have money. The vast majority of them earned it.

  43. Doug Ross


    Columbia can be a dominant region in the state without public transportation.

    It requires creating businesses that bring in highly paid workers.

    Compare Columbia to the RTP area. There’s no real public transportation there (plenty of traffic though). Wouldn’t you take an RTP economy here without the public transportation? I sure would.

    We should be trying to get Google to build in Blythewood as rumored. Trying to attract bio-tech and green jobs.

    And stop relying on the legislature to fund boondoggles like Innovista. They’ve proven they aren’t up to the challenge (no matter how many pizza shops open in the Vista to support Brad’s vision).

  44. Doug Ross


    Here’s a real world example for you. My wife’s grandfather built a manufacturing business from nothing in the early 1920’s in New York. He created hundreds of jobs over the years. When he died in the early 90’s, his net worth was in excess of $2 million dollars. You know what the tax bill was on his estate? $400K. For what? For building something out of nothing? For paying taxes for 70 years?

    Inheritance taxes are just delayed socialism. “It’s not fair you made money during your lifetime. Give a big chunk back to those who weren’t “lucky” like you”.

  45. William Tucker

    @Kathryn – Is this why a college friend of mine made $26/hr. as a union member up in Alaska who did nothing but change light bulbs in a cannery?

    Or a cousin of mine who works for a large government nuclear facility (not power) that has to take a flashlight with him when he goes to the bathroom? The reason being the lights have been out for nearly 3 months and nobody is allowed to change them except for the union represented electricians.

  46. William Tucker

    @bud – I’d love you to go to the Midwest where thousands of multi-generation family farms went under because the current family members could not pay the inheritance tax on the land and equipment passed down to them. Have you priced a piece of new farm equipment lately? Tractors can easily fetch in the neighborhood of $300,000 and combines with a header are close to $250,000. The average family farm can easily have a million dollars just in machinery. Then you want them to pay taxes on the value of the land.

    Inheritance tax is nothing but double-dipping. It’s as obscene as is property tax. Why should I pay taxes on something that I’ve already taxes on when I initially purchased it.

    I can’t help but see that you are against anything you don’t have or not willing to work for. Hard work never killed anyone, but liberals sure are trying to make sure the next generation will not have it.

  47. William Tucker

    Does bud really believe all wealthy people come from crooked executives? Does he not believe that people can earn wealth from hard work?

  48. Mark Stewart

    Doug, no, I don’t to see Columbia become another RTP (fat chance anyway) because there is no there there. Urban centers have proven to be good for people in many ways. The Triangle doesn’t have that feeling of a center. How about Austin as a model instead? The point is simply to get going – to make regular strides. One foot in front of the other…

  49. Doug Ross


    Seems like a whole lot of people moved to RTP area even though there was no “there” there. I spent most of 1995-2000 commuting to Raleigh and there’s no comparison to Columbia. They’ve got us beat in every area: technology, arts, sports, outdoor activities.

    I don’t really care what Columbia becomes – it is what it is because of what the downtown offers. It’s less than what it was 20 years ago when I moved here because people just didn’t want to go there any more. A public transportation system will not make a bit of difference in what Columbia looks like 40 years from now. It’s jobs, jobs, jobs. And we can’t forget the stranglehold USC has on anything happening downtown. If USC ain’t for it, it ain’t happening. And by “for it” I mean “getting money out of the deal”.

  50. bud

    You know what the tax bill was on his estate? $400K. For what? For building something out of nothing? For paying taxes for 70 years?
    – Doug

    His heirs received $1.6 million. That’s true whether or not they did a thing to run the business. What’s unfair about that? Seems like free money to me. That’s $1.6 million more than most folks get in inheritance. Besides if that money is not taxed my taxes will have to be raised. Why would I support a system that would raise my taxes?

    “Inheritance taxes are just delayed socialism.”

    And the problem is? Socialism is not a dirty word to me. There is a great deal of socialism in this country and virtually every country in the world. Beats unregulated capitalism.

  51. Doug Ross


    Was the original $2 million he earned taxed?

    Why not just take it all. I guess that would be the “fair” thing to do, right?

  52. William Tucker

    @bud – Why would your taxes increase because Doug’s grandfather died? Besides that money has already been taxed. Would you prefer we start taxing on bank account balances? If you have $100,000 in a savings account, should that be taxed every year? According to you, it should.

    And to me, “socialism” is one of the most vulgar words in the English language. This country was founded on capitolism. If I work hard and make a decent living, why should I support someone who sat on his ass doing absolutely nothing but running to the mailbox expecting a government check? Where is the reward for working hard if I know the harder I work the more I’m going to be taxed to fund the slugs of the country.

  53. Brad

    Re the inheritance tax — I really don’t see how any of y’all can have such black-and-white opinions on the subject. I’m ambivalent about it. I respect someone’s desire to leave something to his family. I also don’t see why people who didn’t lift a finger to earn it should be wealthy from the sweat of their ancestors. William, unintentionally, gave one of the best arguments FOR a hefty estate tax when he spoke of those “not willing to work for. Hard work never killed anyone, but liberals sure are trying to make sure the next generation will not have it.” His “liberals” bugaboo aside, it’s the heirs who want to get something without working for it. THAT I don’t respect, while at the same time respecting the desire of the deceased to give it to them.

    I don’t see how any of y’all’s absolutes — from Doug and William thinking people are entitled to this money to Bud thinking all wealth is stolen (or something not far off morally from stolen) — make any sense.

    Why is it that people think in absolutes — that ALL wealth is earned, or that ALL wealth is undeserved? (Those two beliefs are crucial to the madness of left-vs.-right partisanship, which is one of the reasons I decry it.) The world isn’t that simple, as anyone who pays the slightest bit of discerning attention can attest. Nor is the estate tax.

  54. Doug Ross

    All wealth IS earned. Start with the premise that what you get is yours and doesn’t belong to the government first. Then the government takes its cut.

    I believe both William and I have made the point that the wealth was taxed in the first place so by what right should it be taxed again? Why create some arbitrary amount that defines just how much you can pass on to your heirs before it gets taxed? Some things are black-and-white stupid. That includes the estate tax.

    As for absolutes, are all lives the same or is there a difference between a fertilized egg and a baby?

  55. William Tucker

    Brad, some people work hard their entire life so their heirs won’t have to. Do you wish your kids or grandkids to have to work as hard and go through the same financial struggles you’ve had to? I grew up with people like that, mostly farmers who worked 7 days a week so their sons and daughters wouldn’t have to and wouldn’t have to worry about whether or not they’ll be able to provide for their families. I knew farmers who lived like paupers to later find out that they had millions in the bank to be distributed to their sons and daughters. That was their goal, that’s what they want to achieve in life. Why is the state getting involved in personal last wishes? Why are they saying that an inheritance (which has already been taxed at least once in it’s creation) should be taxed just because the names have changed on the bank accounts or property titles?

    If you give your kids $100 for their birthdays, should they have to pay a tax on it? They didn’t earn it, you gave it to them. Gift or Inheritance… same thing.

    Where does the money for this inheritance tax go? You take money from surviving family members “who did not earn it” and give it to strangers “who did not earn it”. What’s the sense in that? Does bud just feel that he’s as entitled as Doug is to Doug’s grandfather’s estate?

  56. William Tucker

    Brad, having come back from England… how do you feel about the Royal Family? The people of Great Britain are taxed to pay for the expenses of this family for nothing more than being born into the right family. What has Prince Charles or his sons done to deserve to be living in such luxury?

    If they had an inheritance tax in England, this Royal Family wouldn’t be living in palaces across the country… they’d be living in apartments and 1000 sq.ft. houses like everyone else.

  57. Doug Ross

    Here’s a good example for the stupidity of the tax laws.

    Let’s say I work hard all year and earn $50,000. I pay my taxes on that $50,000. Say that leaves me with $40,000. Now, if I happen to be thrifty and save $20,000 of that money in the bank, I will also be taxed on the interest I earn on the $20,000 during the year. And then at the end of the year, I say to myself “My son is a good kid… I’m going to give him $15,000”. Guess what? The amount above $13,000 is taxed AGAIN!

    ABSOLUTE stupidity.

    Even the IRS website admits that their rules are too complex for the average person. Here’s a direct quote from the web page explaining gift taxes:

    “For further guidance, we strongly recommend that you visit with an estate tax practitioner (Attorney or CPA) who has considerable experience in this field. ”

    The tax system in the U.S. is THE biggest barrier to economic progress. It is complex, arbitrary, unfair (where some people pay no federal taxes and others have enough wealth to avoid paying them).

  58. SusanG

    Re: the inheritance tax. One point that hasn’t been made is that much of the inheritance in large estates is of capital gains on which taxes have never been paid. So the question of basis is a very important question in inheritance tax — so for those against inheritance tax because it’s “double taxation”, are you for the taxes being paid on the capital gains — or at least the persons inheriting the wealth inheriting it at the original basis amount? Otherwise, especially on mid-size estates, a person can easily inherit money that never is taxed at all.

  59. bud

    Of course the world isn’t simple. And I don’t advocate for a 100% inheritance tax. But to suggest it’s good for ME to eliminate the inheritance tax altogether is, to borrow from William, pretty vulgar. Why in the world would I support something like that when it’s going to cause my taxes to go up? To argue that it won’t is completely illogical.

    My proposal is pretty simple. Let’s exempt the first million dollars in inheritance then tax the remainder the same as normal income. If you work at a job and make $2 million dollars the entire $2M is subject to tax. Why should inherited money be any different? (Actually I’m suggesting the first million actually is treated a bit differently).

    Brad is totally correct on this, William makes the point about as crystal clear as it can be made, someone who inherits money DIDN’T EARN IT. Someone else did.

  60. Brad

    And while I GET what y’all are saying about “double taxation,” that’s a bit dodgy. The individual who was taxed when he first received that income is NOT being taxed again. The people who are inheriting it are being taxed, and they have never previously been taxed on that money.

    The idea is to tax income. It’s income when the first guy got it (I’m avoiding loaded words such as “earned” it, even though that would be a fine way to say it), and when others get that same money (and of course, speaking of “same money” is also a bit dicey, money being fungible and all) for the first time, that is now income for THEM, and is therefore taxed.

    No, the only argument in favor of keeping inheritance taxes low is the wishes of the deceased. The double-taxation thing doesn’t wash.

    Oh, and to change the subject slightly — Doug is always complaining about how contradictory and inconsistent, etc., our tax system is. That is consistent with Doug’s total frustration with representative democracy and the deliberative process. The tax system is the product of many thousands of separate legislative decisions made among, over time, thousands of lawmakers representing uncountable constituents. As human beings do, they have made untold numbers of compromises so that each might get something of what he was trying to achieve in the legislation. That’s how representative democracy works. You will NOT get something satisfying to a single individual looking at it from his viewpoint of what he thinks makes sense. This is frustrating to me, of course, because I’m a guy who thinks of systems and wants them to make sense. But I’m at peace with the fact that I, personally, will never be wholly satisfied with the result, unless I, personally, get to be absolute despot. Which I would love, of course (THEN you’d see some proper action, mate!), but I’m not holding my breath.

    I still agitate constantly for comprehensive tax reform in South Carolina because over time, the result of all those compromises has produced SUCH a mess, and I believe it does hold us back. But I know that even the best result possible from comprehensive reform would still be in many ways unsatisfactory to me (and certainly to Doug), because the people doing it would not be thinking, as they drafted each detail of the plan, “What does Brad want?”

    This is the price of living in a republic.

  61. Doug Ross


    Half of Americans who file income taxes pay zero now. Is that fair?

    I would welcome a system where every person paid the same percentage of every dollar earned. No deductions, no exemptions (why should a couple with three children pay less than a couple with no children)? Another stupid tax law.

  62. Doug Ross

    > The people who are inheriting it are being taxed,

    Wrong. The person estate is being taxed. It is not a tax on the receiver. They tax the total amount minus whatever the exemption is. They do not tax the amounts given to individuals.

    And the reason the tax laws are a mess is not because of representative democracy but due to politicians using the tax code to reward lobbyists or else attempt to do social engineering via the tax laws. Take from A to give to B and ensure that the politician stays in office to get his cut.

  63. Doug Ross

    And you can’t be for an inheritance tax and then also be for some arbitrary amount where it kicks in. Either the inheritance should be taxed or it shouldn’t.

    I remember when Strom Thurmond died – his estate had moved nearly all of his assets into trusts that allowed for the avoidance of paying taxes. It’s been a long time but I think I remember his estate being around $100K. You think that’s even close to what he was actually worth?

  64. William Tucker

    @bud – How did you come up with the million dollar limit? A million dollars is easily reached in 2010 dollars.

    Do you know how many acres of land a farmer needs to farm to earn a living? 10x that for a rancher? What is the value of just his land? In either case a million dollars is easy to reach. Then add in the farmstead and equipment. Now you’re up well over a million dollars. This is all before we take into bank accounts, investments, or insurance policies. Should a family farm be required to sell the land homesteaded by earlier generations to pay off the inheritance tax? Do you think that’s right? Not everyone with an estate over a million dollars is a Wall Street tycoon living in a Four Season penthouse suite. Some work a lot harder than you or I ever have.

  65. William Tucker

    @bud and Brad – Both of you read half of my statement and used it as an example.

    “Where does the money for this inheritance tax go? You take money from surviving family members “who did not earn it” and give it to strangers “who did not earn it”.”

    This is what both of you are stating as fair. Why?

  66. bud

    Brad, some people work hard their entire life so their heirs won’t have to.

    So what is it Tucker, good to work hard or not good to work hard. On the one hand you find it repugnant to give people welfare checks. Yet on the other had you’re ok with folks inheriting tens of millions of dollars without ever lifting a damn finger to earn it. There is absolutely no logic in what you’re saying.

  67. Doug Ross

    And here’s the facts on the trusts from the Washington Post:

    “In 1989, when Thurmond had a declared net worth of $2 million, he began placing assets in trust accounts for his children, according to news accounts. Taylor said those estate accounts were separate legal instruments and were not included in Thurmond’s will.”

    According to Bud and Brad, we should consider Thurmond to be a thief for stealing tax dollars from the government.

  68. Brad

    Again, I don’t see what makes y’all so passionate about this. Seems to me an issue that can easily be argued either way, and is not a bit clear-cut.

    And Doug, I have to wonder at your dismissals of what bud and I said. There’s nothing wrong with bud’s suggestion of a threshold. Unless there is some gigantic ideological point at stake (and that’s the thing I don’t get, because I don’t see a critically important principle here), there’s nothing wrong with it. Seems like a rational way to come to a compromise between ideologues with incompatible positions. Of course, I haven’t the slightest idea where the threshold should BE.

    And as for your dismissal of what I said… come on. Is the “estate” a person? Is it someone whose rights or prerogatives we need bow down to? Of course not. All that matters is the people involved. And the only PEOPLE who can derive benefits from the money are the living.

    That was a weirdly technical, excessively legalistic, objection on your part.

  69. Doug Ross


    You said the recipients were taxed. You were wrong. A person receiving $50K from an estate gets $50K untaxed. It’s okay to admit you were wrong.

    Do you think it’s okay for my wife’s grandfather to pay $400K in taxes on $2 million while Strom Thurmond’s estate paid zero?

  70. Doug Ross

    Here’s what George Will had to say about the tax code a couple weeks ago. This mirrors my opinion:

    ” In George W. Bush’s 2004 speech to the Republican convention, he denounced the tax code as “a complicated mess” that annually requires “6 billion hours of paperwork” – now estimated at 7.6 billion. He vowed to “simplify” it. The audience cheered. Then he promised new complexities. There would be “opportunity zones” – tax relief for depressed areas – and a tax credit to encourage businesses to establish health savings accounts. The audience cheered.

    This is perennial mischief – using the tax code not simply to raise revenue efficiently (with minimal distortion of economic behavior) but to pamper pet causes, appease muscular interests and make social policy. Since 1986, the tax code has acquired more than 15,000 complications. “Targeted” tax cuts are popular complexities because they serve a bossy government’s agenda of behavior modification: You can keep more of your money if you do what Washington wants. The tax code, says Camp, “should not be a tool of industrial policy” or of “crony capitalism”: “Politicians should not pick the industry of the day.”

  71. Brad

    But I’m not wrong, Doug. Presumably the estate was taxed before the payout, right? So, just to keep it simple, let’s say the estate tax was 50 percent. So before the tax, that heir would have gotten $100 — now he’s getting only $50.

    So… how is it he hasn’t paid that tax? Because he didn’t have to fill out a form and write a check to do it. How is this different from withholding income tax from a paycheck? Just because you never held the money doesn’t mean you didn’t pay a tax.

    And if the amount the heir gets is NOT reduced by the estate tax — and yeah, it’s possible that I’m wrong on this, because I am not any sort of expert on inheritance law — then what are we talking about here? What’s the point of the discussion?

  72. William Tucker

    I see Big Brother is at work. Responses not fitting into Brad’s and apparently bud’s logic do not get posted.

  73. Doug Ross

    Uh, no, Brad. You are wrong. If Grandpa’s will says Johnny gets $50K (not some percentage), Johnny gets $50K untaxed.

    The point is that you think inheritance taxes set at some arbitrary level of “richness” are fine. I gave you a specific example of two people with the same size estate paying $400K and zero. And you try to make me out as some absoutist zealot for calling that situation stupid.

  74. Mark Stewart


    According to your logic, yes, it was fair that your father-in-law’s estate paid taxes and Strom’s did not. Strom effectively played the system to “keep” what he had “earned”; your father-in-law apparently did not.

    Yeah, I know, it’s not so fun to look at it that way.

    A famous architect once said “everything should be made as simple as possible, but not more so”. The Tax structure is always going to be complicated and multi-layered with taxes coming in all sorts of ways. That’s by design and the intention is good – to equitably spread the burden across all economic sectors. The problem really arises when more and more loopholes are added. Then, as with your complaints about the inheritance tax, some people really get pickled while others find, or buy, ways to escape tax free.

    There ought to be a happy medium where everyone pays something (based upon “profit”) across a wide range of income and ownership categories & economically beneficial transactions. That’s really the logical Fair Tax structure. It’s the exemptions that are really the root of everyone’s tax angst.

  75. Brad

    OK, Doug, so if grandpa wanted to leave me $50, and he did, and no taxes diminished that amount, so that I got the entire $50, then WHAT IN THE WORLD ARE WE TALKING ABOUT HERE? What’s my stake in the issue? Why would I ever care?

    I’m just not following at all. Anybody else feel my pain? Or at least, my confusion?

  76. Doug Ross


    I realize that any time we talk about real numbers, your head starts spinning… but just for once could you attempt to follow the logic. This is all based on your claim that the government doesn’t tax the individual who earned the money. You tried to claim that they tax the recipient. I just showed you that you that your statement was 100% wrong.

    It’s the ESTATE that gets taxed. What’s left is distributed to the heirs. The ESTATE = the earnings/wealth of the person who died and has nothing to do with the recipients. So what is left after the original income has been taxed is taxed again.

    Here’s an even simpler case that explains the double taxation.

    If John Doe wins the lottery on December 26th for $10 million and takes a lump sum on December 29, he will pay taxes on the $10 million. If he dies on December 30, the day after he gets the money, his ESTATE will be taxed on what is left of the $10 million after taxes above the exemption. So it’s taxed twice. Not his heirs, the money he received.

    It’s no different if you spread the earnings over 50 years. You are being taxed on what is left over after the taxes have been taken out.

  77. Doug Ross


    Okay, that’s all I need to hear. We don’t care about taxing the wealthy, just the wealthy who are unable to shield their assets. Got it.

  78. bud

    I’m with you Brad. I don’t follow Doug’s logic either. But maybe that’s point. The system is so complicated no one really knows what they’re going to inherit.

  79. William Tucker

    Why would the estate even be taxed once a person dies? Why wait? Brad, your house is worth $XXX,XXX dollars. please pay 30% of that now.

    It’s clear, Brad and bud have no financial understandings at all.

    Doug’s latest lottery example is as simple as it can be put.

  80. Doug Ross

    And on Brad’s blog, the only allowable “black-and-white” opinions are when you agree that the U.S. should have a single payer healthcare system, no abortions, and fight any number of wars on any number of continents.

    Hard to see where Brad’s “passion” regarding those issues is any different than mine towards taxes.

  81. SusanG

    Yes, the estate gets taxed, not the person who inherits. That’s the point. If Grampa leaves you $100 in his will, if there’s still money left in the estate after taxes are paid, you get the full $100. Not $50. Seems like a sidepoint to the discussion, though. I believe Doug’s point is that he still thinks taxing the estate is a form of double taxation.

    I earlier asked about how folks felt about the way basis is handled when investments are inherited, but no one has taken me up on that. Maybe because it didn’t seem related, or maybe because you all don’t know how basis works in inheritance? So to be a little more direct — because of how basis works, currently, a lot of money never gets taxed at all when it is inherited — so I’m wondering if Doug would want to make sure it would be. Here’s the scenario that would exist if we had no estate tax. I inherit stock that at my Grandpa bought for $10. When he dies, the stock is trading for $100. Because of this, when I receive the stock the basis is stepped up to $100. I sell the stock for $100, and pay no taxes on that money. So Doug, would you require that the basis be inherited at the original $10 price, and that $90 in capital gains be realized upon the sale of the stock?
    If so, I’m fine with that — since most of us inherit wealth from parents who realized their gains through investments, it will result in higher taxes for the proceeds from most estates, but I wouldn’t be surprised if it came out about the same overall….

  82. Doug Ross


    I understand your question about basis. In my view, the basis should be the value of the asset at the time of transfer. Since I don’t think there should be any inheritance tax, the stock should be treated as being worth $100 when it was acquired. Does that mean the government loses out on the capital gains from $10 to $100? I sure hope so.

    Same would apply to a home. If Junior inherits Dad’s home that Dad paid $100K for in 1960 and is now worth $750K, should Junior be on the hook for $650K of capital gains? No way. Because the tax bill would probably be large enough to force Junior to sell the house to pay the bill.

    Read this quote from George Will’s column again “he denounced the tax code as “a complicated mess” that annually requires “6 billion hours of paperwork” – now estimated at 7.6 billion.”

    7.6 billion hours of unproductive time spent by Americans. There should be no income tax filing. Take a flat percentage out of every paycheck. Make every American citizen have a stake in the game instead of the 50% that now pay all income taxes.

    Abolish inheritance taxes and property taxes. Fund roads with a gas tax.

  83. William Tucker

    @SusanG – Stocks transferred transfer at the same rate on the day of the transfer. No actual money has changed hand until the stock is sold. Then it’s taxed as income tax.

    I’d love to know how you don’t plan to pay tax on that $90 profit on the stock share.

    If you inherit $100 worth of stock, then it’s taxed at time you inherit and again at the time you sell it. Even if the stock drops to $5.00 after you inherit it, you pay income tax on it and do not get to deduct it as a loss.

    I really wish people would write things about what they know and not what they believe to be true. I don’t know how to do brain surgery, and I’m surely not going to write about it here.

  84. SusanG

    Mr Tucker, I have inherited the stock, and I didn’t pay the $90. Good accountants, I guess.

    Doug, I actually think the scenario of someone having to sell an asset to pay the tax bill is minimized (if not removed) if we dropped the estate tax, but didn’t step up the basis on assets.

    The heir wouldn’t realize the gain until the asset was sold (whether that asset was a home or stock or whatever), and thus it wouldn’t create a taxable event until then. They could hold onto the asset as long as they wished (even passing it to their own heirs potentially), an when the asset was sold, any taxes would be paid out of the gains.

    Now, while this method does address the “double taxation” issue, and it addresses the problem with being forced to sell assets in an untimely manner, it doesn’t address your biggest issue, of course — your taxes would still be too darn high!

  85. Mark Stewart

    SusanG’s understanding of capital gains is both more logical and practical then some others’ viewpoints here

    One can either inherit at the original basis or pay capital gains and go forward at the stepped up basis. It makes no sense to believe that people should pay capital gains taxes, but estates should not.

    This all comes back to the ideas of equitable apportionment and equitable treatment. Those ideas appear lost to the fog of personal viewpoint in this evolved discussion.

  86. Doug Ross

    It comes down to basic philosophy. Brad and Bud believe that the fruits of a man’s labor belong to the government first and he is then given what the government feels is his share. I believe that the fruits of a man’s labor belong to the man and that the government should be given what the man feels is an appropriate amount to cover the functions the government should provide.

    It’s a government of the people, not people of the government.

  87. Doug Ross


    You have a body of work that can be used to infer that belief. I have a body of work that you use all the time to characterize me. What’s the difference?

  88. Doug Ross


    And this thread has shown a very basic pattern to your style of arguing a point. You made a statement “the recipients are taxed”. When the evidence showed otherwise, you dropped back to “well, I don’t know much about taxes”… then “well, who really cares about this anyway”… and then finally “well, Doug is just a single minded absolutist. Ignore his evidence.”

    An alternative would have been to say “Oops, I was wrong”. I know that’s not common when you make your career writing opinions. But sometime facts do tend to negate an opinion.

  89. David

    Abolish inheritance taxes and property taxes. Fund roads with a gas tax.

    What makes an inheritance tax so unholy while a gas tax is ok? You’re still buying that gasoline with after-(income) tax dollars. Isn’t that double taxation too?

    You can probably look at any tax and come up with a reason why it seems unfair. And I wouldn’t necessarily disagree either. But taxes are taxes and they will never be fair, especially considering that different people have different notions of fairness. That’s not what taxes are about. They are about funding our government. I’m not saying we shouldn’t try to fund our government in a way that is less complicated. I’m not saying that taxes in this country should have no regard to any sense of fairness either.

    I just don’t understand why certain taxes (inheritance) get people really worked up over the concept of “fairness” more than others. I guess the level of unfairness of taxes in this country just isn’t big enough to bother me.

    By the way, this statement:

    If you inherit $100 worth of stock, then it’s taxed at time you inherit and again at the time you sell it. Even if the stock drops to $5.00 after you inherit it, you pay income tax on it and do not get to deduct it as a loss.

    is not true, generally.

  90. bud

    Seriously Doug, you have twisted my position on this issue beyond recognition. I’m interested first and foremost in retaining the fruits of MY labor. By eliminating the “lazy heir” tax I have to pay more.

  91. Brad

    Again, Doug, you’re seriously mischaracterizing.

    Actually, my INITIAL position when I joined into this estate tax digression was, as you put it, “who cares about this anyway?” Scroll up and check. You’ll find that these are my first words on the subject: “Re the inheritance tax — I really don’t see how any of y’all can have such black-and-white opinions on the subject. I’m ambivalent about it.”

    Next… in trying to engage y’all on a subject I care little about, I said that if anyone was being penalized by this tax, it was the heir (who didn’t earn it) rather than the deceased. I really couldn’t care less how that is accomplished — who fills out what paperwork, or what mechanism is used to achieve it. You maintained then (correct me if I’m wrong) that the heirs were NOT penalized, that if granddad wanted to leave them $50, they got $50. I said OK, maybe that’s so, because I certainly don’t set myself up as an expert on this subject (although I’d still like you to explain to me how money is taken from the estate without the inheritance the heirs receive being diminished — which is what I meant by the heirs being taxed). But if that IS so, then why the hell do you care about it? Why would anyone care about it? I mean, if everybody’s got the money they’d have had otherwise, why are you all worked up? I really don’t get it, and I’ve been very frank about that from the start.

  92. William Tucker

    @David – I really didn’t state that comment well. It was written in a sarcastic “other side” view.

    What I should have written: If you inherit $100 worth of stock, in your scenario, it would be taxed at $100 on the inheritance date, again when it was sold, and possibly a third time under capital gains tax. This would be true even if the stock fell to $5.00/share.

    @Doug – Your set of beliefs are dead on… with examples to back it up.

  93. Brad

    So, another way to put it is, instead of trying to get Brad to say “uncle” — which is what you’re doing with all that “Brad won’t say ‘I’m wrong'” stuff — is answer my direct and implied questions. Since I say I don’t understand what you’re worked up about, why don’t you explain to me what you’re worked up about. Explain which living people are penalized by this tax, and why that bothers you. Because I continue to not get it, and I haven’t pretended otherwise at any point.

    But then, that’s often the way it is when I debate with libertarians. I have trouble understanding what a former editor of mine used to term “the emotional center.”

  94. William Tucker

    @bud – “By eliminating the “lazy heir” tax I have to pay more.”

    How so?

    And if we’re eliminating “lazy” taxes, can we eliminate welfare and social programs that I’m paying for but not using?

  95. bud

    Doug what you’ve done is change the subject constantly on this discussion. The complexity of the tax code is an entirely different subject than the inheritance tax. Let’s just stick to that. It’s completely impossible to eliminate the inheritance tax and NOT increase taxes somewhere else. That’s just a fact no matter how you treat capital gains or whether you tax estates or individuals. What’s people understand that then it becomes a matter of the wealthy getting a tax break at the expense of those of more modest means. If you believe that it’s fair for the rich to pay less taxes then I will never persuade you otherwise. But don’t try to tell me my taxes won’t increase if the inheritance tax is eliminated. That’s nonsense and you certainly know that.

  96. William Tucker

    @Brad – So, if I understand your point correctly. If I’m set to inherit an estate worth $1 million, and after the inheritance tax takes 50%, I should be satisfied and happy to pocket $500,000. Is that what you’re trying to tell me?

    What does it matter if the people penalized are living or dead. Use my example of prepaying your inheritance tax on your property, why wait until you’re dead before the IRS comes to get their portion of what you’ve worked and saved for? It’s much easier to take something away from a dead man than a live man. If a man’s estate is taxed 30% and his son’s estate is taxed 30%… in a few generations there won’t be anything left.

  97. Doug Ross

    You answered your own question with your question:

    “money is taken from the estate without the inheritance the heirs receive being diminished”

    So the money is taken from the estate of the dead person, not from the recipients. They get to take their cut from what is left from the estate. There is no tax paid by the recipient.

    Let’s see if I can address why I care about this:

    1) It is an unfair tax. I proved that with the Thurmond example. He had the same assets as my wife’s grandfather yet paid no tax. All because he had access to the right lawyers and estate planners to shield his wealth. So the tax is unfair.

    2) It is double taxation. I proved that already with the lottery example.

    3) It is an utterly complex system devised to take earned wealth from people with no justification. What aspect of dying should trigger the government taking a chunk of the wealth? Today, it’s mine. Tomorrow, it belongs to the government. It requires the expenditure of significant resources to do estate planning to avoid paying the taxes. Those resources are taken away from doing productive work.

    4) It relies on some arbitrary definition of wealth to determine when the tax kicks in. You have X, no tax. You have X + $1, you have to pay the tax. Stupidity reigns as in most cases of tax regulation.

    5) The laws force people to sell off assets that they may not want to due to the tax burden placed on the estate. My mother-in-law and her brother had to sell a prime piece of beach property from the estate to pay the $400K in taxes. Oh well, too bad. Shoulda hid all those assets before he died. That’s the Strom Thurmond way.

    and the biggest reason why we don’t need the inheritance tax:


    I feel the same way about taxes that you feel about insurance companies. Why do you care so much about that? I know why – because it impacts you.

  98. Doug Ross

    Here’s the inheritance tax I will support:

    The government can take 2% of the estate. No arbitrary definition of “rich”. You have $10000 in your estate, your estate owes the government 200 dollars. You have $1 million, your tax is $20K.

    Simple and fair. And plenty enough extra cash to pay for our bloated government.

  99. Mark Stewart

    This is the issue: Doug said “I believe that the fruits of a man’s labor belong to the man and that the government should be given what the man feels is an appropriate amount to cover the functions the government should provide.”

    I would respectfully disagree and agree with the comment that David made above – we all collectively decide, as voters, what government is going to do for (and to) us as the citizenry. Doug seems to view the things that bother him, like property and inheritance taxes as nonsensical irritants. At the same time he is amenable to other taxes, like the gas tax, that he doesn’t view as being as much of an irritant (probably because it has a less than proportional impact on him personally). Sorry, Doug, but otherwise I’m at a loss.

    Doug is right about the inequality that had existed in the inheritance tax for a long time – because it had gotten so dodgy. However, the problem is really the loopholes available to some, not the theoretical idea of an inheritance tax.

    I would simply argue that the concept is sound, but the structure is not.

  100. William Tucker

    @Mark – You do realize that sales tax and gasoline tax are a useage tax. You pay as you purchase those products. If you don’t own a vehicle, you probably don’t pay any gasoline tax. If you’re a skinflint, you probably don’t pay much in sales tax. The inheritance tax is a death tax, let’s see you get away from that one.

  101. William Tucker

    @Doug – I’m even against a 2% flat tax. What justification does the government have to tax for previously taxed items for the simple sake that the name on the title or account changed names.

    If the inherited stock is sold, I’ll pay capitol gains tax and income tax. If the real property is sold, I’ll pay capitol gains tax and income tax. If the inheritance generates revenue I’ll pay income tax on the revenue. But to simply tax the inheritance because my father’s name was removed and replaced with mine doesn’t make any sense. This is a personal transaction in which the government has no financial claim.

  102. Mark Stewart

    Death is the ultimate due on sale situation. The very word inheritance means transfer. What is the problem people?!

    What the tax should be is, fairly, an entirely different question.

  103. bud

    Doug, this will be my last word on this subject: Why should I care if a wealthy person has to sell some property to pay their inheritance tax? What difference does it make to me? Unless you can provide some valid reason why I should actually care (since I reject your arguments that somehow the heirs to a large estate are more worthy of that money than the state) then I choose to support the retention of the estate tax in order to keep my taxes low.

  104. SusanG

    I personally prefer the current setup — which is in disagreement with William (and maybe Doug — he didn’t really address the basis issue with the 2% idea) — but ironically it’s because his idea results in more taxes for most of us, not less! For example, I inherited property and investments from my parents, as is common for most folks. Because the total came in under the exclusion amount (at the time, that was a hefty $4M), and because I was given a stepped-up basis in the property and investments, I paid no taxes when I sold their property and will pay nothing on the gains on the investments that occurred during their lifetime (and, I can claim any losses on my own tax returns!). If there was no estate tax, but I had had to pay capital gains on the property and the investments, over time I would pay a lot of taxes on that same estate.

    Removing estate taxes and transferring assets at the original basis does satisfy Doug’s criteria he lists above: it is not 1) unfair 2) double taxation 3) complex 4) doesn’t rely on an arbitrary definition of wealth or 5) force people to sell assets.

    But if the “evil” is just paying a lot in taxes — getting rid of estate taxes and removing the stepped up basis rule is probably not the way to do it!

  105. Doug Ross


    I rememeber you and Brad both had a very strong opinion about the Act 388 (?) property tax bill. Why don’t you just accept that since it is the result of our elected officials deciding what is best?

    How does your opinion on that tax differ from mine on the inheritance tax? Maybe be in that case, YOUR ox is the one being gored?

  106. Brad

    Doug, you keep telling me you get me, but you don’t.

    Act 388 really screwed up our tax system, throwing it out of balance, and putting an unwarranted burden on business. Not on me — on business.

    There are some of us whose political opinions are actually not based in our perception of how it affects US. You will see me use personal experience to illustrate a point — I’ve done it a lot to push single-payer — but if you conclude from that that I want to change policy because it would benefit ME, you don’t know me. I’m for single-payer because I look at the country as a whole, and the problems with paying for health care, and I see it as the best systemic solution…

  107. Mark Stewart


    Here’s one differene: Act 388 saves me oddles of dough each year on my now much reduced property taxes. I am making out like a bandit – and I still think 388 is a terrible screw-up that needs to be corrected. I would pay, not happily, but gladly to see a sustainable tax scheme instituted for our state.

    I’ll say it again: I am in support of a taxation system of equitable apportionment and equitable treatment.

  108. Doug Ross

    I won’t ever have to pay inheritance tax nor benefit from it going away. So I have no personal stake in it. I used a personal example to demonstrate the stupidity of the tax.

    And again, it was a tax voted for by the representative democracy. You and Mark used that as a reason why I should just accept the inheritance tax. Accept the system, accept the taxes – right?

    Your opinion that Act 388 screwed up the tax system is based on what evidence? Homeowners saw their taxes reduced. Can you reverse Act 388 without causing taxes to go up on homeowners?

    I’d be all for reversing Act 388 if we left the property taxes as is and cut government accordingly.


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