1 00:00:01,200 --> 00:00:04,640 Speaker 1: Welcome to Stuff you should Know from how Stuff Works 2 00:00:04,680 --> 00:00:13,920 Speaker 1: dot com. Hey, and welcome to the podcast. I'm Josh Clark. 3 00:00:14,360 --> 00:00:18,000 Speaker 1: There's Charles W. Chuck Ban, there's Jerry. If you put 4 00:00:18,040 --> 00:00:21,600 Speaker 1: us together in a room, get a little air conditioneder 5 00:00:21,720 --> 00:00:25,319 Speaker 1: noise going black out the windows. It's stuff you should know. 6 00:00:25,720 --> 00:00:29,000 Speaker 1: Hegg crates on the walls bringing a cup of water 7 00:00:29,080 --> 00:00:31,840 Speaker 1: for me, and like, I got nothing whatever? Why don't 8 00:00:31,840 --> 00:00:34,040 Speaker 1: you have four beverages? Like, I don't know, it's a 9 00:00:34,080 --> 00:00:37,040 Speaker 1: weird day. What is that is so weird? They're out 10 00:00:37,040 --> 00:00:42,640 Speaker 1: of Pellegrino. Yeah, I know. I'm sitting here like I've 11 00:00:42,680 --> 00:00:45,320 Speaker 1: never seen you without a beverage within three ft of 12 00:00:45,320 --> 00:00:47,960 Speaker 1: your body. And I also am really tired of the 13 00:00:48,040 --> 00:00:51,800 Speaker 1: coffee here. It's not okay. Oh man, are you drinking 14 00:00:51,800 --> 00:00:57,480 Speaker 1: it right now? No? Good for you, jack um Chuck. 15 00:00:58,360 --> 00:01:01,400 Speaker 1: Oh yeah, that's right. Although it's funny over the years 16 00:01:01,440 --> 00:01:05,400 Speaker 1: when I go into restaurants, usually like some sort of 17 00:01:05,760 --> 00:01:07,679 Speaker 1: like an ethnic restaurant, and asked for my name and 18 00:01:07,680 --> 00:01:10,760 Speaker 1: I say Chuck, they almost always say Jack, that was there, right, 19 00:01:10,800 --> 00:01:12,720 Speaker 1: And I just go with it. Yeah, I mean yeah, Jack, 20 00:01:13,840 --> 00:01:16,440 Speaker 1: because what kind of person is like, no, get my 21 00:01:16,520 --> 00:01:19,400 Speaker 1: name right? On the little thing you write down to 22 00:01:19,440 --> 00:01:23,360 Speaker 1: my ticket. You just grabbed the thin man lapels. Yeah, 23 00:01:23,400 --> 00:01:27,200 Speaker 1: I didn't care. Uh well, it's the perfect segue into 24 00:01:27,240 --> 00:01:31,160 Speaker 1: what we're talking about today, Chuck, Yeah, Jack, the death tax. 25 00:01:31,680 --> 00:01:38,120 Speaker 1: That's right, one of our scintillating, uh internal revenue centered casts. 26 00:01:39,080 --> 00:01:41,639 Speaker 1: I mean, we have done a bunch of like tax 27 00:01:41,720 --> 00:01:45,000 Speaker 1: related episodes if you think about it. Yeah, this one. 28 00:01:45,080 --> 00:01:48,040 Speaker 1: I'm surprised we haven't done this one. And actually I 29 00:01:48,080 --> 00:01:53,640 Speaker 1: didn't check. We haven't, right, I checked, we have not, Um, yeah, 30 00:01:53,640 --> 00:01:55,640 Speaker 1: but it did seem familiar here there, but I definitely 31 00:01:55,640 --> 00:01:58,280 Speaker 1: double checked. Yeah, I thought it was pretty interesting, especially 32 00:01:58,320 --> 00:01:59,680 Speaker 1: a lot of this will be the history of it, 33 00:02:00,680 --> 00:02:04,040 Speaker 1: which basically is, we're going to war, let's get the 34 00:02:04,080 --> 00:02:07,080 Speaker 1: death tax going, right exactly, the rich are getting too rich, 35 00:02:07,160 --> 00:02:10,000 Speaker 1: Let's get the death tax going. So we should probably 36 00:02:10,040 --> 00:02:14,919 Speaker 1: say what the death taxes, and actually death tax we 37 00:02:14,960 --> 00:02:17,760 Speaker 1: should be saying death taxes because there's a couple of 38 00:02:17,800 --> 00:02:21,200 Speaker 1: different kinds of death taxes, and that's basically the term 39 00:02:21,280 --> 00:02:24,480 Speaker 1: that's used by people who aren't in favor of death taxes. 40 00:02:25,040 --> 00:02:28,240 Speaker 1: The kind of make it seem like it's just a 41 00:02:28,400 --> 00:02:30,720 Speaker 1: stupid idea, like you have to you have to pay 42 00:02:30,760 --> 00:02:33,440 Speaker 1: a tax to die. Come on, people, snap out of it, 43 00:02:34,040 --> 00:02:36,800 Speaker 1: you know. Um. So basically you have two types of 44 00:02:36,840 --> 00:02:38,960 Speaker 1: death taxes as it stands right now here in two 45 00:02:39,040 --> 00:02:42,360 Speaker 1: thousand seventeen, you've got, at least in the United States, 46 00:02:42,720 --> 00:02:45,880 Speaker 1: you have the estate tax and you have the inheritance tax, 47 00:02:46,520 --> 00:02:49,840 Speaker 1: and both of them are basically death taxes. The estate 48 00:02:49,880 --> 00:02:53,520 Speaker 1: taxes where um you die, you have an estate in 49 00:02:53,560 --> 00:02:56,880 Speaker 1: your state is the total of all of the stuff 50 00:02:56,919 --> 00:02:59,480 Speaker 1: you own and all the debts you have. So the 51 00:02:59,520 --> 00:03:02,160 Speaker 1: first thing that happens to your state, your debts get 52 00:03:02,200 --> 00:03:06,480 Speaker 1: paid off, uh, and then your executor gets paid off 53 00:03:07,200 --> 00:03:10,400 Speaker 1: for their troubles. Your funeral gets paid off. And then 54 00:03:10,480 --> 00:03:13,840 Speaker 1: Uncle Sam's standing there with his hand out shot out 55 00:03:13,840 --> 00:03:17,160 Speaker 1: of a cannon that costs take that off the top. 56 00:03:18,000 --> 00:03:20,960 Speaker 1: So Uncle Sam's standing there and he says, hey, lay 57 00:03:20,960 --> 00:03:25,720 Speaker 1: it on me, guys, I want that. That's your estate taxes. 58 00:03:26,160 --> 00:03:29,480 Speaker 1: Then after that, in some states, the money goes to 59 00:03:29,560 --> 00:03:31,680 Speaker 1: the heirs, and then the states come along and say 60 00:03:31,960 --> 00:03:35,880 Speaker 1: it's archer now. And because you know, states rights aren't 61 00:03:35,920 --> 00:03:37,520 Speaker 1: what they used to be, right, And then your city 62 00:03:37,560 --> 00:03:42,360 Speaker 1: comes along and they want theirs. And then if the 63 00:03:40,720 --> 00:03:44,160 Speaker 1: city then your next door neighbor comes along and say 64 00:03:44,160 --> 00:03:46,080 Speaker 1: you didn't pay the neighborhood tax on that, right, Can 65 00:03:46,120 --> 00:03:50,280 Speaker 1: I have my lawnmower back? Uh so? Yeah. Basically, if 66 00:03:50,360 --> 00:03:53,240 Speaker 1: you die in a state that has inheritance text, you're 67 00:03:53,280 --> 00:03:55,840 Speaker 1: going to pay in a state tax and an inheritance 68 00:03:55,920 --> 00:04:00,680 Speaker 1: inheritance tax on your estate. After your death, you won't care, 69 00:04:01,000 --> 00:04:05,360 Speaker 1: but your heirs well, and you make care every moment 70 00:04:05,480 --> 00:04:08,480 Speaker 1: leading up to that last one. After that, you'll be fine. 71 00:04:09,120 --> 00:04:10,640 Speaker 1: I think the Beatles had it right on the money 72 00:04:10,680 --> 00:04:16,880 Speaker 1: there that song Come Together. You're like Lucy and the 73 00:04:16,880 --> 00:04:20,440 Speaker 1: Sky with diamonds, no tax man. It's a great song. 74 00:04:20,480 --> 00:04:21,840 Speaker 1: If you you know, if you drive a car, I'll 75 00:04:21,839 --> 00:04:23,880 Speaker 1: Texas Street, if you take a walk, I'll text your feet. 76 00:04:24,400 --> 00:04:30,880 Speaker 1: It's very ah, very libertarian. Yeah, come to think of it. 77 00:04:31,960 --> 00:04:33,840 Speaker 1: In the background, if you play it backwards, it goes, 78 00:04:33,880 --> 00:04:39,960 Speaker 1: who is John Goal? Do we do what? I'm backmasking? 79 00:04:40,560 --> 00:04:43,040 Speaker 1: All right, We're gonna do that one day took all right, 80 00:04:43,120 --> 00:04:46,840 Speaker 1: So you just describe the estate tax. I described both. Okay, 81 00:04:46,839 --> 00:04:49,719 Speaker 1: you said the inheritance taxe. Okay, that's the one where 82 00:04:49,720 --> 00:04:52,719 Speaker 1: the states like, can we have our cut to where 83 00:04:52,720 --> 00:04:55,080 Speaker 1: they text your airs, not your state. Yeah, like after 84 00:04:55,120 --> 00:04:58,720 Speaker 1: you get the dough in your text. Uh so, you're right, 85 00:04:58,760 --> 00:05:03,640 Speaker 1: both of those together make up a death tax. And um. Well, 86 00:05:04,279 --> 00:05:09,080 Speaker 1: over the years, it's been debated both economically and philosophically. 87 00:05:09,680 --> 00:05:12,039 Speaker 1: And I guess we should go back in time and 88 00:05:12,080 --> 00:05:16,000 Speaker 1: the way back machine to ancient Egypt if we fire 89 00:05:16,040 --> 00:05:26,760 Speaker 1: it up. Did you put gasing? I did? Uh so 90 00:05:26,839 --> 00:05:28,440 Speaker 1: if you if you go back to ancient Egypt, they 91 00:05:28,480 --> 00:05:33,280 Speaker 1: actually have existing uh papyrus with that tells the story 92 00:05:33,480 --> 00:05:37,719 Speaker 1: of men basically either trying to dodge paying a death 93 00:05:37,760 --> 00:05:41,159 Speaker 1: tax or paying a death tax, two different versions of 94 00:05:41,200 --> 00:05:43,520 Speaker 1: that story against depending on who the guy was, you 95 00:05:43,520 --> 00:05:45,320 Speaker 1: could tell which one you're supposed to do, because the 96 00:05:45,360 --> 00:05:47,560 Speaker 1: guy dodging it had he was in the middle of 97 00:05:47,560 --> 00:05:50,279 Speaker 1: a circle with a slash there. That's right, don't be 98 00:05:50,400 --> 00:05:54,400 Speaker 1: this guy. Uh. And of course in ancient Rome they 99 00:05:54,440 --> 00:05:58,400 Speaker 1: were big on uh big on trying to modernize everything, 100 00:05:58,400 --> 00:06:00,960 Speaker 1: and of course meant the tax code as well. And 101 00:06:01,040 --> 00:06:08,239 Speaker 1: Caesar Augustus instituted something called the uh vis sina herad titadium. 102 00:06:08,320 --> 00:06:10,840 Speaker 1: Is that right? I think so? My Romans not what 103 00:06:10,880 --> 00:06:14,720 Speaker 1: it used to herititardium. Apparently that translation is twentieth penny 104 00:06:14,720 --> 00:06:21,080 Speaker 1: of inheritances. Uh. And taxes, sex secessions, legacies and donations 105 00:06:21,120 --> 00:06:24,560 Speaker 1: after death. They should have called it death tax. They 106 00:06:24,600 --> 00:06:26,880 Speaker 1: should have whoever came up with that, I couldn't find 107 00:06:26,920 --> 00:06:29,920 Speaker 1: who did, but it's pretty clever. Uh. And like I said, 108 00:06:29,960 --> 00:06:34,320 Speaker 1: there's long been debate. Um. Even in ancient Rome there 109 00:06:34,320 --> 00:06:37,480 Speaker 1: were exemptions for close family Back then you could give 110 00:06:37,520 --> 00:06:41,200 Speaker 1: away some charitable donations, which is, you know, kind of 111 00:06:41,240 --> 00:06:43,120 Speaker 1: similar to what you can do today. That's a that's 112 00:06:43,120 --> 00:06:45,760 Speaker 1: a very long standing tradition, and it should be I mean, 113 00:06:45,800 --> 00:06:47,640 Speaker 1: like if you want to give a bunch of money 114 00:06:47,680 --> 00:06:52,440 Speaker 1: to a charity, man, there should you. That should be unfettered, yes, um. 115 00:06:52,520 --> 00:06:54,440 Speaker 1: And in fact you should maybe even get a little 116 00:06:54,440 --> 00:06:57,200 Speaker 1: text break for that sure as people do at least 117 00:06:57,200 --> 00:07:00,280 Speaker 1: a pat on the back from everybody in your community. Uh. 118 00:07:00,320 --> 00:07:04,279 Speaker 1: And then plenty the younger not the elder beer man, 119 00:07:04,760 --> 00:07:07,560 Speaker 1: which one's the one that's so hard to get? I 120 00:07:07,560 --> 00:07:10,240 Speaker 1: think plenty of the elder is the beer that's hard 121 00:07:10,280 --> 00:07:12,160 Speaker 1: to get, right, I don't know. It might be the 122 00:07:12,200 --> 00:07:15,800 Speaker 1: other way around. So there's a plenty of younger beer 123 00:07:15,880 --> 00:07:19,240 Speaker 1: as well. Versions one you can get basically all the time. 124 00:07:19,280 --> 00:07:20,840 Speaker 1: The other one like, you have to stand in line 125 00:07:20,840 --> 00:07:23,560 Speaker 1: for a week and a half outside of the brewery 126 00:07:23,640 --> 00:07:25,680 Speaker 1: to get it, and they give you a you have 127 00:07:25,720 --> 00:07:28,120 Speaker 1: to bring your own like bucket and they fill it 128 00:07:28,200 --> 00:07:30,880 Speaker 1: up and they make you chug it right there and 129 00:07:30,880 --> 00:07:33,080 Speaker 1: then they kick you in the butt as you're walking away. Yeah, 130 00:07:33,120 --> 00:07:36,280 Speaker 1: they're doing it right. Uh well, regardless of I'm not 131 00:07:36,320 --> 00:07:39,880 Speaker 1: sure which one, plenty of the younger criticize this tax 132 00:07:39,960 --> 00:07:41,480 Speaker 1: and he's like, you know what you're doing. You're taking 133 00:07:41,480 --> 00:07:44,600 Speaker 1: advantage of people of these families that are distraught over 134 00:07:44,680 --> 00:07:47,760 Speaker 1: the death of a loved one. Yeah, how unfair is that. 135 00:07:48,160 --> 00:07:50,400 Speaker 1: I would guess that plenty the younger may have been 136 00:07:50,560 --> 00:07:54,600 Speaker 1: rich from that quote. I bet you're right. Yeah. Uh 137 00:07:54,720 --> 00:07:57,840 Speaker 1: where else? We can go to England and France. Yea 138 00:07:58,440 --> 00:08:01,960 Speaker 1: we I mean we jumped over several centuries. I don't 139 00:08:01,960 --> 00:08:04,640 Speaker 1: know though, if the Holy Roman Empire was into death texas, 140 00:08:04,680 --> 00:08:08,160 Speaker 1: but by the time we arrive in uh well, feudal England, 141 00:08:08,160 --> 00:08:10,120 Speaker 1: that still would have been the Holy Roman Empire. I 142 00:08:10,120 --> 00:08:13,560 Speaker 1: think in the thirteenth century. In England, by the time 143 00:08:13,600 --> 00:08:17,480 Speaker 1: they founded the Magna Carta, death texas were so unpopular 144 00:08:17,760 --> 00:08:20,040 Speaker 1: that It's like one of the first clauses of the 145 00:08:20,080 --> 00:08:24,240 Speaker 1: Magna Carta, like you gotta lay off on the death texas. 146 00:08:24,640 --> 00:08:26,920 Speaker 1: You could do them, but not so much. I think 147 00:08:26,960 --> 00:08:30,240 Speaker 1: that was the verbatim quote in the Magna Carta. Every 148 00:08:30,240 --> 00:08:33,079 Speaker 1: time I hear Magna Carta, I think of Johnny Dangerously. 149 00:08:33,520 --> 00:08:35,760 Speaker 1: Did you see that? I don't remember that. I think 150 00:08:35,760 --> 00:08:40,280 Speaker 1: it's the end when they're taking like walking maybe Johnny 151 00:08:40,280 --> 00:08:42,800 Speaker 1: too his execution and they have the fake priests and 152 00:08:42,840 --> 00:08:47,280 Speaker 1: he's doing this fake Latin because Magna Carta, Master Charga. 153 00:08:47,840 --> 00:08:50,880 Speaker 1: It's just so dumb. Whenever I hear Magna Carta, I 154 00:08:50,920 --> 00:08:54,240 Speaker 1: think of that one Simpsons where Marge is training to 155 00:08:54,320 --> 00:08:57,920 Speaker 1: be a realtor and Lisa's teaching her like that if 156 00:08:57,960 --> 00:08:59,760 Speaker 1: you if you make a song out of what you're 157 00:08:59,800 --> 00:09:02,880 Speaker 1: trying to memorize, remember She's like in twelve fifteen running 158 00:09:03,000 --> 00:09:07,000 Speaker 1: Me do. It's funny. There's historians out there right now 159 00:09:07,040 --> 00:09:09,080 Speaker 1: going when I hear of Magna Carta, I think of 160 00:09:09,080 --> 00:09:15,240 Speaker 1: the Magna cartas. Uh. But moving on to the United 161 00:09:15,240 --> 00:09:17,080 Speaker 1: States because that's mainly kind of what we're talking about 162 00:09:17,120 --> 00:09:21,800 Speaker 1: here with the death tax um. It was debated in Scotland, 163 00:09:21,840 --> 00:09:24,679 Speaker 1: which carried over eventually into our own founding fathers. But 164 00:09:25,120 --> 00:09:28,280 Speaker 1: some notable philosophers and economists, and they used to be 165 00:09:28,400 --> 00:09:31,439 Speaker 1: very heavily tied, which I think is interesting. Yeah, philosophy 166 00:09:31,480 --> 00:09:35,680 Speaker 1: and economics. Yeah, I guess it still is in some circles. Yeah. 167 00:09:35,720 --> 00:09:38,560 Speaker 1: I think economists like to pretend that's not the case, 168 00:09:38,600 --> 00:09:40,600 Speaker 1: but I think you're right. I mean, there's a certain 169 00:09:40,600 --> 00:09:44,160 Speaker 1: philosophy to it. But we talked about people like John 170 00:09:44,240 --> 00:09:49,640 Speaker 1: Locke and Bentham and Adam Smith before and they've kind 171 00:09:49,640 --> 00:09:54,240 Speaker 1: of remained lockstep with their principles on on the death tax. Right, So, uh, 172 00:09:54,360 --> 00:09:58,160 Speaker 1: Smith and Locke, we're saying, no, no, no, that's not 173 00:09:58,280 --> 00:10:01,240 Speaker 1: the government's role the tax of person airs after they die. 174 00:10:01,760 --> 00:10:07,640 Speaker 1: Black Stone, uh, the very famous magician, said no, we uh, 175 00:10:07,679 --> 00:10:10,840 Speaker 1: we absolutely should be taxing people's estates when they die, 176 00:10:11,240 --> 00:10:14,720 Speaker 1: because we want to prevent dynasties. And finally somebody in 177 00:10:14,760 --> 00:10:17,560 Speaker 1: history comes out and says it like that's basically the 178 00:10:17,600 --> 00:10:21,480 Speaker 1: point of the estate tax. Yeah, and um, and then uh, 179 00:10:21,800 --> 00:10:25,160 Speaker 1: I think Jeremy Bentham said basically the same thing, like, yeah, 180 00:10:25,200 --> 00:10:28,960 Speaker 1: we we like like wells should not be able to 181 00:10:29,000 --> 00:10:33,560 Speaker 1: grow exponentially in a single family that's not that's bad news. Yeah, 182 00:10:33,600 --> 00:10:35,280 Speaker 1: and that's sort of, like you said, been the root 183 00:10:35,360 --> 00:10:41,880 Speaker 1: of the philosophical debate from black Stone to Bernie Sanders saying, um, 184 00:10:41,920 --> 00:10:45,400 Speaker 1: and we'll get into the what people commonly were called 185 00:10:45,440 --> 00:10:48,360 Speaker 1: the pros and cons. But one of the cons is 186 00:10:48,480 --> 00:10:51,080 Speaker 1: uh and whether or not it's I don't know if 187 00:10:51,200 --> 00:10:52,880 Speaker 1: you can prove it's true. But one of the cons 188 00:10:53,040 --> 00:10:56,199 Speaker 1: people point to is you leave these kids all these 189 00:10:56,240 --> 00:10:59,480 Speaker 1: millions of dollars, and they're gonna end up on dope. Well, 190 00:10:59,600 --> 00:11:03,559 Speaker 1: or they're less likely to be super product not much 191 00:11:03,679 --> 00:11:06,520 Speaker 1: much ass likely necessarily, but they're not as incentivized to 192 00:11:06,559 --> 00:11:13,920 Speaker 1: be constructive contributors to society. No, they're not. It's well put. Yes. 193 00:11:15,040 --> 00:11:19,040 Speaker 1: Uh So, like I said, this kind of transferred over 194 00:11:19,080 --> 00:11:22,400 Speaker 1: to the founding fathers of the United States. Yeah, because again, 195 00:11:22,520 --> 00:11:26,760 Speaker 1: I mean, the US was founded very much on enlightenment, thinking. Yeah, 196 00:11:26,840 --> 00:11:29,480 Speaker 1: so the guys who founded the US were looking over 197 00:11:29,520 --> 00:11:31,400 Speaker 1: to Europe and saying, like, what are those guys saying 198 00:11:31,520 --> 00:11:33,600 Speaker 1: right now? What do we think about that? How does 199 00:11:33,640 --> 00:11:35,959 Speaker 1: that apply here? Let's like, what are they saying over there? 200 00:11:36,000 --> 00:11:38,440 Speaker 1: I don't know. I'll let you know in six months. 201 00:11:38,679 --> 00:11:42,840 Speaker 1: Send a message on a boat the stamp tax of 202 00:11:42,880 --> 00:11:47,480 Speaker 1: seven and this kind of begins a long tradition of hey, 203 00:11:47,640 --> 00:11:49,520 Speaker 1: we're going to war, we need to raise some dough 204 00:11:49,760 --> 00:11:55,120 Speaker 1: because at first they resisted the UM death tax. Yeah, 205 00:11:55,160 --> 00:11:57,640 Speaker 1: but they needed to protect the colonies and that's expensive. 206 00:11:58,640 --> 00:12:03,319 Speaker 1: So UH to under war against France and naval war. Um, 207 00:12:03,480 --> 00:12:06,200 Speaker 1: they said, how about a stamp tax, which when I 208 00:12:06,200 --> 00:12:07,439 Speaker 1: was a little kid, you know, I heard of the 209 00:12:07,440 --> 00:12:10,680 Speaker 1: stamp tax and I didn't get it um. But basically 210 00:12:10,679 --> 00:12:13,600 Speaker 1: it was a tax on every piece of paper printed, 211 00:12:14,920 --> 00:12:18,520 Speaker 1: like every kind of documenticial document and newspapers and stuff. 212 00:12:18,960 --> 00:12:22,599 Speaker 1: If you had a document that you needed to file, right, Yeah, 213 00:12:22,800 --> 00:12:25,880 Speaker 1: for like the judge to release somebody's personal effects to 214 00:12:25,960 --> 00:12:28,680 Speaker 1: you their air, you had to show them this document 215 00:12:28,800 --> 00:12:30,920 Speaker 1: and for the judge to release it had to be stamped, 216 00:12:30,920 --> 00:12:33,439 Speaker 1: and you had to pay for that stamp. So in effect, 217 00:12:33,640 --> 00:12:36,720 Speaker 1: it was a government tax because this whole transaction couldn't 218 00:12:36,720 --> 00:12:39,360 Speaker 1: happen until the government officially got its cut, and the 219 00:12:39,400 --> 00:12:41,720 Speaker 1: stamp was proof that the government had gotten its cut 220 00:12:41,800 --> 00:12:46,160 Speaker 1: and the transaction transaction could proceed. Yeah. So anything from 221 00:12:46,440 --> 00:12:52,480 Speaker 1: UH an administrative letter to UH receipts for legacies, UH 222 00:12:52,720 --> 00:12:56,080 Speaker 1: even the attorney's license. Like apparently attorneys had to pay 223 00:12:56,080 --> 00:12:59,280 Speaker 1: like ten pounds powder for the wig just to get license, 224 00:12:59,320 --> 00:13:03,080 Speaker 1: which is about a thous and bucks. Now, yeah, I'm 225 00:13:03,120 --> 00:13:06,720 Speaker 1: sure they passed that. I'll bet that's about I'll bet 226 00:13:06,760 --> 00:13:10,520 Speaker 1: you it costs about that much. These days, they probably 227 00:13:11,000 --> 00:13:13,960 Speaker 1: ten grand for an attorney's license. I could see it. 228 00:13:14,160 --> 00:13:18,000 Speaker 1: That sound about right. They make that up pretty quickly, though, 229 00:13:18,120 --> 00:13:20,600 Speaker 1: I think so, you know, just a couple of hours, 230 00:13:20,920 --> 00:13:24,200 Speaker 1: a couple of hours sitting at the desk watching the 231 00:13:24,240 --> 00:13:27,319 Speaker 1: little bird dip its peak in the water, thinking about 232 00:13:27,320 --> 00:13:30,440 Speaker 1: the summers. I'm just kidding, attorneys out there, we love you, 233 00:13:33,559 --> 00:13:38,480 Speaker 1: everyone does. Um. They did have rules back then, though, 234 00:13:38,520 --> 00:13:42,760 Speaker 1: even for the stamp tax, which we're kind of carried 235 00:13:42,760 --> 00:13:45,120 Speaker 1: out throughout the years in one way or another. Estates 236 00:13:45,200 --> 00:13:50,200 Speaker 1: under fifty bucks were exempt, and then anything above fifty 237 00:13:50,240 --> 00:13:52,800 Speaker 1: had a graduated scale of tax, which is still kind 238 00:13:52,800 --> 00:13:56,199 Speaker 1: of what we have today. I read this this post 239 00:13:56,240 --> 00:14:00,800 Speaker 1: by this guy um on I believe Forbes, and he 240 00:14:02,679 --> 00:14:04,880 Speaker 1: his name is Bob Rywick, and he wrote a book 241 00:14:04,920 --> 00:14:10,560 Speaker 1: on tax pretty much literally um and he was saying 242 00:14:10,559 --> 00:14:15,560 Speaker 1: that for most of history there, especially the history up 243 00:14:15,679 --> 00:14:19,000 Speaker 1: leading up to America. There was not a question of 244 00:14:19,000 --> 00:14:21,000 Speaker 1: whether there should be a death text or not. It 245 00:14:21,080 --> 00:14:24,680 Speaker 1: was um, how much is the upper limit and what 246 00:14:24,760 --> 00:14:28,520 Speaker 1: are the exemptions, you know, or what's the minimum and 247 00:14:28,520 --> 00:14:30,880 Speaker 1: what are the exemptions. That's basically yeah, which is kind 248 00:14:30,920 --> 00:14:33,880 Speaker 1: of where we ended up in the modern times, just 249 00:14:33,880 --> 00:14:36,480 Speaker 1: sort of debating and going back and forth. Right, but 250 00:14:36,560 --> 00:14:38,440 Speaker 1: even still, I mean, like right out of the gate, 251 00:14:38,640 --> 00:14:40,960 Speaker 1: you know, back in Rome, we talked about how there 252 00:14:40,960 --> 00:14:45,520 Speaker 1: were exceptions where if you donated to UM to like 253 00:14:45,560 --> 00:14:49,480 Speaker 1: a charity or here, it's like if you of Rome, 254 00:14:50,200 --> 00:14:56,600 Speaker 1: right or UM, if your state's fifty dollars worth fifty dollars, 255 00:14:56,600 --> 00:14:58,840 Speaker 1: there's like no one wants that, and it's fine. Even 256 00:14:58,920 --> 00:15:02,440 Speaker 1: back in the late eighteenth century that wasn't very much. 257 00:15:03,080 --> 00:15:06,480 Speaker 1: It's like a hundred dollars today. Uh. So the stamp 258 00:15:06,600 --> 00:15:11,160 Speaker 1: tax was repealed in eighteen o two because the war ended, 259 00:15:11,880 --> 00:15:16,520 Speaker 1: or at least that particular war that they were funding ended. Yeah, 260 00:15:17,000 --> 00:15:18,520 Speaker 1: and they thought about it again during the War of 261 00:15:18,560 --> 00:15:20,760 Speaker 1: eighteen twelve, but that were ended before they had a 262 00:15:20,800 --> 00:15:23,560 Speaker 1: chance to get it through. And maybe we should take 263 00:15:23,560 --> 00:15:47,520 Speaker 1: a break here and pick up with more history. So 264 00:15:48,080 --> 00:15:52,960 Speaker 1: chuck Naval War with France funded by the Staff Stamp Act. 265 00:15:53,320 --> 00:15:57,160 Speaker 1: Death taxes go away for a while, and they came back. 266 00:15:57,400 --> 00:16:00,680 Speaker 1: They actually stayed low in the United States until the 267 00:16:00,720 --> 00:16:03,680 Speaker 1: Civil War. Yeah, and we should point out this, these 268 00:16:03,720 --> 00:16:07,200 Speaker 1: death taxes didn't like fund entire wars. They you know, 269 00:16:07,240 --> 00:16:10,560 Speaker 1: there were many other taxes involved for this stuff, right, Okay, 270 00:16:11,040 --> 00:16:13,680 Speaker 1: So when and when I mean stay low, I mean 271 00:16:13,720 --> 00:16:17,120 Speaker 1: like non existent, not that the rates were low. So, um, 272 00:16:17,160 --> 00:16:21,360 Speaker 1: in the Civil War death text came about, and um 273 00:16:22,120 --> 00:16:24,480 Speaker 1: it was it was different than what had been proposed 274 00:16:24,480 --> 00:16:27,680 Speaker 1: with the Stamp Act. So the people who received the 275 00:16:27,680 --> 00:16:30,240 Speaker 1: inheritance were the ones who were taxed. So it was 276 00:16:30,280 --> 00:16:33,520 Speaker 1: an inheritance tax, not in the state tax, right. Yeah. 277 00:16:33,520 --> 00:16:35,960 Speaker 1: And it wasn't like, hey, we're going to tax these stamps, 278 00:16:36,000 --> 00:16:40,400 Speaker 1: which is really kind of a roundabout way of making 279 00:16:40,400 --> 00:16:43,480 Speaker 1: a death tax estate tax, right exactly. This was actually 280 00:16:43,520 --> 00:16:46,120 Speaker 1: your your uncle died, you got that money, give us 281 00:16:46,120 --> 00:16:50,040 Speaker 1: some or we're going to break your legs all the 282 00:16:50,440 --> 00:16:55,400 Speaker 1: civiphor Italians. Uh. After that, there was an amendment two 283 00:16:55,440 --> 00:17:00,120 Speaker 1: years later where um, it wasn't just like person all 284 00:17:00,160 --> 00:17:04,879 Speaker 1: effects or maybe stocks or cash or whatever, but real 285 00:17:04,920 --> 00:17:07,280 Speaker 1: property came to be taxed as part of the estate 286 00:17:07,320 --> 00:17:12,920 Speaker 1: as well. And then lastly, I think in eighteen seventy no, 287 00:17:13,480 --> 00:17:15,920 Speaker 1: as part of that eighteen sixty four a moment, there's 288 00:17:15,960 --> 00:17:18,680 Speaker 1: also a gift tax, and this is a big loophole 289 00:17:18,680 --> 00:17:21,760 Speaker 1: that people would take advantage of. Yeah, it's funny, like 290 00:17:21,800 --> 00:17:25,800 Speaker 1: early on even people were like figured out a way, like, oh, well, 291 00:17:25,840 --> 00:17:29,080 Speaker 1: here's what I'll do. I'll just sell my assets and 292 00:17:29,400 --> 00:17:31,520 Speaker 1: for even if it's for even less money, just to 293 00:17:31,520 --> 00:17:33,679 Speaker 1: get it off the books, well to my kids or 294 00:17:33,720 --> 00:17:36,840 Speaker 1: something like that. Yeah, Like here's like my dad sold 295 00:17:36,840 --> 00:17:39,080 Speaker 1: me a car once for a dollar. Nice, that's a 296 00:17:39,119 --> 00:17:41,480 Speaker 1: sweet deal. Yeah, yeah, it was all right. Did you 297 00:17:41,520 --> 00:17:44,160 Speaker 1: pay him in like pennies? He actually wanted the dollar 298 00:17:45,760 --> 00:17:48,520 Speaker 1: and it ended up costing me like a lot of 299 00:17:48,520 --> 00:17:51,199 Speaker 1: money in repairs and it was sort of not a 300 00:17:51,200 --> 00:17:54,960 Speaker 1: great deal in the end. Did he say buyer beware chump. No, 301 00:17:55,240 --> 00:17:57,440 Speaker 1: And I don't want to be uh look a gift 302 00:17:57,440 --> 00:18:02,320 Speaker 1: horse in the mouth. It was a nice gesture only, Yeah, 303 00:18:02,760 --> 00:18:06,480 Speaker 1: very nice. So let's move on show. So the big 304 00:18:06,520 --> 00:18:09,560 Speaker 1: loophole with that gift taxes. If you want your kids 305 00:18:09,600 --> 00:18:12,560 Speaker 1: to have all of your stuff and you wait until 306 00:18:12,600 --> 00:18:15,199 Speaker 1: you die to pass it on to him, Well, if 307 00:18:15,240 --> 00:18:17,320 Speaker 1: there's an estate tax, the government's going to take a 308 00:18:17,320 --> 00:18:20,960 Speaker 1: big chunk. But if you're alive and you say, hey, kids, 309 00:18:21,320 --> 00:18:24,880 Speaker 1: i'm feeling a little, uh, a little over the hill, 310 00:18:25,560 --> 00:18:27,760 Speaker 1: and uh, I think I'm gonna die soon, So I 311 00:18:27,800 --> 00:18:30,359 Speaker 1: want you to have all of this stuff from my estate. 312 00:18:30,840 --> 00:18:32,399 Speaker 1: You can have a tax free because there is no 313 00:18:32,440 --> 00:18:35,280 Speaker 1: gift tax. The government finally said, and I think eighteen 314 00:18:35,400 --> 00:18:38,320 Speaker 1: sixty four, wait a minute, there's a gift tax now, 315 00:18:39,320 --> 00:18:41,840 Speaker 1: and uh, we see your loophole. But I think they 316 00:18:41,880 --> 00:18:44,400 Speaker 1: even made it. The gift tax was still less than 317 00:18:44,440 --> 00:18:48,639 Speaker 1: it was for an estate tax or an inheritance tax, 318 00:18:49,000 --> 00:18:52,080 Speaker 1: so it was still advantageous if you're a very wealthy 319 00:18:52,119 --> 00:18:55,800 Speaker 1: family to pass on your estate while you were living. 320 00:18:56,080 --> 00:18:58,719 Speaker 1: Then it was to leave it after you died, but 321 00:18:58,760 --> 00:19:02,800 Speaker 1: it would still be taxed. Actually equalized those right later on. Yeah, 322 00:19:02,920 --> 00:19:07,320 Speaker 1: but not for a few decades. All right, So let's 323 00:19:07,400 --> 00:19:12,240 Speaker 1: let's get into the twentieth century here. Industrialization. H One 324 00:19:12,280 --> 00:19:14,760 Speaker 1: of the byproducts of that was it led to a 325 00:19:14,760 --> 00:19:18,480 Speaker 1: concentration of wealth for a lot of families. So the 326 00:19:18,520 --> 00:19:21,880 Speaker 1: government was like, alrighty see, all you wealthy families out there, 327 00:19:22,280 --> 00:19:24,520 Speaker 1: thinking you can learn learn all that money and keep 328 00:19:24,560 --> 00:19:26,399 Speaker 1: it and pass it to your kids, and they can 329 00:19:26,440 --> 00:19:29,280 Speaker 1: pass it to their kids. We want our cut. And 330 00:19:29,320 --> 00:19:31,600 Speaker 1: it wasn't just the government. As a matter of fact, 331 00:19:31,640 --> 00:19:33,480 Speaker 1: I'm not sure how much the government had to do 332 00:19:33,520 --> 00:19:36,040 Speaker 1: with it, but the there was a populist movement that 333 00:19:36,119 --> 00:19:40,400 Speaker 1: arose that was basically like, we want our cut. And 334 00:19:40,440 --> 00:19:43,720 Speaker 1: you know, Wizard of Oz was was written during that time. 335 00:19:44,040 --> 00:19:48,960 Speaker 1: Frank really, Frank L. Bomb, the author of the Wizard 336 00:19:49,000 --> 00:19:52,480 Speaker 1: of Oz was a populist. And there's apparently it's a 337 00:19:52,600 --> 00:19:55,480 Speaker 1: very populist allegory. Yeah, lots of it, Like the Yellow 338 00:19:55,480 --> 00:19:59,000 Speaker 1: Brick Road is some commentary on the gold standard, the 339 00:19:59,080 --> 00:20:01,440 Speaker 1: fact that it's in can in this is um has 340 00:20:01,480 --> 00:20:04,240 Speaker 1: to do with the agrarian roots of the popular The 341 00:20:04,320 --> 00:20:09,719 Speaker 1: scarecrow is um, I don't know, Elvis, something weird like that, right, 342 00:20:10,400 --> 00:20:14,080 Speaker 1: put on some pink Floyd, right. So um. There was 343 00:20:14,119 --> 00:20:17,800 Speaker 1: this big movement, and part of this big populous movement was, Hey, 344 00:20:17,840 --> 00:20:21,199 Speaker 1: there's a lot of really wealthy people here. Um, you 345 00:20:21,240 --> 00:20:24,639 Speaker 1: guys should should stop this procession of wealth, you guys 346 00:20:24,640 --> 00:20:27,320 Speaker 1: being in the government. And they started to get there. 347 00:20:27,359 --> 00:20:32,080 Speaker 1: There was an income tax instituted in eighteen ninety four. Yeah, 348 00:20:32,480 --> 00:20:34,560 Speaker 1: I didn't realize this. I thought the first income tax 349 00:20:34,640 --> 00:20:36,800 Speaker 1: came later in nineteen sixteen. But they made they took 350 00:20:36,800 --> 00:20:39,320 Speaker 1: a crack at it in four but it was ruled 351 00:20:39,400 --> 00:20:43,879 Speaker 1: unconstitutional for reasons other than, um, the fact that it 352 00:20:43,960 --> 00:20:48,680 Speaker 1: was an income tax. Right, But it was ruled unconstitutional, 353 00:20:49,000 --> 00:20:52,320 Speaker 1: but not because of the death tax, for different reasons. 354 00:20:52,440 --> 00:20:55,160 Speaker 1: So they said, we'll get that income tax, don't you worry, Right, 355 00:20:55,240 --> 00:20:58,840 Speaker 1: that's plenty constitutions. Wait, just wait twenty years, twenty two years. 356 00:20:59,200 --> 00:21:01,960 Speaker 1: Then comes along another war, the Spanish American War, and 357 00:21:02,000 --> 00:21:06,520 Speaker 1: they instituted the War Revenue Act of eight And this 358 00:21:06,560 --> 00:21:10,479 Speaker 1: one looked a lot like the one that we have today. Right, 359 00:21:10,560 --> 00:21:12,440 Speaker 1: while it was in a state tax rather than an 360 00:21:12,440 --> 00:21:16,280 Speaker 1: inheritance tax. Yeah, and it had familiar exemptions. Uh. This 361 00:21:16,320 --> 00:21:20,480 Speaker 1: time under ten thousand left to a spouse was fell 362 00:21:20,600 --> 00:21:25,200 Speaker 1: under the exemption, and the rate of tax depended on, 363 00:21:25,440 --> 00:21:28,720 Speaker 1: of course, how big your estate was and then who 364 00:21:28,760 --> 00:21:31,320 Speaker 1: you were giving it to. Yeah, and those are still 365 00:21:31,359 --> 00:21:34,919 Speaker 1: around today in a lot of places. Um, if you 366 00:21:35,040 --> 00:21:39,520 Speaker 1: are somebody's nephew, you're probably gonna pay the full bracket 367 00:21:39,560 --> 00:21:44,199 Speaker 1: of taxation very according to uh, according to who you 368 00:21:44,240 --> 00:21:46,160 Speaker 1: are or if you like you're a drinking buddy, you're 369 00:21:46,160 --> 00:21:49,639 Speaker 1: gonna pay the full the full amount. If you're a 370 00:21:51,520 --> 00:21:55,400 Speaker 1: like a grandchild, you'd pay less than the drinking buddy, 371 00:21:55,480 --> 00:21:58,959 Speaker 1: but more than the spouse. And then the spouse is 372 00:21:59,040 --> 00:22:01,919 Speaker 1: usually and has been for a very long time, whenever 373 00:22:01,920 --> 00:22:05,080 Speaker 1: there's an exemption within the state tax, the spouse is 374 00:22:05,160 --> 00:22:08,680 Speaker 1: usually completely left alone. There's no tax if the entire 375 00:22:08,800 --> 00:22:11,720 Speaker 1: state goes over to the spouse. So that's the current 376 00:22:11,840 --> 00:22:13,840 Speaker 1: rules too. Yeah, boy, I get I need to look 377 00:22:13,880 --> 00:22:17,360 Speaker 1: up drinking buddy, So I gotta take care of Clem right, Well, 378 00:22:17,400 --> 00:22:20,400 Speaker 1: Clem is gonna pay through the notes, I'm afraid. Oh boy, 379 00:22:20,480 --> 00:22:23,199 Speaker 1: he's not gonna like that. He's really counting on me 380 00:22:23,320 --> 00:22:29,920 Speaker 1: dying leaving in my podcast fortune. Uh so with that one, 381 00:22:30,119 --> 00:22:34,719 Speaker 1: the War Revenue Act of again War ends. In nineteen 382 00:22:34,720 --> 00:22:39,960 Speaker 1: and one, Congress uh repealed the tax. Yeah, which is weird. 383 00:22:40,000 --> 00:22:42,880 Speaker 1: I kept reading that, like, what do you mean repealed 384 00:22:42,920 --> 00:22:45,600 Speaker 1: the text? When did they stop doing that? But apparently 385 00:22:45,920 --> 00:22:49,879 Speaker 1: they used to institute new taxes get the money they needed, 386 00:22:50,200 --> 00:22:53,000 Speaker 1: and then they would say we got enough, now they 387 00:22:53,040 --> 00:22:58,840 Speaker 1: have and then just more new taxes. Yeah. Um, so 388 00:23:00,200 --> 00:23:02,399 Speaker 1: this kind of marked a turn where people started to 389 00:23:02,440 --> 00:23:08,600 Speaker 1: get who wrote this was this Jane Jane McGrath, remember Jane, uh. 390 00:23:08,840 --> 00:23:11,919 Speaker 1: She calls it a growing distaste for inherited wealth. And 391 00:23:11,960 --> 00:23:14,400 Speaker 1: it started to kind of pick up steam, most notably, 392 00:23:15,080 --> 00:23:18,760 Speaker 1: UM in the form of President Teddy Roosevelt, who was 393 00:23:18,800 --> 00:23:22,720 Speaker 1: not a fan. No, he actually around this time there 394 00:23:22,800 --> 00:23:25,880 Speaker 1: was another there was another big push for the income text. 395 00:23:25,920 --> 00:23:30,280 Speaker 1: Remember it had been repealed, and Um Roosevelt was like, 396 00:23:30,440 --> 00:23:32,560 Speaker 1: I'm not sure about the income tax, but I'll tell 397 00:23:32,560 --> 00:23:35,840 Speaker 1: you what is great idea, that estate tax. Let's get 398 00:23:35,880 --> 00:23:40,280 Speaker 1: one of those in there. Um he said. Basically, our 399 00:23:40,400 --> 00:23:43,760 Speaker 1: national legislators should enact a law providing for a graduated 400 00:23:43,800 --> 00:23:46,520 Speaker 1: inheritance text. The prime objects should be to put a 401 00:23:46,600 --> 00:23:50,439 Speaker 1: constantly increasing burden on the inheritance of those swollen fortunes, 402 00:23:51,000 --> 00:23:53,440 Speaker 1: which it is certainly of no benefits to this country 403 00:23:53,480 --> 00:23:56,960 Speaker 1: to perpetuate. I mean that kind of lays it down there, 404 00:23:58,080 --> 00:24:02,000 Speaker 1: go out and make your own money essentially. Well, yeah, 405 00:24:02,000 --> 00:24:05,159 Speaker 1: and I think part of the other point, um, is 406 00:24:05,359 --> 00:24:07,879 Speaker 1: that really seems to apply today. If you've listened to 407 00:24:07,880 --> 00:24:12,600 Speaker 1: our Dark Money episode two. Um money very easily translates 408 00:24:12,600 --> 00:24:17,280 Speaker 1: into political power. Now it translates into political speech, but 409 00:24:17,320 --> 00:24:20,800 Speaker 1: it's always translated into political power. And if you have 410 00:24:21,440 --> 00:24:23,640 Speaker 1: more and more money just being passed along from one 411 00:24:23,680 --> 00:24:27,919 Speaker 1: generation to the next, that that that family is not 412 00:24:28,040 --> 00:24:30,480 Speaker 1: just amassing more and more money, they're amassing more and 413 00:24:30,520 --> 00:24:35,160 Speaker 1: more power. And that's not good for democracies. It's good 414 00:24:35,200 --> 00:24:39,720 Speaker 1: for monarchies, but not democracies. And that's what Roosevelt was saying. 415 00:24:40,480 --> 00:24:44,280 Speaker 1: Uh so Roosevelt support it big time. It also was 416 00:24:44,320 --> 00:24:48,040 Speaker 1: supported by Taft and Wilson, but it still took a 417 00:24:48,040 --> 00:24:52,320 Speaker 1: little bit of time and another war before Congress would 418 00:24:52,480 --> 00:24:55,600 Speaker 1: get back on board again with another death tax. World 419 00:24:55,600 --> 00:24:59,960 Speaker 1: War One. Yes, world War One, the US lowered terror 420 00:25:00,080 --> 00:25:02,679 Speaker 1: us on our allies and wanted to build up a 421 00:25:02,720 --> 00:25:05,480 Speaker 1: stronger defense, and all of a sudden they said, wait 422 00:25:05,480 --> 00:25:08,840 Speaker 1: a minute, we we need dough. Yeah, those new fangled 423 00:25:08,840 --> 00:25:14,480 Speaker 1: tanks aren't cheap, they're not building themselves. So they went 424 00:25:14,520 --> 00:25:17,400 Speaker 1: back and said, all right, maybe that income tax ideas 425 00:25:17,480 --> 00:25:19,719 Speaker 1: pretty good one. So they came up with the Revenue 426 00:25:19,720 --> 00:25:22,919 Speaker 1: Act of nineteen sixteen, and that's where the modern the 427 00:25:23,040 --> 00:25:27,240 Speaker 1: modern income tax and the modern um the state tax 428 00:25:27,280 --> 00:25:30,000 Speaker 1: were born. And there's been no going back. No, there 429 00:25:30,000 --> 00:25:34,119 Speaker 1: really hasn't because they were initially Apparently initially they planned 430 00:25:34,160 --> 00:25:38,040 Speaker 1: on repealing it after the war, and they're like, this 431 00:25:38,119 --> 00:25:41,000 Speaker 1: feels pretty good. I like rolling in piles of money, 432 00:25:41,400 --> 00:25:44,520 Speaker 1: so let's just keep it going. And at this point, 433 00:25:44,560 --> 00:25:49,040 Speaker 1: the exemption was fifty thou dollars and had a graduated 434 00:25:49,119 --> 00:25:52,000 Speaker 1: rate of one per cent on amounts under fifty grand, 435 00:25:52,160 --> 00:25:58,680 Speaker 1: up to ten on amounts over five million dollars. Right, 436 00:25:58,840 --> 00:26:01,880 Speaker 1: it's a lot of dough back in. Yeah, it also 437 00:26:02,000 --> 00:26:06,040 Speaker 1: text um real land, personal property. Uh, if you transferred 438 00:26:06,040 --> 00:26:09,400 Speaker 1: something at death or even in the two years before death, 439 00:26:09,720 --> 00:26:14,200 Speaker 1: that loophole. Yep, it was taxed um and then the 440 00:26:14,200 --> 00:26:16,840 Speaker 1: the gift tax, but there's still a loophole. See like 441 00:26:16,880 --> 00:26:18,679 Speaker 1: if you did it three years, if you transferred all 442 00:26:18,680 --> 00:26:21,280 Speaker 1: of it three years before your death, you're fine. Um, 443 00:26:21,359 --> 00:26:23,040 Speaker 1: you just had to live in poverty for the last 444 00:26:23,040 --> 00:26:25,879 Speaker 1: three years of your life and hope that you called 445 00:26:25,920 --> 00:26:29,120 Speaker 1: it correctly and that it wasn't like seventeen years. Right. 446 00:26:30,000 --> 00:26:34,000 Speaker 1: So in Congress said, we see what you're doing. We're 447 00:26:34,000 --> 00:26:36,439 Speaker 1: coming back with that gift tax again. That was a 448 00:26:36,480 --> 00:26:38,680 Speaker 1: good idea. I don't know why we ever forgot it. 449 00:26:39,080 --> 00:26:41,919 Speaker 1: We lost our institutional memory but we're putting it back in. 450 00:26:41,960 --> 00:26:44,080 Speaker 1: So they put in this gift tax, and now all 451 00:26:44,080 --> 00:26:48,399 Speaker 1: of a sudden it was um not smart too, it 452 00:26:48,520 --> 00:26:52,080 Speaker 1: was not a loophole any longer. Yeah, and then the 453 00:26:52,160 --> 00:26:54,080 Speaker 1: Great Depression had a lot to do with that, because 454 00:26:54,080 --> 00:26:57,639 Speaker 1: obviously income tax went down during the Great Depression, and 455 00:26:57,680 --> 00:27:00,480 Speaker 1: they said, our coffers are getting low, so we need 456 00:27:00,520 --> 00:27:03,720 Speaker 1: to equalize this again. That's right. And I think the 457 00:27:03,720 --> 00:27:06,960 Speaker 1: gift tax his state since then too, right, It never 458 00:27:06,960 --> 00:27:10,080 Speaker 1: went away, Yeah, because I guess it was challenged in 459 00:27:10,119 --> 00:27:12,159 Speaker 1: court and it was upheld by the Supreme Court to 460 00:27:12,200 --> 00:27:15,399 Speaker 1: be constitutional. But Congress is like, ah, we'll repeal it, 461 00:27:15,760 --> 00:27:17,359 Speaker 1: and then yeah, they brought it back and it's been 462 00:27:17,400 --> 00:27:20,199 Speaker 1: there ever since. Yeah. And here's a staggering stat you know. 463 00:27:20,240 --> 00:27:23,679 Speaker 1: We we've talked before about past income tax and uh, 464 00:27:24,520 --> 00:27:26,000 Speaker 1: how even though it might not seem like it, we've 465 00:27:26,040 --> 00:27:29,159 Speaker 1: got it pretty good today compared to certain years. But 466 00:27:29,520 --> 00:27:33,520 Speaker 1: the estate tax from World War Two, when they raised rates, 467 00:27:33,680 --> 00:27:37,800 Speaker 1: uh ninety one until nineteen seventy seven, the very top 468 00:27:38,040 --> 00:27:44,160 Speaker 1: estate tax was seventy seven percent. Isn't that crazy? Wow, 469 00:27:44,200 --> 00:27:48,720 Speaker 1: that's pretty high. Oh yeah, that's like Gerard Depardu fleeing 470 00:27:48,800 --> 00:27:51,480 Speaker 1: for the borders high you know what I mean. Yeah, 471 00:27:51,520 --> 00:27:53,520 Speaker 1: like you made all this stow in your life and 472 00:27:54,160 --> 00:27:56,840 Speaker 1: you get to keep your family gets to keep it 473 00:27:57,359 --> 00:28:01,680 Speaker 1: after you die. Yeah, and give us a smile. So 474 00:28:02,200 --> 00:28:05,600 Speaker 1: the m they stayed that way actually for a really 475 00:28:05,600 --> 00:28:10,240 Speaker 1: long time. It wasn't until yeah, it wasn't until nineteen 476 00:28:10,320 --> 00:28:14,240 Speaker 1: seventy seven that Congress brought that highest rate down from 477 00:28:14,280 --> 00:28:17,920 Speaker 1: seventy and they just brought it down to seventy then 478 00:28:18,000 --> 00:28:21,919 Speaker 1: and then um, Reagan came in and started whittling it away, uh, 479 00:28:22,080 --> 00:28:25,720 Speaker 1: little by little, um and it got as far down 480 00:28:25,760 --> 00:28:29,280 Speaker 1: as I think. Yeah. That was the Tax Reformact of 481 00:28:29,320 --> 00:28:31,840 Speaker 1: nineteen seventy six. And another thing came along with that. 482 00:28:32,359 --> 00:28:34,240 Speaker 1: It was something called the g s T tax, the 483 00:28:34,359 --> 00:28:39,120 Speaker 1: Generation skipping transfer tax, another loophole, yeah, which is like, oh, well, 484 00:28:39,120 --> 00:28:41,120 Speaker 1: I'm not gonna give my fortune to my kids, I'll 485 00:28:41,120 --> 00:28:44,040 Speaker 1: give it to my grandkids, wink wink. And then if 486 00:28:44,040 --> 00:28:46,000 Speaker 1: you had a really good estate planner, they could teach 487 00:28:46,040 --> 00:28:49,760 Speaker 1: you how to leave your assets to your grandkids, but 488 00:28:49,920 --> 00:28:53,840 Speaker 1: make your kids the beneficiary of any interest in income 489 00:28:53,880 --> 00:28:57,920 Speaker 1: arising from those assets. So both generations were taken care 490 00:28:57,960 --> 00:29:01,440 Speaker 1: of text free so they in nineteen seventy six they 491 00:29:01,480 --> 00:29:05,360 Speaker 1: closed that loophole with the generation skipping transfer tax, and 492 00:29:05,400 --> 00:29:12,240 Speaker 1: grandchildren around the world cried and cried, cried, yeah, and 493 00:29:12,280 --> 00:29:17,200 Speaker 1: that's when the um well, the exemption at that point 494 00:29:17,800 --> 00:29:20,120 Speaker 1: in nineteen seventy six went from sixty grand to a 495 00:29:20,200 --> 00:29:24,480 Speaker 1: hundred and twenty thousand dollars. And you know what, let's 496 00:29:24,520 --> 00:29:26,440 Speaker 1: take a little break here. I'm gonna leave people in suspense, 497 00:29:26,800 --> 00:29:49,840 Speaker 1: I think wed because I'm starting to get excited. All right, Chuck, 498 00:29:50,000 --> 00:29:53,440 Speaker 1: you've left this in suspense long enough. What so that 499 00:29:53,560 --> 00:29:56,800 Speaker 1: exemption rate, I said, in Uh, the Tax Reformact of 500 00:29:56,880 --> 00:30:00,520 Speaker 1: nineteen seventy six went from sixty grand to one at seven. 501 00:30:01,160 --> 00:30:05,120 Speaker 1: And we've explained what the exemption was, right like or 502 00:30:05,160 --> 00:30:08,280 Speaker 1: did we not? Even? I feel like we did, But 503 00:30:08,360 --> 00:30:11,280 Speaker 1: if not, just make it more clear. The exemption is where, 504 00:30:11,400 --> 00:30:14,760 Speaker 1: if you're the value of your estate comes and that's 505 00:30:14,800 --> 00:30:17,240 Speaker 1: part of the process is everybody goes in and says 506 00:30:17,280 --> 00:30:19,680 Speaker 1: this is worth this much, No, it's not, YESI and 507 00:30:19,680 --> 00:30:21,120 Speaker 1: then they come up with the value of your state. 508 00:30:21,280 --> 00:30:24,920 Speaker 1: If that value was less than sixty grand at that point, 509 00:30:25,360 --> 00:30:28,520 Speaker 1: then you're you could transfer it to any you could 510 00:30:28,520 --> 00:30:32,360 Speaker 1: transfer it to claim text free. It's exempt below the 511 00:30:32,880 --> 00:30:35,440 Speaker 1: level of sixty grands, okay, so super clear. So that 512 00:30:35,520 --> 00:30:38,120 Speaker 1: rose to a hundred and twenty grand and change. Uh. 513 00:30:38,160 --> 00:30:41,400 Speaker 1: And then in the nineteen nineties things kind of started 514 00:30:41,480 --> 00:30:45,120 Speaker 1: rolling a little bit. We had this uh big budget surplus. 515 00:30:45,800 --> 00:30:48,560 Speaker 1: I remember that, Yeah, the good old days. And then 516 00:30:48,840 --> 00:30:50,960 Speaker 1: George W. Came along and said, you know we're gonna 517 00:30:50,960 --> 00:30:52,760 Speaker 1: do we got this big surplus, we're gonna start giving 518 00:30:52,800 --> 00:30:57,080 Speaker 1: it back to the American people, um, and especially the 519 00:30:57,160 --> 00:31:05,880 Speaker 1: wealthy American people. And um, the the threshold really started climbing. Yeah, 520 00:31:06,080 --> 00:31:09,160 Speaker 1: Like it went from in two thousand nine, it had 521 00:31:09,160 --> 00:31:12,320 Speaker 1: climbed to six hundred and seventy five thousand dollars not bad. 522 00:31:12,680 --> 00:31:15,240 Speaker 1: And it jumped from six d seventy five thousand to 523 00:31:15,400 --> 00:31:19,280 Speaker 1: three point five million dollars, yeah, in two thousand nine. 524 00:31:19,520 --> 00:31:24,720 Speaker 1: So it went from from the eighties and of or 525 00:31:24,800 --> 00:31:27,040 Speaker 1: no I'm sorry, the seventies a hundred and twenty thousand 526 00:31:27,880 --> 00:31:31,400 Speaker 1: to thirty years later three and a half million dollars. 527 00:31:32,240 --> 00:31:35,800 Speaker 1: The exemption was. Yes, that that is quite a climb, 528 00:31:36,040 --> 00:31:39,720 Speaker 1: but it had an even more astronomical climb from two 529 00:31:39,800 --> 00:31:44,960 Speaker 1: thousand nine to uh two thousand thirteen because it went 530 00:31:45,080 --> 00:31:49,400 Speaker 1: chuck in the Taxpayer Relief Acts. So remember George W. 531 00:31:49,640 --> 00:31:52,760 Speaker 1: Came in and said, hey, it's not government's role to 532 00:31:52,840 --> 00:31:55,720 Speaker 1: have a bunch of taxpayers money and you don't know 533 00:31:55,760 --> 00:31:57,920 Speaker 1: what you're gonna do with it. Give it back. I'm 534 00:31:58,000 --> 00:31:59,960 Speaker 1: the man who's gonna get it back. And like you said, 535 00:32:00,000 --> 00:32:03,200 Speaker 1: and certain people got it back, some other people got 536 00:32:03,280 --> 00:32:07,200 Speaker 1: it back. But it was a transfer of wealth, right. Um. 537 00:32:07,320 --> 00:32:10,320 Speaker 1: Barack Obama came in and said, you know what, that 538 00:32:10,400 --> 00:32:12,840 Speaker 1: was screwed up. I'm gonna get some of that money 539 00:32:12,920 --> 00:32:15,560 Speaker 1: back for everybody. I'm gonna tax the wealthy. I'm gonna 540 00:32:15,600 --> 00:32:18,000 Speaker 1: get rid of these so called Bush tax cuts, which 541 00:32:18,040 --> 00:32:22,440 Speaker 1: is what they were called. And um, he didn't at all. 542 00:32:23,000 --> 00:32:26,040 Speaker 1: As a matter of fact, he signed into law in 543 00:32:26,120 --> 00:32:31,120 Speaker 1: two thousand twelve, the Taxpayer Relief Act of two thousand 544 00:32:31,160 --> 00:32:34,160 Speaker 1: and twelve, which took the Bush tax cuts which were 545 00:32:34,720 --> 00:32:38,800 Speaker 1: which had expired already, um, but then had been extended 546 00:32:38,800 --> 00:32:41,600 Speaker 1: temporarily for two years. He took those Bush tax cuts 547 00:32:41,640 --> 00:32:44,960 Speaker 1: he campaigned on getting rid of, and actually enshrined them 548 00:32:45,000 --> 00:32:49,720 Speaker 1: in law. And now for the indefinite future. They the 549 00:32:50,080 --> 00:32:53,160 Speaker 1: um the exemption is up to five million dollars for 550 00:32:53,240 --> 00:32:55,560 Speaker 1: in a state more than that now actually, so it 551 00:32:55,640 --> 00:32:58,880 Speaker 1: must have been at least five Well it's index for inflation. Yes, 552 00:32:58,920 --> 00:33:00,960 Speaker 1: And now for two thou and sixteen it was four 553 00:33:01,280 --> 00:33:05,160 Speaker 1: five point four five million um for a single individual, 554 00:33:05,200 --> 00:33:08,120 Speaker 1: ten point nine for a couple for a couple yeah. Uh. 555 00:33:08,160 --> 00:33:14,560 Speaker 1: And then um, the tax rates were set at fort maximum, right, 556 00:33:14,680 --> 00:33:17,840 Speaker 1: and that's after it had gone down to thirty five 557 00:33:18,440 --> 00:33:21,320 Speaker 1: under Busch. So I think that was part of the compromise, 558 00:33:21,800 --> 00:33:25,680 Speaker 1: and let's bring it up, but let's let's basically make 559 00:33:25,720 --> 00:33:29,680 Speaker 1: it permanent at five mill Yeah. And there was even 560 00:33:29,720 --> 00:33:32,360 Speaker 1: a year in there. This is crazy. Do you remember this, 561 00:33:32,360 --> 00:33:34,320 Speaker 1: this whole back and forth, like getting rid of the 562 00:33:34,320 --> 00:33:38,600 Speaker 1: bush tax? What's gonna happen? Yeah? And um, in two 563 00:33:38,600 --> 00:33:41,560 Speaker 1: thousand and ten there was I guess they didn't sign 564 00:33:41,640 --> 00:33:43,720 Speaker 1: a paper fast enough for something. But there was no 565 00:33:43,800 --> 00:33:47,360 Speaker 1: death tax in that year. So if you're wealthy and 566 00:33:47,480 --> 00:33:52,080 Speaker 1: Gladys died in two thousand and ten, you were you 567 00:33:52,080 --> 00:33:55,640 Speaker 1: you lucked out because the very next year, those uh, 568 00:33:55,680 --> 00:33:59,200 Speaker 1: those cuts got restored, or those those gifts taxes or 569 00:33:59,320 --> 00:34:01,440 Speaker 1: estate taxes out of store. And don't think that there 570 00:34:01,440 --> 00:34:04,320 Speaker 1: weren't some people in two thousand ten that were peeking 571 00:34:04,320 --> 00:34:10,440 Speaker 1: in on Aunt Gladys holding a pillow in their hands. Us. Yeah, 572 00:34:11,080 --> 00:34:13,239 Speaker 1: that's not funny at all. Killing a relative for their 573 00:34:13,280 --> 00:34:16,600 Speaker 1: inheritance is not funny. No, it's not certainly not in practice. 574 00:34:17,280 --> 00:34:18,920 Speaker 1: So here's the deal, and we're going to get to 575 00:34:18,920 --> 00:34:21,240 Speaker 1: the pros and cons in a second. But like I said, 576 00:34:21,320 --> 00:34:27,080 Speaker 1: for because of inflation, five five point four or five 577 00:34:27,120 --> 00:34:32,520 Speaker 1: million dollars is the lifetime exclusion amount. They have this 578 00:34:32,640 --> 00:34:36,799 Speaker 1: chart you can basically throw out the window that says like, 579 00:34:36,960 --> 00:34:39,879 Speaker 1: if you have a taxable state of four grand, you'll 580 00:34:39,880 --> 00:34:43,400 Speaker 1: low seventy thousand dollars plus thirty of a hundred and 581 00:34:43,400 --> 00:34:45,640 Speaker 1: fifty thousand because you have to pay a percentage on 582 00:34:45,640 --> 00:34:47,719 Speaker 1: the amount and excess of the lower limit. It's all 583 00:34:47,800 --> 00:34:51,520 Speaker 1: mine numbing if you're just a lay person. But throw 584 00:34:51,560 --> 00:34:54,480 Speaker 1: that all out the door, because anything under five point 585 00:34:54,760 --> 00:34:56,880 Speaker 1: four or five million, let's just call it five and 586 00:34:56,880 --> 00:35:00,640 Speaker 1: a half million bucks is under that ex lousion amount. 587 00:35:00,840 --> 00:35:03,280 Speaker 1: But here's the weird part. Because it's the United States 588 00:35:03,800 --> 00:35:08,120 Speaker 1: and we can't just make things simple. It's a unified credit. 589 00:35:08,160 --> 00:35:10,719 Speaker 1: It's how it's structured. So what what you have to 590 00:35:10,760 --> 00:35:13,680 Speaker 1: do is you have to structure it to pay on 591 00:35:13,760 --> 00:35:16,480 Speaker 1: the full amount, and then they give you a tax 592 00:35:16,600 --> 00:35:21,279 Speaker 1: credit back. Oh, that's just to make convoluted. That's not okay, though, 593 00:35:21,320 --> 00:35:22,920 Speaker 1: you pay the full amount and then they're like, and 594 00:35:22,920 --> 00:35:25,160 Speaker 1: then we'll pay you back what you I don't think 595 00:35:25,200 --> 00:35:26,799 Speaker 1: you pay it. Actually, I think it's just in the 596 00:35:26,840 --> 00:35:32,120 Speaker 1: computation different. But it still seems just unnecessarily convoluted, Like 597 00:35:32,239 --> 00:35:35,279 Speaker 1: you should just knock it off the top and see 598 00:35:35,280 --> 00:35:39,200 Speaker 1: what you got left. Here's the other trick. If you 599 00:35:39,239 --> 00:35:41,960 Speaker 1: have a lot of money, and we should say that 600 00:35:42,000 --> 00:35:45,640 Speaker 1: this is we do not qualify as text experts, or 601 00:35:45,640 --> 00:35:48,319 Speaker 1: if we're giving tax advice. If if you're subject to 602 00:35:48,400 --> 00:35:51,319 Speaker 1: the estate tax and you're using our tax advice, No, no, no, 603 00:35:51,400 --> 00:35:54,880 Speaker 1: how did you come up with that money? Yeah? Uh? 604 00:35:55,000 --> 00:35:58,400 Speaker 1: The gift thing, there's an annual gift tax exemption of 605 00:35:58,400 --> 00:36:03,200 Speaker 1: fourteen thou dollars per person. Oh yeah, so if you 606 00:36:03,280 --> 00:36:06,719 Speaker 1: have three kids, that's per year. Yeah, if you have 607 00:36:06,760 --> 00:36:09,000 Speaker 1: three per person per years. If you've got three kids 608 00:36:09,400 --> 00:36:11,880 Speaker 1: and they're all three married, and they have ten kids 609 00:36:11,920 --> 00:36:14,680 Speaker 1: between them, and they they all are successful, they don't 610 00:36:14,719 --> 00:36:17,719 Speaker 1: have drug habits or anything like that, right, you can 611 00:36:17,760 --> 00:36:20,040 Speaker 1: give fourteen thousand dollars a year to each one of 612 00:36:20,080 --> 00:36:25,040 Speaker 1: them per spouse. So that's four hundred and forty eight 613 00:36:25,040 --> 00:36:28,680 Speaker 1: thousand dollars a year to those three kids, their three spouses, 614 00:36:28,719 --> 00:36:33,560 Speaker 1: and those ten grandkids. And if you plan ahead way 615 00:36:33,600 --> 00:36:36,799 Speaker 1: before your death, you could potentially give away all your 616 00:36:36,840 --> 00:36:40,520 Speaker 1: money tax free by the time you die through gifts. 617 00:36:42,239 --> 00:36:49,840 Speaker 1: So that seems legit to me because that is clearly 618 00:36:50,400 --> 00:36:53,360 Speaker 1: middle class. It's upper middle class, but that's middle class. 619 00:36:53,400 --> 00:36:58,680 Speaker 1: That that cap, the five million, No, that gift tax. Yeah, 620 00:36:58,880 --> 00:37:02,240 Speaker 1: that cap of fourteen grand a year. It's not gonna 621 00:37:02,480 --> 00:37:07,800 Speaker 1: help funnel a massive estate tax free onto the airs, 622 00:37:07,800 --> 00:37:11,439 Speaker 1: but it does give a break to middle class, upper 623 00:37:11,480 --> 00:37:14,239 Speaker 1: middle class, but middle class families. Well, but you would 624 00:37:14,280 --> 00:37:15,840 Speaker 1: only be given that away though, if you were going 625 00:37:15,880 --> 00:37:20,360 Speaker 1: to be above the five million dollars, right, because anything 626 00:37:20,400 --> 00:37:22,680 Speaker 1: under that is exempted. So that ain't middle class. No, 627 00:37:22,800 --> 00:37:25,719 Speaker 1: that's true, you're right, you know. Okay, Well that was 628 00:37:25,920 --> 00:37:29,319 Speaker 1: that was a stupid thing for me to say. So 629 00:37:29,440 --> 00:37:34,040 Speaker 1: if you're out there thinking, even with the deduction at rate, 630 00:37:34,120 --> 00:37:37,040 Speaker 1: is a lot of money on an estate tax. They 631 00:37:37,040 --> 00:37:38,840 Speaker 1: give an example here in this article. Let's say you 632 00:37:38,840 --> 00:37:42,400 Speaker 1: have a seven million dollar estate knock off the five 633 00:37:42,560 --> 00:37:45,439 Speaker 1: point four or five million, that's one point five five 634 00:37:45,440 --> 00:37:50,000 Speaker 1: million at that's about six and twenty thousand. So if 635 00:37:50,000 --> 00:37:51,879 Speaker 1: you didn't look at that for the whole seven million 636 00:37:51,920 --> 00:37:55,680 Speaker 1: dollars state, that's only about nine. Yeah. And actually I 637 00:37:55,719 --> 00:38:01,920 Speaker 1: saw a two thousand thirteen Brooking study Text Policy Institute. 638 00:38:01,920 --> 00:38:07,719 Speaker 1: I think study found that of in that year, of 639 00:38:07,760 --> 00:38:10,680 Speaker 1: all of the estates that had to pay taxes, they 640 00:38:10,840 --> 00:38:14,719 Speaker 1: paid an average effective rate what they actually paid of 641 00:38:14,840 --> 00:38:21,120 Speaker 1: sixteen point six percent, nothing like and um in that 642 00:38:21,200 --> 00:38:23,640 Speaker 1: same year. There's another one too. There's there's a lot 643 00:38:23,680 --> 00:38:26,240 Speaker 1: of objection. We should talk about some of these objections. 644 00:38:26,719 --> 00:38:31,080 Speaker 1: Some of the objections to this is they're basically they 645 00:38:31,120 --> 00:38:35,680 Speaker 1: go into two tranches. One is that this kind of 646 00:38:35,760 --> 00:38:39,120 Speaker 1: tax stifles investment. That is the very wealthy and the 647 00:38:39,239 --> 00:38:42,560 Speaker 1: very rich, who are really that the economic engines of 648 00:38:42,560 --> 00:38:47,040 Speaker 1: America and capitalism't because they introduce capital to the markets 649 00:38:47,080 --> 00:38:49,680 Speaker 1: and that's what drives the markets and makes the economic 650 00:38:49,719 --> 00:38:51,600 Speaker 1: engine hum. And we're all better off as long as 651 00:38:51,600 --> 00:38:55,000 Speaker 1: the wealthier pumping money into this. Well, if we don't pump, 652 00:38:55,080 --> 00:38:58,520 Speaker 1: if we don't let the rich pump more money into it, 653 00:38:58,600 --> 00:39:01,800 Speaker 1: meaning the government comes along and says, your father just died, 654 00:39:02,080 --> 00:39:05,520 Speaker 1: give us of his of that vast estate that you 655 00:39:05,640 --> 00:39:08,960 Speaker 1: just inherited, Well, that's going to Uncle Sam rather than 656 00:39:09,000 --> 00:39:12,960 Speaker 1: potentially into the markets. Yeah. And also some people would say, hey, 657 00:39:13,040 --> 00:39:16,840 Speaker 1: that's attacks for being successful. Well, that's the other trunch 658 00:39:17,000 --> 00:39:21,759 Speaker 1: is that it's basically morally incorrect for the government to 659 00:39:21,800 --> 00:39:25,080 Speaker 1: come in and say give us some money wealthy person. 660 00:39:25,920 --> 00:39:29,160 Speaker 1: That yeah, that it's attacks on on success, that the 661 00:39:29,200 --> 00:39:35,759 Speaker 1: government has no business taxing inter family fortunes, um. And 662 00:39:35,800 --> 00:39:39,919 Speaker 1: then again that it stifles economic growth and development. Yeah. 663 00:39:39,960 --> 00:39:43,480 Speaker 1: And another thing if you're against this, someone might say is, hey, 664 00:39:43,560 --> 00:39:45,680 Speaker 1: we were already taxed on that stuff to begin with 665 00:39:46,160 --> 00:39:48,920 Speaker 1: during life. So now and not only that, but my 666 00:39:49,000 --> 00:39:51,759 Speaker 1: dad inherited that and paid in a state tax. So 667 00:39:51,840 --> 00:39:55,520 Speaker 1: it's just double and triple and who knows depends on 668 00:39:55,560 --> 00:39:58,960 Speaker 1: how long your family wealth goes back? Is how many 669 00:39:59,040 --> 00:40:03,320 Speaker 1: times it's tax Yeah, because not only was it taxes income, 670 00:40:03,360 --> 00:40:05,880 Speaker 1: it could be taxed multiple times. Is in a state 671 00:40:05,960 --> 00:40:08,600 Speaker 1: that same estate is what you're saying. Yeah, Then of 672 00:40:08,640 --> 00:40:11,120 Speaker 1: course a lot of people drop the mic with it's 673 00:40:11,160 --> 00:40:15,040 Speaker 1: a wealth redistribution scheme that you're trying to take money 674 00:40:15,120 --> 00:40:18,640 Speaker 1: from the wealthy and give it to the less wealthy 675 00:40:19,080 --> 00:40:23,160 Speaker 1: e g. The poor and um, home, we don't play that. 676 00:40:25,040 --> 00:40:29,120 Speaker 1: I remember Holming the Clown. That was great. Uh that 677 00:40:29,200 --> 00:40:32,240 Speaker 1: was a great show. Yeah, oh yeah in living color. Yeah. 678 00:40:32,280 --> 00:40:36,319 Speaker 1: It's crazy how many things kind of like carried over 679 00:40:36,640 --> 00:40:39,319 Speaker 1: and are still part of the lexicon. Home, we don't play. 680 00:40:39,560 --> 00:40:41,480 Speaker 1: We don't play that. Two snaps up. Let's bring all 681 00:40:41,480 --> 00:40:47,400 Speaker 1: that stuff back, two snaps um. Another knock is that 682 00:40:47,440 --> 00:40:50,840 Speaker 1: people say, you know what this is, state taxes is 683 00:40:50,920 --> 00:40:53,400 Speaker 1: less than like one per cent of what the government 684 00:40:53,440 --> 00:40:57,120 Speaker 1: collects annually, and they probably spend that much going after 685 00:40:57,160 --> 00:41:00,799 Speaker 1: it and litigating this stuff because nine times out of ten, 686 00:41:01,480 --> 00:41:05,440 Speaker 1: wealthy people are fighting this tooth and nail and you know, 687 00:41:05,560 --> 00:41:08,200 Speaker 1: just cause too much to go get it. And that's 688 00:41:08,239 --> 00:41:11,120 Speaker 1: a a lot of these, it turns out, are pretty disingenuous, 689 00:41:11,160 --> 00:41:14,600 Speaker 1: Like they sound right if you don't look into them, 690 00:41:14,800 --> 00:41:17,160 Speaker 1: but apparently a lot of them are not correct, like 691 00:41:17,200 --> 00:41:21,760 Speaker 1: the idea that the effective tax rate is sixteen percent 692 00:41:21,840 --> 00:41:25,640 Speaker 1: or seventeen percent, not fort Another one is that it 693 00:41:25,719 --> 00:41:29,520 Speaker 1: hurts small businesses. This is a big boogeyman with the 694 00:41:29,640 --> 00:41:34,080 Speaker 1: estate tax as well, like that you if you go 695 00:41:34,239 --> 00:41:39,640 Speaker 1: in and a family owned business or a family owned farm. 696 00:41:39,680 --> 00:41:42,480 Speaker 1: If the government goes in there and says you own 697 00:41:43,680 --> 00:41:46,839 Speaker 1: on that just because your father died, So go sell 698 00:41:46,880 --> 00:41:49,320 Speaker 1: some of the cows, go sell a tractor, you hay seed, 699 00:41:49,480 --> 00:41:52,240 Speaker 1: and give us the money. That's gonna have a really 700 00:41:52,280 --> 00:41:55,640 Speaker 1: negative effect on the family farm or the family small business. 701 00:41:56,040 --> 00:41:58,040 Speaker 1: It may even cause it to go bankrupt. It may 702 00:41:58,160 --> 00:42:01,040 Speaker 1: cause the farm to go under. That's not good. The 703 00:42:01,040 --> 00:42:03,560 Speaker 1: government can't do that. Yeah, you hear that, and you think, 704 00:42:03,840 --> 00:42:06,560 Speaker 1: of course that's awful, right, but the facts don't bear 705 00:42:06,600 --> 00:42:10,040 Speaker 1: that out, correct, right. That same two thirteen Brooking study 706 00:42:10,080 --> 00:42:15,560 Speaker 1: found that in two thousand thirteen, twenty twenty small businesses 707 00:42:15,600 --> 00:42:19,800 Speaker 1: and farms owed any estate tax at all, and on average, 708 00:42:19,840 --> 00:42:23,560 Speaker 1: those twenty small businesses and small farms that did have 709 00:42:23,600 --> 00:42:25,879 Speaker 1: to pay a state tax paid an average about four 710 00:42:25,920 --> 00:42:30,200 Speaker 1: point nine percent of the value of the estate. Um, 711 00:42:30,239 --> 00:42:33,920 Speaker 1: there's special there's special rules, especially for calculating the value 712 00:42:33,920 --> 00:42:38,120 Speaker 1: of farmland for estate taxes, in particular, that reduces their 713 00:42:38,200 --> 00:42:43,640 Speaker 1: value so that the tax is inherently lesser. Another reason 714 00:42:43,760 --> 00:42:47,480 Speaker 1: someone says might say that they're unfair. I'm sorry, you 715 00:42:47,560 --> 00:42:50,320 Speaker 1: might say that they're fair, is what we alluded to 716 00:42:50,360 --> 00:42:53,640 Speaker 1: a little bit earlier about the concentration of wealth is 717 00:42:53,680 --> 00:42:57,239 Speaker 1: not a good thing, not just economically, but um when 718 00:42:57,239 --> 00:43:00,880 Speaker 1: it comes to power, and it's dangerous to a democratic 719 00:43:00,920 --> 00:43:05,279 Speaker 1: society to have UM. The influencers of this country be 720 00:43:05,440 --> 00:43:10,160 Speaker 1: so few and only influencers because they have so much right, 721 00:43:10,320 --> 00:43:14,759 Speaker 1: and the average Joe's voice is lost in the process. Yeah, so. 722 00:43:14,920 --> 00:43:18,000 Speaker 1: Somewhere somebody pointed out that the estate taxes the most 723 00:43:18,040 --> 00:43:21,640 Speaker 1: progressive part of the entire U S tax code because 724 00:43:21,640 --> 00:43:25,600 Speaker 1: it truly only affects the people who actually can afford it, 725 00:43:25,880 --> 00:43:28,799 Speaker 1: or who are actually wealthy. It doesn't it has no 726 00:43:28,960 --> 00:43:34,360 Speaker 1: undoe or disproportionate burden, or any burden on people of 727 00:43:34,719 --> 00:43:42,600 Speaker 1: lower socioeconomic status or even middle socioeconomic status. Something like um, 728 00:43:42,800 --> 00:43:48,120 Speaker 1: two tenths of one percent of households are subject to 729 00:43:48,160 --> 00:43:51,640 Speaker 1: the estate tax in the United States this year. I 730 00:43:51,680 --> 00:43:58,720 Speaker 1: think two tenths of one percent. That's not much, that's true. 731 00:43:58,960 --> 00:44:02,080 Speaker 1: And then another one to address that, the idea that 732 00:44:02,120 --> 00:44:04,280 Speaker 1: it doesn't bring in very much, and the government spends 733 00:44:04,320 --> 00:44:08,120 Speaker 1: more money than it then it takes in it. Yeah, 734 00:44:08,120 --> 00:44:11,040 Speaker 1: we're fighting for it. Supposedly. I saw estimates of two 735 00:44:11,480 --> 00:44:16,400 Speaker 1: billion I saw one estimate of two billion UM between 736 00:44:16,440 --> 00:44:19,319 Speaker 1: two thousand seventeen and two thousand twenty six is how 737 00:44:19,400 --> 00:44:22,279 Speaker 1: much they expect the estate tax to take in, which 738 00:44:22,360 --> 00:44:24,360 Speaker 1: isn't much. It's like less than one percent of the 739 00:44:24,360 --> 00:44:30,200 Speaker 1: government's tax revenue. But the author of this one article 740 00:44:30,239 --> 00:44:34,080 Speaker 1: I saw pointed out that's like the combined budgets of 741 00:44:34,120 --> 00:44:36,160 Speaker 1: the f d A, the CDC, and the e p 742 00:44:36,280 --> 00:44:41,680 Speaker 1: A combined, So it's it's actually paying for stuff, you know. 743 00:44:42,200 --> 00:44:48,160 Speaker 1: And apparently it cost about seven percent for enforcement and administration, 744 00:44:49,400 --> 00:44:54,680 Speaker 1: whereas income taxes cost about four to UM chase down 745 00:44:54,920 --> 00:44:59,440 Speaker 1: dead beats, So there's that. It's about half the state 746 00:44:59,520 --> 00:45:04,920 Speaker 1: tax problems debunked you anything else? No, I thought I 747 00:45:04,960 --> 00:45:07,400 Speaker 1: thought that was fairly interesting for someone who doesn't like 748 00:45:07,440 --> 00:45:10,839 Speaker 1: I go a little uh foggy when I start talking 749 00:45:10,880 --> 00:45:13,799 Speaker 1: about finance and taxes, But for some reason this one 750 00:45:13,880 --> 00:45:16,400 Speaker 1: kind of interested me. Do you do your own taxes? No? 751 00:45:17,040 --> 00:45:20,200 Speaker 1: I love it? No, no, no, no, I love it. Man, 752 00:45:20,239 --> 00:45:23,279 Speaker 1: I love doing taxes. I not only do I not 753 00:45:23,440 --> 00:45:27,960 Speaker 1: like it, but I would say that I can't put 754 00:45:27,960 --> 00:45:32,640 Speaker 1: a percentage on it. But having a professional involved, really 755 00:45:32,680 --> 00:45:38,480 Speaker 1: really financially is beyond worthwhile. Like a thousand percent worthwhile 756 00:45:38,640 --> 00:45:41,799 Speaker 1: Yeah for what they can save you. Oh no, I'm 757 00:45:41,800 --> 00:45:45,239 Speaker 1: sure like like we're having somebody go back over my 758 00:45:45,560 --> 00:45:49,040 Speaker 1: figures this year, but um it's and I don't like 759 00:45:49,200 --> 00:45:53,279 Speaker 1: paying tech because it's not fun. But it's like this 760 00:45:54,480 --> 00:46:00,680 Speaker 1: big horrible ball like hair and teeth after like like 761 00:46:00,880 --> 00:46:06,000 Speaker 1: work into uh a usable yeah figure, I gotta turn 762 00:46:06,040 --> 00:46:08,640 Speaker 1: it into the venus. Gummy venus to Mila. So you 763 00:46:08,680 --> 00:46:11,480 Speaker 1: take a taratoma and you form that into a beautiful 764 00:46:11,520 --> 00:46:17,239 Speaker 1: statue right with no arms, and then I cry Matt's Texas. Uh. 765 00:46:17,360 --> 00:46:19,759 Speaker 1: If you want to know more about death Texas, type 766 00:46:19,800 --> 00:46:22,680 Speaker 1: those words into the search part how stuff works dot Com. 767 00:46:22,680 --> 00:46:24,839 Speaker 1: Since I said search parts, it's time for listener mail. 768 00:46:28,000 --> 00:46:30,840 Speaker 1: I'm gonna call this uh fan that found us through Delta, 769 00:46:31,600 --> 00:46:34,239 Speaker 1: all right. I know this would pay off one day. 770 00:46:34,280 --> 00:46:36,120 Speaker 1: You know, we don't know for still on. But for 771 00:46:36,120 --> 00:46:37,920 Speaker 1: a while we were on Delta flights. We're supposed to 772 00:46:37,920 --> 00:46:39,960 Speaker 1: be back on this year, are we? And I always 773 00:46:40,040 --> 00:46:42,120 Speaker 1: kind of wondered, like we got booted off? Does anyone 774 00:46:42,160 --> 00:46:45,600 Speaker 1: actually discover us board on a flight? That's what I'm saying. 775 00:46:45,640 --> 00:46:49,960 Speaker 1: We now come we have one person, so uh, Ethan 776 00:46:50,000 --> 00:46:52,160 Speaker 1: lives in Los Angeles and says he found us on 777 00:46:52,160 --> 00:46:55,160 Speaker 1: a Delta fight and a loyal listener ever since. Um, 778 00:46:55,200 --> 00:46:57,880 Speaker 1: I'm sure many fans have their favorite episodes, favorite sweets, 779 00:46:58,280 --> 00:47:01,560 Speaker 1: band names, ideas. Here if you my favorite jokes, and 780 00:47:01,600 --> 00:47:03,200 Speaker 1: I didn't remember a couple of these, so I'm gonna 781 00:47:03,360 --> 00:47:07,200 Speaker 1: test your memory. Josh, you had one look at those 782 00:47:07,480 --> 00:47:14,040 Speaker 1: look at these shoes. I'm the king of Rotterdam. All right, Nope, 783 00:47:14,200 --> 00:47:16,040 Speaker 1: he said. He laughed for five minutes on that one. 784 00:47:16,800 --> 00:47:20,000 Speaker 1: Chuck the Language of the Beard. He says, he's still 785 00:47:20,040 --> 00:47:21,879 Speaker 1: laughing at that. In fact, anytime I need to pick 786 00:47:21,920 --> 00:47:24,399 Speaker 1: me up. I scrolled to the forty three minute mark 787 00:47:24,440 --> 00:47:27,479 Speaker 1: of how the Stigil the Stigil Organs work. The whole 788 00:47:27,480 --> 00:47:30,920 Speaker 1: exchange is hilarious, including Josh's reaction. The joke verges on 789 00:47:30,960 --> 00:47:34,680 Speaker 1: toilet humor, but doesn't quite belong in that category. So 790 00:47:34,719 --> 00:47:36,120 Speaker 1: I don't remember that one. I have to look it up. 791 00:47:37,280 --> 00:47:39,360 Speaker 1: I do remember this one, Chuck the runner up his 792 00:47:39,440 --> 00:47:41,919 Speaker 1: Chuck's line when you realize that diesel fuel is named 793 00:47:41,920 --> 00:47:46,600 Speaker 1: after a person, Jimmy Gasoline. I remember that. I remember that. 794 00:47:46,719 --> 00:47:48,880 Speaker 1: I don't remember what episode it was in, though, but 795 00:47:48,960 --> 00:47:51,680 Speaker 1: I do remember that, but he has a little factoid 796 00:47:51,719 --> 00:47:54,880 Speaker 1: for us. He finished the Alexander Hamilton's show, uh and 797 00:47:54,920 --> 00:47:57,160 Speaker 1: he says, this saw the visit of the Grange a 798 00:47:57,160 --> 00:47:58,960 Speaker 1: couple of years ago and loved it. While there, I 799 00:47:59,000 --> 00:48:01,120 Speaker 1: learned something I'm surprised you mentioned as a testament to 800 00:48:01,120 --> 00:48:04,600 Speaker 1: his character. Not only did Hamilton's shunned slavery, as you mentioned, 801 00:48:04,840 --> 00:48:08,880 Speaker 1: he also defended Tories and British subjects as a lawyer 802 00:48:08,920 --> 00:48:11,880 Speaker 1: in court. And this was only six years after the 803 00:48:11,960 --> 00:48:15,160 Speaker 1: Declaration of Independence. What a guy. Wow, he really was 804 00:48:15,280 --> 00:48:19,000 Speaker 1: top knock. Yeah, that's from Ethan barber Er. Thanks a lot. 805 00:48:19,120 --> 00:48:23,439 Speaker 1: Ethan Ethan Barber or Barber one of the two. Oh 806 00:48:23,480 --> 00:48:26,120 Speaker 1: it wasn't Barbara. It was spelled different Barber, I know, 807 00:48:26,320 --> 00:48:30,960 Speaker 1: like the hunting gear right, I don't know barb barber whatever. 808 00:48:31,680 --> 00:48:34,200 Speaker 1: If you want to get in touch of this, like 809 00:48:34,239 --> 00:48:37,399 Speaker 1: Ethan did Ethan right, Ethan, it's his last name. That's 810 00:48:37,480 --> 00:48:40,360 Speaker 1: up for grabs. You can tweet to us at s 811 00:48:40,480 --> 00:48:43,840 Speaker 1: Y s K podcast. You can join us on Facebook 812 00:48:43,880 --> 00:48:45,960 Speaker 1: dot com slash stuff you should know. You can send 813 00:48:46,000 --> 00:48:48,279 Speaker 1: us an email stuff podcast at how Stuff Works dot 814 00:48:48,320 --> 00:48:50,640 Speaker 1: com and has always joined us at our home on 815 00:48:50,680 --> 00:48:57,640 Speaker 1: the Web Stuff you Should know dot com for more 816 00:48:57,680 --> 00:48:59,960 Speaker 1: on this and thousands of other topics. Is it how 817 00:49:00,040 --> 00:49:11,400 Speaker 1: stuff works? Dot com? Mhm