Congratulations, New Yorkers! It now costs you money to die. Okay, not really. But it's an eye-grabbing headline, no? There is a kernel of truth to it, and that's the ironic thing. Because, in an attempt to stem the flight of wealthy citizens to lower tax states, New York legislators actually raised the rates on some levels of the estate tax. It's pretty convoluted and definitely involves some monkey math, but the fact is some folks who die in New York over the next decade will be on the hook for more than 100% of the taxable amount of their estate. What a great place to live (and die)!!! Check it out:
Trending Content
Career Resources
Eddie - the headline from those articles/reports are sensationalist and meant to fool people into thinking that they may owe the government more money than the estate is worth, and you know it.
I'm all for keeping taxes at reasonable levels, but come on. Shenanigans like these are just cannon fodder for people who hate on the "mainstream media" for misleading the general public. Apparently with good reason...
It does bring up the point of pointless taxation though. Example - I own ABC company stock. They have $1 billion in revenues this year that is taxed by the federal government. They issue a dividend to me and because of my income bracket, it is taxed by the federal government. The shares rise, and depending on when I cash out and what my income level is, those capital gains are taxed by the federal government. That money sits there until I give it to my kids as a part of my estate. So marginal tax rate or overall estate value including those shares is a moot point to me. That money has been taxed quite a few times. I don't see how some cash sitting in an account that has been dinged several times by state and federal taxing agencies should be open to ANY taxation. Our government knows nothing but thievery. I do agree that the title is misleading and the estate won't be wiped out with a debt owed by the heirs, but it shows that government gets its stingy hands in places where it doesn't belong and doesn't relent.
this makes no sense...how can a marginal tax rate be over 100%? do you get the math? So for each additional $ of estate value results in $1.65 of estate tax...really? so from what amount to what amount?
I don't think that it's a situation where they increased the marginal tax rate. From the video it looks as if they've closed numerous loopholes and deductions. That way if you had, say, a $5 million estate, there could be numerous ways to declare parts of the estates untaxable and drop the taxable portion of your estate down to a smaller percantage of the overall estate. Then, if you get rid of the deductions, it increases the marginal tax rate. It's the same situation as having a 15% marginal tax rate on your income. If the government got rid of a major deduction like mortgage interest deductions, and your tax rate went to 24.6%, that would be a 164% increase. Doesn't mean that you pay 164% of your income in taxes, just the amount you pay increases. Definitely a misleading headline but egregious stretch of taxing powers.
yeah, saying "TO 165%" vs "increases 165%" isn't misleading, it's flat out wrong...
Angus is right, but this just re-affirms that our legislators have way too much time on their hands and way too little sense to enact any worthwhile legislation.
So if I read this right, they just move the bracket up where it annihilates you to keep a few more marginally 'rich' people around in their state? I love how politicians cry foul about campaign contribution regulations and 'buying votes' but this slides through the back door.
IMO, if you are truly wealthy this shouldn't be an issue because you would have structured your estate appropriately. In reality this will only fuck Upstate NY farmers who have family farms, illiquid assets, and have to sell it off because they don't have the liquid assets to pay the tax man.
Honestly, I have no clue why anyone would live in New York-Abama outside of NYC. You pay outrageous taxes to live in a rust belt, rural area. Raped with taxes with none of the benefit.
I just don't see any upside to retiring in New York. If you were truly wealthy enough and enjoyed parts of NY, own a vacation home there. I do think that @"TNA" is right, this will screw people with illiquid assets the most. From a taxation standpoint, look at what happened with Robinson Cano. The Yankees couldn't offer him enough money to stay because of the high state income tax. No matter what amount they were prepared to offer, it had to be much higher than any other teams after him because of the heavy state taxes in NY. Just matching another team's offer wouldn't come close. One day NY will understand that manipulating the tax code in their state isn't going to help. Unless they actually cut taxes, there will continue to be major disincentives to staying there long term. There might not be the opportunity that major Wall Street firms create for kids cutting their teeth and getting their careers started in other states, but it's getting a lot more lucrative to work elsewhere, that's for sure.
Just to better explain this (which the video for some reason doesn't do), the way the law is written, if your estate is worth more than 105% of the exclusion amount in a given year, you lose the entire benefit of the exclusion, and are instead taxed some percent on the entire value of your estate (the actual top rate is 16%). So, with simplified numbers, in a year where the exclusion is $5M, if your estate is worth $5M, you would pay $0 in tax. However, if your estate is worth $5,300,000, you would pay $848,000 in tax (assuming a 16% rate).
It's more complicated than that because the exclusion is actually phased out when the estate is between 100% and 105% of the total exclusion amount (as opposed to a sudden drop from full exclusion to no exclusion at 105%), and I assume the estate tax might ramp up to 16% as opposed to being 16% right off the bat, but playing around with the exclusion phase-out is how they get to a 164% marginal tax rate.
Must be so pleasant having to deal with the lawyers and accountants right after a death in the family.
That's why the last check you write in this life should bounce. They don't make hearses with luggage racks.
A pleasant farewell indeed...
Awesome. Another reason not to have kids -- don't have to worry about passing along your estate. Hell, I think the last three years of my life (if I were able to predict such a thing) I'm just not going to pay any taxes. By the time they audit me I'll be a pile of ashes floating somewhere in the South Pacific.
I am curious--what value do the high taxes in New York add? Is the crime rate zero? Does every student from the NYC public schools graduate with a 2400 SAT? Is public transit so efficient that you can commute from Stamford to Midtown in 15 minutes?
Don't get me wrong, I love NYC, the nightlife, the pizza, and just the energy that you feel walking around in the city--but I don't think any of that was produced by a government service.
The better question is what value do high taxes have for the state other than NYC. Like I get high taxes in CT, but if you're 4-5 hours from NYC and paying 8% progressive state tax you are getting fucked.
Another good point. This opens up a whole new can of worms and a debate for a different thread, but it may eventually be worth re-examining the old state lines, which were drawn centuries before the current population centers became what they are. This isn't a HURRR OBAMA IS A COMMUNIST argument but just pragmatic in that if upstaters don't feel represented, and if NYCers feel that they can't pursue all the social programs that they want because of a more conservative upstate, maybe they should just call it what it is and split. Both sides get what they want instead of both sides only getting half of what they want. Just my take.
Outside of NYC and Westchester, it's tough to justify. But, I'd argue that from a cultural standpoint more than anything else, let alone the taxes. Hudson Valley is a nice place to visit, though.
Well NYS (minus NYC) has been continually losing residents. Outside of the city, the state as a whole is largely a dying manufacturing place. All the non-NYC cities are shells of their former self. I've been in all of them (Syracuse, Buffalo, Rochester, Albany, Ithaca) and you really see how time has passed it by.
IMO, NYS as a whole needs to lower taxes and provide incentives for businesses to come back to the state. It is a real shame as NYS is one of the best wine producing regions in the country and is a major agricultural center. It just makes no sense to live there and work in a blue collar role when you can easily move down south, do the same job with less taxes and better weather.
This is relevant:
http://www.gallup.com/poll/168419/new-york-tri-state-region-gripes-stat…
You can't have your cake and eat it too.
omg just died laughing at my desk. Cleary, I wont be inheriting anything.
I think the issue is you have rural voters voting for lower taxes and urban voters voting for higher taxes. Since the bumpkins don't have critical mass they get pulled along for the ride.
End of the day shit needs to get paid for, I understand that, but you have this phenomenon in the US where people who pay little to no taxes vote to increase taxes on those who pay. I think it is bullshit, but can't think of a way to still allow voting for all and stop this.
At this point in my life I am just detached from it all. My only goal is to pay as little in taxes as I can and enjoy my life.
Yeah but you have 77% disapproval. That's a majority, more than just the rural crowd, otherwise you'd have different policies. That, or people just like to complain.
I'm confused. Who has 77% disapproval?
Id nesciunt similique doloremque. Ut in praesentium aut excepturi voluptatibus omnis et. Ratione nihil officia adipisci ab ut soluta deserunt. Cum officiis qui ad. Non itaque corporis qui sed laudantium eos eaque.
Ratione dignissimos quia praesentium. Ut sapiente aut incidunt repellendus id. Ut voluptatem maxime maxime quibusdam quae.
Veritatis eum eaque reiciendis qui voluptas fugit. Sed omnis quas voluptatibus consectetur a ducimus possimus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Voluptatum molestiae illo hic sit libero ducimus sint. Maiores voluptatem repudiandae omnis inventore quae maxime sed. Consectetur autem beatae quis odio occaecati eligendi eum saepe. Occaecati in odio sit minima quo rerum. Nostrum optio non nesciunt id velit et dolorem. Quia enim sed numquam incidunt est.
Voluptas qui debitis dolores veritatis ipsam omnis. Maiores est sit ab possimus. Laborum voluptatem asperiores officiis ipsa reiciendis. Harum est vel eos nisi enim. Est ut ea dolores saepe.
Iusto aut laudantium id blanditiis quo repellendus placeat. Ut in ut error soluta enim. Inventore accusamus reiciendis et impedit assumenda ullam. Blanditiis magnam aut officiis aperiam voluptatem excepturi. Similique natus sed facilis similique.