On the topic of "Money Already Taxed"

[Philly]

In a few threads recently we've heard discussions about money (mainly inheritance) being taxed despite the fact that it was "already taxed" in the past. I felt this notion deserved its own thread. I am not here to discuss money (inherited or otherwise) being "double taxed" on a single occasion, but rather the idea that money or assets which have been taxed in the past being taxed again at a later date.

To me, the primary flaw in this logic is the idea that money is some kind of tangible object which should be looked upon as being somehow altered due to taxation. Money itself is not taxed. What we're seeing happen is transactions being taxed. The example I gave earlier is that if I save up money that I acquire through taxed wages, and then use that money to hire an employee to perform services for me, that employee should pay taxes on the wages I am paying, even though I already paid taxes when I initially acquired the money. The same should hold true on estate taxes. If your dad earns wages for 40 years and saves up 10 million dollars to give to you when he dies, the 10 million he leaves you has not "already been taxed". The transaction when he received those wages from his employer was taxed. And the transaction when you receive that money from him is taxed as well. Money itself is not taxed.

Discuss.

[Winchester]

It's a fair point. We tax transfers, income being but one of them.

[Philly]

CPA confirmation. Thread is legit.

[Saz]

[Philly]

That's why I mentioned in the OP that my points were about the idea of taxing money that was "already taxed" in the past, and not about money being double taxed in one transaction. I recognize that double taxing on one transaction is a different issue and am not trying to debunk that concern.

[Winchester]

[Medius]

The main problem I have is a philosophical one.

If you earn a million dollars, go blow it on coke and hookers. End up broke and on welfare for twenty years, you pay tax once on your money.

If I earn a million dollars, put it away to pass on to my children, who will likely never have to take a dime from the government, I get taxed twice.

Sure, it was income when it came to me and in some sense can be seen as income when it goes to someone else as inheritance. But you are taxing a responsible use of money. One we should encourage. Primarily to get at the super rich, who are f**k tax evading ninjas that you will never catch.

[Winchester]

[Medius]

[Winchester]