Inheritance Denial

Oftentimes, we assume inheritances as sums of money that, while taxed, are smoothly transferred from one party to another. In truth, this is not always the case. As years go on, a growing issue in America is what is sometimes called “inheritance denial.” This is the practice of one’s inheritance being held away from them or not transferred properly. This can lead to a lessened sum inheritance, or a total lack of reception from the inheriting party.

To put it simply, this is seriously wrong. Most inheritances are a result of a family loss, and to deny the wishes of those past is morally abhorrent. Inheritance taxes are already very high, and to add insult to injury by adding unnecessary barriers to reception is just not right. An inheritance is not something that should have to be fought for or denied.

However, it is very difficult to devise a functional solution to this problem. I would like to believe that it can be fixed eventually, as inheritances should never be denied to their rightful recipients, but, unfortunately, I am not hopeful. Maybe someday we can act in a moral manner rather than one determined by greed.

Estate and Inheritance Taxes around the World

For a country that is so focused on making money, this seems to be something that the US isn’t paying close enough attention to. From the article, it seems as though the estate and inheritance tax in the US, is the fourth highest in the world, but is only bringing in less than 1% of the federal revenue. At one point, the US even eliminated it for an entire year, but brought it back for whatever reason.

I am uncertain of the technicalities of the way the tax works, but I would be willing to wager that they are meant to help the rich and not help the middle or lower classes. I could be wrong, but history isn’t in the governments favor on this.

However, from the research done for this article, there is evidence that eliminating the tax altogether could even help the economy. While I am not sure exactly how that would work, it does seem like something that the government should spend a few minutes looking into.

Table 3. The Effect of Estate Tax Elimination
Economic and Revenue Change Estimates for Estate Tax Elimination vs. Current Law Projection (Billions of 2015 Dollars)
Change in Level of GDP 0.8%
GDP Change in Terms of Today’s Economy $137
Change in Private Business GDP 0.8%
Change in Private Business Stocks (Machines, Equipment, Structures, etc.) 2.2%
Change in Wage Rate 0.7%
Change in Private Business Hours of Work 0.1%
Full-time Equivalent Jobs (in Thousands) 139
Annual Static Federal Revenue Estimate in Steady State -$20
Annual Dynamic Federal Revenue Estimate after GDP Gain or Loss $8
Source: Tax Foundation Taxes and Growth Model.

While there are 13 countries that have repealed this law, I am not sure that the list of countries itself is necessarily one that supports the idea that we should abandon the tax ourselves. I do think that looking at the changes in economic growth or failure since the time that they repealed it, is definitely worth looking at more closely.

Table 2. Thirteen Countries or Tax Jurisdictions Have Repealed Inheritance or Estate Taxes Since 2000
Country or Jurisdiction Year of Repeal
Macau 2001
Portugal 2004
Slovak Republic 2004
Sweden 2005
Russia 2005
Hong Kong 2006
Hungary[7] 2006
Singapore 2008
Austria 2008
Liechtenstein 2011
Brunei 2013
Czech Republic 2014
Norway 2014
Source: Family Business Coalition.

No Will?

Dividing inheritance can be tricky.

In addition to what has been discussed in class, sometimes families will decide to use their own methods of distributing the inheritance. Some parents allowed their children pick out what they wanted via birth order. Others have drawn numbers out of a hat to decide who gets to pick what first.

However, this is contingent upon whether or not the parents left a will. So, what happens when there is no will?

According to the website Nolo.com, in New Hampshire, if there is no will the closest relatives will receive the deceased’s property under the “intestate succession” laws.  These laws help determine who receives inheritance depending on how they are related to you and the circumstances.

However, one must survive 120 hours after the deceased family member, or be born and live 120 hours after birth to be eligible to inherit under the intestacy laws (hopefully the family doesn’t resort to greed and primal instincts…).

Ultimately, splitting inheritance is much easier with a will. Taking steps to ensure that possessions are evenly distributed is of vital importance.

Sources:

  • https://www.nolo.com/legal-encyclopedia/intestate-succession-new-hampshire.html
  • http://www.startribune.com/dividing-up-heirlooms-can-be-touchy/128333808

 

Inheritance Tax

I know that probably all of us are tired of hearing about taxes, but I decided to post about inheritance tax as it might be useful to know in case you inherit anything. Only a few states enforce to tax inheritance, so if you do end up inheriting anything from someone who lived in those states, your inheritance might be subjected to taxes.

  • Maryland
  • Nebraska
  • Kentucky
  • New Jersey
  • Pennsylvania
  • Iowa

How inheritance tax works

Once the executor of the estate has divided up the assets and distributed them to the beneficiaries, the inheritance tax comes into play. The tax amount is calculated separately for each individual beneficiary, and the beneficiary must pay the tax. For example, a state may charge a 5 percent tax on all inheritances larger than $2 million. Therefore, if your friend leaves you $5 million in his will, you only pay tax on $3 million, which is $150,000.

What Happens To Your Wealth When You Don’t Have A Will? (Intestate Laws)

Dying without a will is a scary prospect. What this is called when it happens is intestate. What happens next is decided on by a few factors including your family, and the state you live in.

For example, if you live in New Hampshire, not all of your assets are affected by intestate laws. Assets that are not affected include IRA’s, life insurance proceeds, some bank account balances and more.

The next step in seeing where your wealth goes when you die without a will would be to view your family tree. For example, if you had a living spouse when you died and one child, your spouse would receive the first $250,000 of your assets and then an additional 1/2 of the remaining wealth. After the spouse has taken their cut the remainder would then be passed on to your child. An example with numbers would be… let’s say you had $550,000 worth of intestate wealth when you died, your spouse would receive $250,000 of your assets, and of the remaining $300,000 your spouse would receive an additional $150,000, bringing their total to $400,000 in assets. Your child would then receive the remaining $150,000 in assets.

Graph Of How Your Intestate Assets Are Divided In New Hampshire From: https://www.nolo.com/legal-encyclopedia/intestate-succession-new-hampshire.html

 

Sources:

https://estate.findlaw.com/wills/what-happens-if-i-die-without-a-will-.html

https://www.nolo.com/legal-encyclopedia/intestate-succession-new-hampshire.html

Issues with the electoral college

One of the biggest storylines from the last presidential election is how Hillary Clinton lost the presidency even though she had almost 3 million more votes than Donald Trump. This is because of the electoral college system we use to declare candidates is deeply flawed.

The most glaring and publicized issue is the danger that the winner of the popular vote will not win the presidency. Since electoral votes are the only votes that count, once they have achieved a majority of them, all other votes do not matter.

This problem is compounded by the fact that there are bad actors involved in the legislative process who take advantage of this in the form of “gerrymandering”.

As Briana mentioned, this is the blatant redrawing of congressional districts in order to achieve a particular political outcome. Sometimes this is subtle, other times, not so much:

Detail of Michigan Congressional maps approved by Republican-led Legislature in 2011.

(Photo courtesy of https://www.detroitnews.com/story/news/local/michigan/2019/01/20/michigan-gerrymandering-deal-focused-redrawing-specific-districts/2631237002/)

The above map was a plan that GOP majority lawmakers drew up in Michigan in 2011. As you can see, it makes no sense. In fact, the bias was so blatant that they were successfully sued in court and now it will be redrawn to truly reflect the population there.

While the electoral college makes sense, there will have to be more of an effort to limit the powers of bad actors to suppress voting rights like this.

 

“Odd Vermont”

Vermont is a liberal state and with the past three elections always voted within the democratic party lines. Our U.S. Senators and Congressman are all democrats, and currently the Vermont State house is ruled by the democratic party. We were one of the first states to legalize gay marriage and the very first state to legalize recreation marijuana without any state tax. However, Vermont for the past two elections voted in a republican for their governor.

Gov. Phil Scott has won back to back elections going against democrats and independent candidates. Vermont is a very progressive state, so progressive it almost made history with one of the first states with a transgender governor. Yet, this die hard blue state decided to elect for a second term a republican governor.

Vermont hasn’t always been a blue state! Our capital dome is gold because President Calvin Coolidge who was a republican was from Vermont. Yet within the last 50 years Vermont switched from republican to democrat.  Vermont was one of two states, Maine being the other, within the Union who did not vote for President Franklin D. Roosevelt. Fast forward to last two presidential elections, vote casted their votes for President Barack Obama and Senator Hillary Clinton.

Vermont uses the Plurality method when choosing the governors. Using the plurality method helps candidates in minor parties for state wide office because it’s easier for voters in the entire state to recognize candidates in both parties rather than minority party candidates in local election. Even in highly partisan states such as Vermont or Massachusetts, the minority party is more competitive in state wide elections instead of congressional or local elections.

https://uselectionatlas.org/FORUM/index.php?topic=195510.0

https://ballotpedia.org/Governor_of_Vermont

Voting System

Before this unit in our class, I assumed voting was just based off of the person who had the most votes collectively. What I did not know is how much math is involved in voting and all the calculations that go into it.

As of right now we have learned about four different voting methods and how each of those have their strengths and weaknesses. First you have the preference schedule, which is the voters preference in the election. With that schedule you can do any of the four methods including plurality, borda count, copeland, and instant runoff. As of right now my favorite method to use is borda count because I feel like it has the most fair system of choosing with the preference schedule.

The way we were doing preference schedules are different in comparison to this articles way of doing them. This article uses more or less signs when distinguishing which candidate they prefer over the other.

 

Ours:                                                              

Number of Votes
13 11 10
A B C
B C A
C A B

 

Their’s

What is also interesting and mind boggling is the fact that you can’t vote on a voting method, because what method would you use to calculate the vote? So really when it comes to voting someone is always going to be unhappy and there is really now way to create a perfect solution!

Article: http://chalkdustmagazine.com/features/mathematical-view-voting-systems/

 

Do Elections Work? Voting Thoery

There has been a lot of controversy over whether or not the methods used to count votes in elections is effective or fair. An example of this controversy is from December of 2017 when the mayor of San Francisco, Ed Lee, passed away and had to be replaced. San Francisco uses whats called ranked choice voting, or the instant runoff method. The voters rank three choices in order of their preference and then when the votes are counted, the choice who got the least first place votes gets dropped and their points go to the voters’ second choices. Even though many people think this method of counting votes is unfair, it is actually one of the most accurate methods. The counting method of plurality makes sense but doesn’t work well when there are more than two voting choices.

The other problem with the plurality method of counting votes is that it violates Condorcet’s Theory which says that an election should be won by a candidate who would beat all the other candidates head-to-head.

Gerrymandering Math

We’ve all heard the word.

Gerrymandering.

I doubt many of us know what it means let alone how it works.

Gerrymandering involves the dividing of a state, county, etc. into election districts. When dividing these districts, certain parties that want to sway elections will divide the counties in a way that gives their political party a majority in many districts while making sure their opposition has a majority in as few districts as possible. 

Although it sounds unfair, this is possible and is done in our current voting system. The math behind it makes it clear that this makes for an unfair political system. Take North Carolina for example.

vox.com
diagram of North Carolina’s state election districts.

Above you can see a bunch of squiggly colorful states. This seems innocent and almost fun, but what you’re actually looking at is a corrupt voting system. In its most recent congressional election, North Carolina’s congressional delegation remained as a 10-3 Republican majority, despite half of the total votes being cast by Democrats. How does this happen? Gerrymandering of election districts to favor the Republican Party is how.

Patrick Honner, a Contributing Columnist for Quanta Magazine, explains the math of Gerrymandering.

“Start by imagining a state with 200 voters, of whom 100 are loyal to party A and 100 to party B. Let’s suppose the state needs to elect four representatives and so must create four districts of equal electoral size.

Imagine that you have the power to assign voters to any district you wish. If you favor party A, you might distribute the 100 A voters and 100 B voters into the four districts like this:

D1 D2 D3 D4
A 30 30 30 10
B 20 20 20 40

With districts constructed in this way, party A wins three of the four elections. Of course, if you prefer party B, you might distribute the voters this way:

D1 D2 D3 D4
A 20 20 20 40
B 30 30 30 10

Here, the results are reversed, and party B wins three of the four elections.

Notice that in both scenarios the same number of voters with the same preferences are voting in the same number of elections. Changing only the distribution of voters among the districts dramatically alters the results. The ability to determine voting districts confers a lot of power, and attending to some simple math is all that’s needed to create an electoral edge.”

Although you cannot simply divide your voters into districts based on their preference, this is the basic idea Gerrymandering. Those creating district lines can track voting data from different regions of a state to see what the general preference of the area is. They then can draw lines to distribute voters similarly to what is done above.  The result is a diagram similar to North Carolina.

Looking at the math, Gerrymandering essentially “waste” the votes of those in a party that is ‘corraled’ – if you will – into fewer districts to suppress their vote.

The process of Gerrymandering causes there to be one or two districts who all prefer party A, and the rest have a majority of party B. This would make for a certain party to have a majority over whatever they are being voted into. What we can learn from Gerrymandering is this. Our voting system is so flawed that we can draw lines on a map and suppress thousands of votes.

-and we can do this legally.