February 21, 2017 • 49 mins
The estate tax, also known as the death tax, is not new. It's actually been around in some form since ancient Rome. Some say it's a necessary tax to help prevent resting on your inheritance laurels. Others say it's straight up double tax robbery. Learn all about this controversial tax today.
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Episode Transcript
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Speaker 1 (00:01):
Welcome to Stuff you should Know from how Stuff Works
dot com. Hey, and welcome to the podcast. I'm Josh Clark.
There's Charles W. Chuck Ban, there's Jerry. If you put
us together in a room, get a little air conditioneder
(00:21):
noise going black out the windows. It's stuff you should know.
Hegg crates on the walls bringing a cup of water
for me, and like, I got nothing whatever? Why don't
you have four beverages? Like, I don't know, it's a
weird day. What is that is so weird? They're out
of Pellegrino. Yeah, I know. I'm sitting here like I've
(00:42):
never seen you without a beverage within three ft of
your body. And I also am really tired of the
coffee here. It's not okay. Oh man, are you drinking
it right now? No? Good for you, jack um Chuck.
Oh yeah, that's right. Although it's funny over the years
when I go into restaurants, usually like some sort of
(01:05):
like an ethnic restaurant, and asked for my name and
I say Chuck, they almost always say Jack, that was there, right,
And I just go with it. Yeah, I mean yeah, Jack,
because what kind of person is like, no, get my
name right? On the little thing you write down to
my ticket. You just grabbed the thin man lapels. Yeah,
I didn't care. Uh well, it's the perfect segue into
(01:27):
what we're talking about today, Chuck, Yeah, Jack, the death tax.
That's right, one of our scintillating, uh internal revenue centered casts.
I mean, we have done a bunch of like tax
related episodes if you think about it. Yeah, this one.
I'm surprised we haven't done this one. And actually I
(01:48):
didn't check. We haven't, right, I checked, we have not, Um, yeah,
but it did seem familiar here there, but I definitely
double checked. Yeah, I thought it was pretty interesting, especially
a lot of this will be the history of it,
which basically is, we're going to war, let's get the
death tax going, right exactly, the rich are getting too rich,
Let's get the death tax going. So we should probably
(02:10):
say what the death taxes, and actually death tax we
should be saying death taxes because there's a couple of
different kinds of death taxes, and that's basically the term
that's used by people who aren't in favor of death taxes.
The kind of make it seem like it's just a
stupid idea, like you have to you have to pay
(02:30):
a tax to die. Come on, people, snap out of it,
you know. Um. So basically you have two types of
death taxes as it stands right now here in two
thousand seventeen, you've got, at least in the United States,
you have the estate tax and you have the inheritance tax,
and both of them are basically death taxes. The estate
taxes where um you die, you have an estate in
(02:53):
your state is the total of all of the stuff
you own and all the debts you have. So the
first thing that happens to your state, your debts get
paid off, uh, and then your executor gets paid off
for their troubles. Your funeral gets paid off. And then
Uncle Sam's standing there with his hand out shot out
(03:13):
of a cannon that costs take that off the top.
So Uncle Sam's standing there and he says, hey, lay
it on me, guys, I want that. That's your estate taxes.
Then after that, in some states, the money goes to
the heirs, and then the states come along and say
it's archer now. And because you know, states rights aren't
(03:35):
what they used to be, right, And then your city
comes along and they want theirs. And then if the
city then your next door neighbor comes along and say
you didn't pay the neighborhood tax on that, right, Can
I have my lawnmower back? Uh so? Yeah. Basically, if
you die in a state that has inheritance text, you're
going to pay in a state tax and an inheritance
inheritance tax on your estate. After your death, you won't care,
(04:01):
but your heirs well, and you make care every moment
leading up to that last one. After that, you'll be fine.
I think the Beatles had it right on the money
there that song Come Together. You're like Lucy and the
Sky with diamonds, no tax man. It's a great song.
If you you know, if you drive a car, I'll
(04:21):
Texas Street, if you take a walk, I'll text your feet.
It's very ah, very libertarian. Yeah, come to think of it.
In the background, if you play it backwards, it goes,
who is John Goal? Do we do what? I'm backmasking?
All right, We're gonna do that one day took all right,
(04:43):
So you just describe the estate tax. I described both. Okay,
you said the inheritance taxe. Okay, that's the one where
the states like, can we have our cut to where
they text your airs, not your state. Yeah, like after
you get the dough in your text. Uh so, you're right,
both of those together make up a death tax. And um. Well,
(05:04):
over the years, it's been debated both economically and philosophically.
And I guess we should go back in time and
the way back machine to ancient Egypt if we fire
it up. Did you put gasing? I did? Uh so
(05:26):
if you if you go back to ancient Egypt, they
actually have existing uh papyrus with that tells the story
of men basically either trying to dodge paying a death
tax or paying a death tax, two different versions of
that story against depending on who the guy was, you
could tell which one you're supposed to do, because the
guy dodging it had he was in the middle of
(05:47):
a circle with a slash there. That's right, don't be
this guy. Uh. And of course in ancient Rome they
were big on uh big on trying to modernize everything,
and of course meant the tax code as well. And
Caesar Augustus instituted something called the uh vis sina herad titadium.
(06:08):
Is that right? I think so? My Romans not what
it used to herititardium. Apparently that translation is twentieth penny
of inheritances. Uh. And taxes, sex secessions, legacies and donations
after death. They should have called it death tax. They
should have whoever came up with that, I couldn't find
who did, but it's pretty clever. Uh. And like I said,
(06:29):
there's long been debate. Um. Even in ancient Rome there
were exemptions for close family Back then you could give
away some charitable donations, which is, you know, kind of
similar to what you can do today. That's a that's
a very long standing tradition, and it should be I mean,
like if you want to give a bunch of money
to a charity, man, there should you. That should be unfettered, yes, um.
(06:52):
And in fact you should maybe even get a little
text break for that sure as people do at least
a pat on the back from everybody in your community. Uh.
And then plenty the younger not the elder beer man,
which one's the one that's so hard to get? I
think plenty of the elder is the beer that's hard
to get, right, I don't know. It might be the
other way around. So there's a plenty of younger beer
(07:15):
as well. Versions one you can get basically all the time.
The other one like, you have to stand in line
for a week and a half outside of the brewery
to get it, and they give you a you have
to bring your own like bucket and they fill it
up and they make you chug it right there and
then they kick you in the butt as you're walking away. Yeah,
they're doing it right. Uh well, regardless of I'm not
(07:36):
sure which one, plenty of the younger criticize this tax
and he's like, you know what you're doing. You're taking
advantage of people of these families that are distraught over
the death of a loved one. Yeah, how unfair is that.
I would guess that plenty the younger may have been
rich from that quote. I bet you're right. Yeah. Uh
where else? We can go to England and France. Yea
(07:58):
we I mean we jumped over several centuries. I don't
know though, if the Holy Roman Empire was into death texas,
but by the time we arrive in uh well, feudal England,
that still would have been the Holy Roman Empire. I
think in the thirteenth century. In England, by the time
they founded the Magna Carta, death texas were so unpopular
that It's like one of the first clauses of the
(08:20):
Magna Carta, like you gotta lay off on the death texas.
You could do them, but not so much. I think
that was the verbatim quote in the Magna Carta. Every
time I hear Magna Carta, I think of Johnny Dangerously.
Did you see that? I don't remember that. I think
it's the end when they're taking like walking maybe Johnny
(08:40):
too his execution and they have the fake priests and
he's doing this fake Latin because Magna Carta, Master Charga.
It's just so dumb. Whenever I hear Magna Carta, I
think of that one Simpsons where Marge is training to
be a realtor and Lisa's teaching her like that if
you if you make a song out of what you're
trying to memorize, remember She's like in twelve fifteen running
(09:03):
Me do. It's funny. There's historians out there right now
going when I hear of Magna Carta, I think of
the Magna cartas. Uh. But moving on to the United
States because that's mainly kind of what we're talking about
here with the death tax um. It was debated in Scotland,
which carried over eventually into our own founding fathers. But
(09:25):
some notable philosophers and economists, and they used to be
very heavily tied, which I think is interesting. Yeah, philosophy
and economics. Yeah, I guess it still is in some circles. Yeah.
I think economists like to pretend that's not the case,
but I think you're right. I mean, there's a certain
philosophy to it. But we talked about people like John
Locke and Bentham and Adam Smith before and they've kind
(09:49):
of remained lockstep with their principles on on the death tax. Right, So, uh,
Smith and Locke, we're saying, no, no, no, that's not
the government's role the tax of person airs after they die.
Black Stone, uh, the very famous magician, said no, we uh,
we absolutely should be taxing people's estates when they die,
(10:11):
because we want to prevent dynasties. And finally somebody in
history comes out and says it like that's basically the
point of the estate tax. Yeah, and um, and then uh,
I think Jeremy Bentham said basically the same thing, like, yeah,
we we like like wells should not be able to
grow exponentially in a single family that's not that's bad news. Yeah,
(10:33):
and that's sort of, like you said, been the root
of the philosophical debate from black Stone to Bernie Sanders saying, um,
and we'll get into the what people commonly were called
the pros and cons. But one of the cons is
uh and whether or not it's I don't know if
you can prove it's true. But one of the cons
people point to is you leave these kids all these
(10:56):
millions of dollars, and they're gonna end up on dope. Well,
or they're less likely to be super product not much
much ass likely necessarily, but they're not as incentivized to
be constructive contributors to society. No, they're not. It's well put. Yes.
Uh So, like I said, this kind of transferred over
(11:19):
to the founding fathers of the United States. Yeah, because again,
I mean, the US was founded very much on enlightenment, thinking. Yeah,
so the guys who founded the US were looking over
to Europe and saying, like, what are those guys saying
right now? What do we think about that? How does
that apply here? Let's like, what are they saying over there?
I don't know. I'll let you know in six months.
Send a message on a boat the stamp tax of
(11:42):
seven and this kind of begins a long tradition of hey,
we're going to war, we need to raise some dough
because at first they resisted the UM death tax. Yeah,
but they needed to protect the colonies and that's expensive.
So UH to under war against France and naval war. Um,
(12:03):
they said, how about a stamp tax, which when I
was a little kid, you know, I heard of the
stamp tax and I didn't get it um. But basically
it was a tax on every piece of paper printed,
like every kind of documenticial document and newspapers and stuff.
If you had a document that you needed to file, right, Yeah,
for like the judge to release somebody's personal effects to
(12:25):
you their air, you had to show them this document
and for the judge to release it had to be stamped,
and you had to pay for that stamp. So in effect,
it was a government tax because this whole transaction couldn't
happen until the government officially got its cut, and the
stamp was proof that the government had gotten its cut
and the transaction transaction could proceed. Yeah. So anything from
(12:46):
UH an administrative letter to UH receipts for legacies, UH
even the attorney's license. Like apparently attorneys had to pay
like ten pounds powder for the wig just to get license,
which is about a thous and bucks. Now, yeah, I'm
sure they passed that. I'll bet that's about I'll bet
(13:06):
you it costs about that much. These days, they probably
ten grand for an attorney's license. I could see it.
That sound about right. They make that up pretty quickly, though,
I think so, you know, just a couple of hours,
a couple of hours sitting at the desk watching the
little bird dip its peak in the water, thinking about
(13:27):
the summers. I'm just kidding, attorneys out there, we love you,
everyone does. Um. They did have rules back then, though,
even for the stamp tax, which we're kind of carried
out throughout the years in one way or another. Estates
under fifty bucks were exempt, and then anything above fifty
(13:50):
had a graduated scale of tax, which is still kind
of what we have today. I read this this post
by this guy um on I believe Forbes, and he
his name is Bob Rywick, and he wrote a book
on tax pretty much literally um and he was saying
(14:10):
that for most of history there, especially the history up
leading up to America. There was not a question of
whether there should be a death text or not. It
was um, how much is the upper limit and what
are the exemptions, you know, or what's the minimum and
what are the exemptions. That's basically yeah, which is kind
(14:30):
of where we ended up in the modern times, just
sort of debating and going back and forth. Right, but
even still, I mean, like right out of the gate,
you know, back in Rome, we talked about how there
were exceptions where if you donated to UM to like
a charity or here, it's like if you of Rome,
right or UM, if your state's fifty dollars worth fifty dollars,
(14:56):
there's like no one wants that, and it's fine. Even
back in the late eighteenth century that wasn't very much.
It's like a hundred dollars today. Uh. So the stamp
tax was repealed in eighteen o two because the war ended,
or at least that particular war that they were funding ended. Yeah,
(15:17):
and they thought about it again during the War of
eighteen twelve, but that were ended before they had a
chance to get it through. And maybe we should take
a break here and pick up with more history. So
(15:48):
chuck Naval War with France funded by the Staff Stamp Act.
Death taxes go away for a while, and they came back.
They actually stayed low in the United States until the
Civil War. Yeah, and we should point out this, these
death taxes didn't like fund entire wars. They you know,
there were many other taxes involved for this stuff, right, Okay,
(16:11):
So when and when I mean stay low, I mean
like non existent, not that the rates were low. So, um,
in the Civil War death text came about, and um
it was it was different than what had been proposed
with the Stamp Act. So the people who received the
inheritance were the ones who were taxed. So it was
an inheritance tax, not in the state tax, right. Yeah.
(16:33):
And it wasn't like, hey, we're going to tax these stamps,
which is really kind of a roundabout way of making
a death tax estate tax, right exactly. This was actually
your your uncle died, you got that money, give us
some or we're going to break your legs all the
civiphor Italians. Uh. After that, there was an amendment two
(16:55):
years later where um, it wasn't just like person all
effects or maybe stocks or cash or whatever, but real
property came to be taxed as part of the estate
as well. And then lastly, I think in eighteen seventy no,
as part of that eighteen sixty four a moment, there's
(17:15):
also a gift tax, and this is a big loophole
that people would take advantage of. Yeah, it's funny, like
early on even people were like figured out a way, like, oh, well,
here's what I'll do. I'll just sell my assets and
for even if it's for even less money, just to
get it off the books, well to my kids or
something like that. Yeah, Like here's like my dad sold
(17:36):
me a car once for a dollar. Nice, that's a
sweet deal. Yeah, yeah, it was all right. Did you
pay him in like pennies? He actually wanted the dollar
and it ended up costing me like a lot of
money in repairs and it was sort of not a
great deal in the end. Did he say buyer beware chump. No,
And I don't want to be uh look a gift
(17:57):
horse in the mouth. It was a nice gesture only, Yeah,
very nice. So let's move on show. So the big
loophole with that gift taxes. If you want your kids
to have all of your stuff and you wait until
you die to pass it on to him, Well, if
there's an estate tax, the government's going to take a
big chunk. But if you're alive and you say, hey, kids,
(18:21):
i'm feeling a little, uh, a little over the hill,
and uh, I think I'm gonna die soon, So I
want you to have all of this stuff from my estate.
You can have a tax free because there is no
gift tax. The government finally said, and I think eighteen
sixty four, wait a minute, there's a gift tax now,
and uh, we see your loophole. But I think they
(18:41):
even made it. The gift tax was still less than
it was for an estate tax or an inheritance tax,
so it was still advantageous if you're a very wealthy
family to pass on your estate while you were living.
Then it was to leave it after you died, but
it would still be taxed. Actually equalized those right later on. Yeah,
(19:02):
but not for a few decades. All right, So let's
let's get into the twentieth century here. Industrialization. H One
of the byproducts of that was it led to a
concentration of wealth for a lot of families. So the
government was like, alrighty see, all you wealthy families out there,
thinking you can learn learn all that money and keep
(19:24):
it and pass it to your kids, and they can
pass it to their kids. We want our cut. And
it wasn't just the government. As a matter of fact,
I'm not sure how much the government had to do
with it, but the there was a populist movement that
arose that was basically like, we want our cut. And
you know, Wizard of Oz was was written during that time.
Frank really, Frank L. Bomb, the author of the Wizard
(19:49):
of Oz was a populist. And there's apparently it's a
very populist allegory. Yeah, lots of it, Like the Yellow
Brick Road is some commentary on the gold standard, the
fact that it's in can in this is um has
to do with the agrarian roots of the popular The
scarecrow is um, I don't know, Elvis, something weird like that, right,
(20:10):
put on some pink Floyd, right. So um. There was
this big movement, and part of this big populous movement was, Hey,
there's a lot of really wealthy people here. Um, you
guys should should stop this procession of wealth, you guys
being in the government. And they started to get there.
There was an income tax instituted in eighteen ninety four. Yeah,
(20:32):
I didn't realize this. I thought the first income tax
came later in nineteen sixteen. But they made they took
a crack at it in four but it was ruled
unconstitutional for reasons other than, um, the fact that it
was an income tax. Right, But it was ruled unconstitutional,
but not because of the death tax, for different reasons.
So they said, we'll get that income tax, don't you worry, Right,
(20:55):
that's plenty constitutions. Wait, just wait twenty years, twenty two years.
Then comes along another war, the Spanish American War, and
they instituted the War Revenue Act of eight And this
one looked a lot like the one that we have today. Right,
while it was in a state tax rather than an
inheritance tax. Yeah, and it had familiar exemptions. Uh. This
(21:16):
time under ten thousand left to a spouse was fell
under the exemption, and the rate of tax depended on,
of course, how big your estate was and then who
you were giving it to. Yeah, and those are still
around today in a lot of places. Um, if you
are somebody's nephew, you're probably gonna pay the full bracket
(21:39):
of taxation very according to uh, according to who you
are or if you like you're a drinking buddy, you're
gonna pay the full the full amount. If you're a
like a grandchild, you'd pay less than the drinking buddy,
but more than the spouse. And then the spouse is
usually and has been for a very long time, whenever
(22:01):
there's an exemption within the state tax, the spouse is
usually completely left alone. There's no tax if the entire
state goes over to the spouse. So that's the current
rules too. Yeah, boy, I get I need to look
up drinking buddy, So I gotta take care of Clem right, Well,
Clem is gonna pay through the notes, I'm afraid. Oh boy,
he's not gonna like that. He's really counting on me
(22:23):
dying leaving in my podcast fortune. Uh so with that one,
the War Revenue Act of again War ends. In nineteen
and one, Congress uh repealed the tax. Yeah, which is weird.
I kept reading that, like, what do you mean repealed
the text? When did they stop doing that? But apparently
(22:45):
they used to institute new taxes get the money they needed,
and then they would say we got enough, now they
have and then just more new taxes. Yeah. Um, so
this kind of marked a turn where people started to
get who wrote this was this Jane Jane McGrath, remember Jane, uh.
(23:08):
She calls it a growing distaste for inherited wealth. And
it started to kind of pick up steam, most notably,
UM in the form of President Teddy Roosevelt, who was
not a fan. No, he actually around this time there
was another there was another big push for the income text.
Remember it had been repealed, and Um Roosevelt was like,
(23:30):
I'm not sure about the income tax, but I'll tell
you what is great idea, that estate tax. Let's get
one of those in there. Um he said. Basically, our
national legislators should enact a law providing for a graduated
inheritance text. The prime objects should be to put a
constantly increasing burden on the inheritance of those swollen fortunes,
(23:51):
which it is certainly of no benefits to this country
to perpetuate. I mean that kind of lays it down there,
go out and make your own money essentially. Well, yeah,
and I think part of the other point, um, is
that really seems to apply today. If you've listened to
our Dark Money episode two. Um money very easily translates
(24:12):
into political power. Now it translates into political speech, but
it's always translated into political power. And if you have
more and more money just being passed along from one
generation to the next, that that that family is not
just amassing more and more money, they're amassing more and
more power. And that's not good for democracies. It's good
(24:35):
for monarchies, but not democracies. And that's what Roosevelt was saying.
Uh so Roosevelt support it big time. It also was
supported by Taft and Wilson, but it still took a
little bit of time and another war before Congress would
get back on board again with another death tax. World
(24:55):
War One. Yes, world War One, the US lowered terror
us on our allies and wanted to build up a
stronger defense, and all of a sudden they said, wait
a minute, we we need dough. Yeah, those new fangled
tanks aren't cheap, they're not building themselves. So they went
back and said, all right, maybe that income tax ideas
(25:17):
pretty good one. So they came up with the Revenue
Act of nineteen sixteen, and that's where the modern the
modern income tax and the modern um the state tax
were born. And there's been no going back. No, there
really hasn't because they were initially Apparently initially they planned
on repealing it after the war, and they're like, this
(25:38):
feels pretty good. I like rolling in piles of money,
so let's just keep it going. And at this point,
the exemption was fifty thou dollars and had a graduated
rate of one per cent on amounts under fifty grand,
up to ten on amounts over five million dollars. Right,
(25:58):
it's a lot of dough back in. Yeah, it also
text um real land, personal property. Uh, if you transferred
something at death or even in the two years before death,
that loophole. Yep, it was taxed um and then the
the gift tax, but there's still a loophole. See like
if you did it three years, if you transferred all
of it three years before your death, you're fine. Um,
(26:21):
you just had to live in poverty for the last
three years of your life and hope that you called
it correctly and that it wasn't like seventeen years. Right.
So in Congress said, we see what you're doing. We're
coming back with that gift tax again. That was a
good idea. I don't know why we ever forgot it.
We lost our institutional memory but we're putting it back in.
(26:41):
So they put in this gift tax, and now all
of a sudden it was um not smart too, it
was not a loophole any longer. Yeah, and then the
Great Depression had a lot to do with that, because
obviously income tax went down during the Great Depression, and
they said, our coffers are getting low, so we need
to equalize this again. That's right. And I think the
(27:03):
gift tax his state since then too, right, It never
went away, Yeah, because I guess it was challenged in
court and it was upheld by the Supreme Court to
be constitutional. But Congress is like, ah, we'll repeal it,
and then yeah, they brought it back and it's been
there ever since. Yeah. And here's a staggering stat you know.
We we've talked before about past income tax and uh,
(27:24):
how even though it might not seem like it, we've
got it pretty good today compared to certain years. But
the estate tax from World War Two, when they raised rates,
uh ninety one until nineteen seventy seven, the very top
estate tax was seventy seven percent. Isn't that crazy? Wow,
that's pretty high. Oh yeah, that's like Gerard Depardu fleeing
(27:48):
for the borders high you know what I mean. Yeah,
like you made all this stow in your life and
you get to keep your family gets to keep it
after you die. Yeah, and give us a smile. So
the m they stayed that way actually for a really
long time. It wasn't until yeah, it wasn't until nineteen
(28:10):
seventy seven that Congress brought that highest rate down from
seventy and they just brought it down to seventy then
and then um, Reagan came in and started whittling it away, uh,
little by little, um and it got as far down
as I think. Yeah. That was the Tax Reformact of
nineteen seventy six. And another thing came along with that.
(28:32):
It was something called the g s T tax, the
Generation skipping transfer tax, another loophole, yeah, which is like, oh, well,
I'm not gonna give my fortune to my kids, I'll
give it to my grandkids, wink wink. And then if
you had a really good estate planner, they could teach
you how to leave your assets to your grandkids, but
make your kids the beneficiary of any interest in income
(28:53):
arising from those assets. So both generations were taken care
of text free so they in nineteen seventy six they
closed that loophole with the generation skipping transfer tax, and
grandchildren around the world cried and cried, cried, yeah, and
that's when the um well, the exemption at that point
(29:17):
in nineteen seventy six went from sixty grand to a
hundred and twenty thousand dollars. And you know what, let's
take a little break here. I'm gonna leave people in suspense,
I think wed because I'm starting to get excited. All right, Chuck,
(29:50):
you've left this in suspense long enough. What so that
exemption rate, I said, in Uh, the Tax Reformact of
nineteen seventy six went from sixty grand to one at seven.
And we've explained what the exemption was, right like or
did we not? Even? I feel like we did, But
if not, just make it more clear. The exemption is where,
(30:11):
if you're the value of your estate comes and that's
part of the process is everybody goes in and says
this is worth this much, No, it's not, YESI and
then they come up with the value of your state.
If that value was less than sixty grand at that point,
then you're you could transfer it to any you could
transfer it to claim text free. It's exempt below the
(30:32):
level of sixty grands, okay, so super clear. So that
rose to a hundred and twenty grand and change. Uh.
And then in the nineteen nineties things kind of started
rolling a little bit. We had this uh big budget surplus.
I remember that, Yeah, the good old days. And then
George W. Came along and said, you know we're gonna
do we got this big surplus, we're gonna start giving
it back to the American people, um, and especially the
(30:57):
wealthy American people. And um, the the threshold really started climbing. Yeah,
Like it went from in two thousand nine, it had
climbed to six hundred and seventy five thousand dollars not bad.
And it jumped from six d seventy five thousand to
three point five million dollars, yeah, in two thousand nine.
(31:19):
So it went from from the eighties and of or
no I'm sorry, the seventies a hundred and twenty thousand
to thirty years later three and a half million dollars.
The exemption was. Yes, that that is quite a climb,
but it had an even more astronomical climb from two
(31:39):
thousand nine to uh two thousand thirteen because it went
chuck in the Taxpayer Relief Acts. So remember George W.
Came in and said, hey, it's not government's role to
have a bunch of taxpayers money and you don't know
what you're gonna do with it. Give it back. I'm
the man who's gonna get it back. And like you said,
(32:00):
and certain people got it back, some other people got
it back. But it was a transfer of wealth, right. Um.
Barack Obama came in and said, you know what, that
was screwed up. I'm gonna get some of that money
back for everybody. I'm gonna tax the wealthy. I'm gonna
get rid of these so called Bush tax cuts, which
is what they were called. And um, he didn't at all.
(32:23):
As a matter of fact, he signed into law in
two thousand twelve, the Taxpayer Relief Act of two thousand
and twelve, which took the Bush tax cuts which were
which had expired already, um, but then had been extended
temporarily for two years. He took those Bush tax cuts
he campaigned on getting rid of, and actually enshrined them
(32:45):
in law. And now for the indefinite future. They the
um the exemption is up to five million dollars for
in a state more than that now actually, so it
must have been at least five Well it's index for inflation. Yes,
And now for two thou and sixteen it was four
five point four five million um for a single individual,
(33:05):
ten point nine for a couple for a couple yeah. Uh.
And then um, the tax rates were set at fort maximum, right,
and that's after it had gone down to thirty five
under Busch. So I think that was part of the compromise,
and let's bring it up, but let's let's basically make
(33:25):
it permanent at five mill Yeah. And there was even
a year in there. This is crazy. Do you remember this,
this whole back and forth, like getting rid of the
bush tax? What's gonna happen? Yeah? And um, in two
thousand and ten there was I guess they didn't sign
a paper fast enough for something. But there was no
death tax in that year. So if you're wealthy and
(33:47):
Gladys died in two thousand and ten, you were you
you lucked out because the very next year, those uh,
those cuts got restored, or those those gifts taxes or
estate taxes out of store. And don't think that there
weren't some people in two thousand ten that were peeking
in on Aunt Gladys holding a pillow in their hands. Us. Yeah,
(34:11):
that's not funny at all. Killing a relative for their
inheritance is not funny. No, it's not certainly not in practice.
So here's the deal, and we're going to get to
the pros and cons in a second. But like I said,
for because of inflation, five five point four or five
million dollars is the lifetime exclusion amount. They have this
(34:32):
chart you can basically throw out the window that says like,
if you have a taxable state of four grand, you'll
low seventy thousand dollars plus thirty of a hundred and
fifty thousand because you have to pay a percentage on
the amount and excess of the lower limit. It's all
mine numbing if you're just a lay person. But throw
that all out the door, because anything under five point
(34:54):
four or five million, let's just call it five and
a half million bucks is under that ex lousion amount.
But here's the weird part. Because it's the United States
and we can't just make things simple. It's a unified credit.
It's how it's structured. So what what you have to
do is you have to structure it to pay on
the full amount, and then they give you a tax
(35:16):
credit back. Oh, that's just to make convoluted. That's not okay, though,
you pay the full amount and then they're like, and
then we'll pay you back what you I don't think
you pay it. Actually, I think it's just in the
computation different. But it still seems just unnecessarily convoluted, Like
you should just knock it off the top and see
what you got left. Here's the other trick. If you
(35:39):
have a lot of money, and we should say that
this is we do not qualify as text experts, or
if we're giving tax advice. If if you're subject to
the estate tax and you're using our tax advice, No, no, no,
how did you come up with that money? Yeah? Uh?
The gift thing, there's an annual gift tax exemption of
fourteen thou dollars per person. Oh yeah, so if you
(36:03):
have three kids, that's per year. Yeah, if you have
three per person per years. If you've got three kids
and they're all three married, and they have ten kids
between them, and they they all are successful, they don't
have drug habits or anything like that, right, you can
give fourteen thousand dollars a year to each one of
them per spouse. So that's four hundred and forty eight
(36:25):
thousand dollars a year to those three kids, their three spouses,
and those ten grandkids. And if you plan ahead way
before your death, you could potentially give away all your
money tax free by the time you die through gifts.
So that seems legit to me because that is clearly
(36:50):
middle class. It's upper middle class, but that's middle class.
That that cap, the five million, No, that gift tax. Yeah,
that cap of fourteen grand a year. It's not gonna
help funnel a massive estate tax free onto the airs,
but it does give a break to middle class, upper
(37:11):
middle class, but middle class families. Well, but you would
only be given that away though, if you were going
to be above the five million dollars, right, because anything
under that is exempted. So that ain't middle class. No,
that's true, you're right, you know. Okay, Well that was
that was a stupid thing for me to say. So
if you're out there thinking, even with the deduction at rate,
(37:34):
is a lot of money on an estate tax. They
give an example here in this article. Let's say you
have a seven million dollar estate knock off the five
point four or five million, that's one point five five
million at that's about six and twenty thousand. So if
you didn't look at that for the whole seven million
dollars state, that's only about nine. Yeah. And actually I
(37:55):
saw a two thousand thirteen Brooking study Text Policy Institute.
I think study found that of in that year, of
all of the estates that had to pay taxes, they
paid an average effective rate what they actually paid of
sixteen point six percent, nothing like and um in that
(38:21):
same year. There's another one too. There's there's a lot
of objection. We should talk about some of these objections.
Some of the objections to this is they're basically they
go into two tranches. One is that this kind of
tax stifles investment. That is the very wealthy and the
very rich, who are really that the economic engines of
(38:42):
America and capitalism't because they introduce capital to the markets
and that's what drives the markets and makes the economic
engine hum. And we're all better off as long as
the wealthier pumping money into this. Well, if we don't pump,
if we don't let the rich pump more money into it,
meaning the government comes along and says, your father just died,
give us of his of that vast estate that you
(39:05):
just inherited, Well, that's going to Uncle Sam rather than
potentially into the markets. Yeah. And also some people would say, hey,
that's attacks for being successful. Well, that's the other trunch
is that it's basically morally incorrect for the government to
come in and say give us some money wealthy person.
(39:25):
That yeah, that it's attacks on on success, that the
government has no business taxing inter family fortunes, um. And
then again that it stifles economic growth and development. Yeah.
And another thing if you're against this, someone might say is, hey,
we were already taxed on that stuff to begin with
(39:46):
during life. So now and not only that, but my
dad inherited that and paid in a state tax. So
it's just double and triple and who knows depends on
how long your family wealth goes back? Is how many
times it's tax Yeah, because not only was it taxes income,
it could be taxed multiple times. Is in a state
that same estate is what you're saying. Yeah, Then of
(40:08):
course a lot of people drop the mic with it's
a wealth redistribution scheme that you're trying to take money
from the wealthy and give it to the less wealthy
e g. The poor and um, home, we don't play that.
I remember Holming the Clown. That was great. Uh that
(40:29):
was a great show. Yeah, oh yeah in living color. Yeah.
It's crazy how many things kind of like carried over
and are still part of the lexicon. Home, we don't play.
We don't play that. Two snaps up. Let's bring all
that stuff back, two snaps um. Another knock is that
people say, you know what this is, state taxes is
(40:50):
less than like one per cent of what the government
collects annually, and they probably spend that much going after
it and litigating this stuff because nine times out of ten,
wealthy people are fighting this tooth and nail and you know,
just cause too much to go get it. And that's
a a lot of these, it turns out, are pretty disingenuous,
(41:11):
Like they sound right if you don't look into them,
but apparently a lot of them are not correct, like
the idea that the effective tax rate is sixteen percent
or seventeen percent, not fort Another one is that it
hurts small businesses. This is a big boogeyman with the
estate tax as well, like that you if you go
(41:34):
in and a family owned business or a family owned farm.
If the government goes in there and says you own
on that just because your father died, So go sell
some of the cows, go sell a tractor, you hay seed,
and give us the money. That's gonna have a really
negative effect on the family farm or the family small business.
(41:56):
It may even cause it to go bankrupt. It may
cause the farm to go under. That's not good. The
government can't do that. Yeah, you hear that, and you think,
of course that's awful, right, but the facts don't bear
that out, correct, right. That same two thirteen Brooking study
found that in two thousand thirteen, twenty twenty small businesses
and farms owed any estate tax at all, and on average,
(42:19):
those twenty small businesses and small farms that did have
to pay a state tax paid an average about four
point nine percent of the value of the estate. Um,
there's special there's special rules, especially for calculating the value
of farmland for estate taxes, in particular, that reduces their
value so that the tax is inherently lesser. Another reason
(42:43):
someone says might say that they're unfair. I'm sorry, you
might say that they're fair, is what we alluded to
a little bit earlier about the concentration of wealth is
not a good thing, not just economically, but um when
it comes to power, and it's dangerous to a democratic
society to have UM. The influencers of this country be
(43:05):
so few and only influencers because they have so much right,
and the average Joe's voice is lost in the process. Yeah, so.
Somewhere somebody pointed out that the estate taxes the most
progressive part of the entire U S tax code because
it truly only affects the people who actually can afford it,
(43:25):
or who are actually wealthy. It doesn't it has no
undoe or disproportionate burden, or any burden on people of
lower socioeconomic status or even middle socioeconomic status. Something like um,
two tenths of one percent of households are subject to
(43:48):
the estate tax in the United States this year. I
think two tenths of one percent. That's not much, that's true.
And then another one to address that, the idea that
it doesn't bring in very much, and the government spends
more money than it then it takes in it. Yeah,
we're fighting for it. Supposedly. I saw estimates of two
(44:11):
billion I saw one estimate of two billion UM between
two thousand seventeen and two thousand twenty six is how
much they expect the estate tax to take in, which
isn't much. It's like less than one percent of the
government's tax revenue. But the author of this one article
I saw pointed out that's like the combined budgets of
(44:34):
the f d A, the CDC, and the e p
A combined, So it's it's actually paying for stuff, you know.
And apparently it cost about seven percent for enforcement and administration,
whereas income taxes cost about four to UM chase down
(44:54):
dead beats, So there's that. It's about half the state
tax problems debunked you anything else? No, I thought I
thought that was fairly interesting for someone who doesn't like
I go a little uh foggy when I start talking
about finance and taxes, But for some reason this one
kind of interested me. Do you do your own taxes? No?
(45:17):
I love it? No, no, no, no, I love it. Man,
I love doing taxes. I not only do I not
like it, but I would say that I can't put
a percentage on it. But having a professional involved, really
really financially is beyond worthwhile. Like a thousand percent worthwhile
(45:38):
Yeah for what they can save you. Oh no, I'm
sure like like we're having somebody go back over my
figures this year, but um it's and I don't like
paying tech because it's not fun. But it's like this
big horrible ball like hair and teeth after like like
(46:00):
work into uh a usable yeah figure, I gotta turn
it into the venus. Gummy venus to Mila. So you
take a taratoma and you form that into a beautiful
statue right with no arms, and then I cry Matt's Texas. Uh.
If you want to know more about death Texas, type
those words into the search part how stuff works dot Com.
(46:22):
Since I said search parts, it's time for listener mail.
I'm gonna call this uh fan that found us through Delta,
all right. I know this would pay off one day.
You know, we don't know for still on. But for
a while we were on Delta flights. We're supposed to
be back on this year, are we? And I always
kind of wondered, like we got booted off? Does anyone
actually discover us board on a flight? That's what I'm saying.
(46:45):
We now come we have one person, so uh, Ethan
lives in Los Angeles and says he found us on
a Delta fight and a loyal listener ever since. Um,
I'm sure many fans have their favorite episodes, favorite sweets,
band names, ideas. Here if you my favorite jokes, and
I didn't remember a couple of these, so I'm gonna
test your memory. Josh, you had one look at those
(47:07):
look at these shoes. I'm the king of Rotterdam. All right, Nope,
he said. He laughed for five minutes on that one.
Chuck the Language of the Beard. He says, he's still
laughing at that. In fact, anytime I need to pick
me up. I scrolled to the forty three minute mark
of how the Stigil the Stigil Organs work. The whole
exchange is hilarious, including Josh's reaction. The joke verges on
(47:30):
toilet humor, but doesn't quite belong in that category. So
I don't remember that one. I have to look it up.
I do remember this one, Chuck the runner up his
Chuck's line when you realize that diesel fuel is named
after a person, Jimmy Gasoline. I remember that. I remember that.
I don't remember what episode it was in, though, but
I do remember that, but he has a little factoid
(47:51):
for us. He finished the Alexander Hamilton's show, uh and
he says, this saw the visit of the Grange a
couple of years ago and loved it. While there, I
learned something I'm surprised you mentioned as a testament to
his character. Not only did Hamilton's shunned slavery, as you mentioned,
he also defended Tories and British subjects as a lawyer
in court. And this was only six years after the
(48:11):
Declaration of Independence. What a guy. Wow, he really was
top knock. Yeah, that's from Ethan barber Er. Thanks a lot.
Ethan Ethan Barber or Barber one of the two. Oh
it wasn't Barbara. It was spelled different Barber, I know,
like the hunting gear right, I don't know barb barber whatever.
If you want to get in touch of this, like
(48:34):
Ethan did Ethan right, Ethan, it's his last name. That's
up for grabs. You can tweet to us at s
Y s K podcast. You can join us on Facebook
dot com slash stuff you should know. You can send
us an email stuff podcast at how Stuff Works dot
com and has always joined us at our home on
the Web Stuff you Should know dot com for more
(48:57):
on this and thousands of other topics. Is it how
stuff works? Dot com? Mhm
Welcome to Stuff you should Know from how Stuff Works
dot com. Hey, and welcome to the podcast. I'm Josh Clark.
There's Charles W. Chuck Ban, there's Jerry. If you put
us together in a room, get a little air conditioneder
(00:21):
noise going black out the windows. It's stuff you should know.
Hegg crates on the walls bringing a cup of water
for me, and like, I got nothing whatever? Why don't
you have four beverages? Like, I don't know, it's a
weird day. What is that is so weird? They're out
of Pellegrino. Yeah, I know. I'm sitting here like I've
(00:42):
never seen you without a beverage within three ft of
your body. And I also am really tired of the
coffee here. It's not okay. Oh man, are you drinking
it right now? No? Good for you, jack um Chuck.
Oh yeah, that's right. Although it's funny over the years
when I go into restaurants, usually like some sort of
(01:05):
like an ethnic restaurant, and asked for my name and
I say Chuck, they almost always say Jack, that was there, right,
And I just go with it. Yeah, I mean yeah, Jack,
because what kind of person is like, no, get my
name right? On the little thing you write down to
my ticket. You just grabbed the thin man lapels. Yeah,
I didn't care. Uh well, it's the perfect segue into
(01:27):
what we're talking about today, Chuck, Yeah, Jack, the death tax.
That's right, one of our scintillating, uh internal revenue centered casts.
I mean, we have done a bunch of like tax
related episodes if you think about it. Yeah, this one.
I'm surprised we haven't done this one. And actually I
(01:48):
didn't check. We haven't, right, I checked, we have not, Um, yeah,
but it did seem familiar here there, but I definitely
double checked. Yeah, I thought it was pretty interesting, especially
a lot of this will be the history of it,
which basically is, we're going to war, let's get the
death tax going, right exactly, the rich are getting too rich,
Let's get the death tax going. So we should probably
(02:10):
say what the death taxes, and actually death tax we
should be saying death taxes because there's a couple of
different kinds of death taxes, and that's basically the term
that's used by people who aren't in favor of death taxes.
The kind of make it seem like it's just a
stupid idea, like you have to you have to pay
(02:30):
a tax to die. Come on, people, snap out of it,
you know. Um. So basically you have two types of
death taxes as it stands right now here in two
thousand seventeen, you've got, at least in the United States,
you have the estate tax and you have the inheritance tax,
and both of them are basically death taxes. The estate
taxes where um you die, you have an estate in
(02:53):
your state is the total of all of the stuff
you own and all the debts you have. So the
first thing that happens to your state, your debts get
paid off, uh, and then your executor gets paid off
for their troubles. Your funeral gets paid off. And then
Uncle Sam's standing there with his hand out shot out
(03:13):
of a cannon that costs take that off the top.
So Uncle Sam's standing there and he says, hey, lay
it on me, guys, I want that. That's your estate taxes.
Then after that, in some states, the money goes to
the heirs, and then the states come along and say
it's archer now. And because you know, states rights aren't
(03:35):
what they used to be, right, And then your city
comes along and they want theirs. And then if the
city then your next door neighbor comes along and say
you didn't pay the neighborhood tax on that, right, Can
I have my lawnmower back? Uh so? Yeah. Basically, if
you die in a state that has inheritance text, you're
going to pay in a state tax and an inheritance
inheritance tax on your estate. After your death, you won't care,
(04:01):
but your heirs well, and you make care every moment
leading up to that last one. After that, you'll be fine.
I think the Beatles had it right on the money
there that song Come Together. You're like Lucy and the
Sky with diamonds, no tax man. It's a great song.
If you you know, if you drive a car, I'll
(04:21):
Texas Street, if you take a walk, I'll text your feet.
It's very ah, very libertarian. Yeah, come to think of it.
In the background, if you play it backwards, it goes,
who is John Goal? Do we do what? I'm backmasking?
All right, We're gonna do that one day took all right,
(04:43):
So you just describe the estate tax. I described both. Okay,
you said the inheritance taxe. Okay, that's the one where
the states like, can we have our cut to where
they text your airs, not your state. Yeah, like after
you get the dough in your text. Uh so, you're right,
both of those together make up a death tax. And um. Well,
(05:04):
over the years, it's been debated both economically and philosophically.
And I guess we should go back in time and
the way back machine to ancient Egypt if we fire
it up. Did you put gasing? I did? Uh so
(05:26):
if you if you go back to ancient Egypt, they
actually have existing uh papyrus with that tells the story
of men basically either trying to dodge paying a death
tax or paying a death tax, two different versions of
that story against depending on who the guy was, you
could tell which one you're supposed to do, because the
guy dodging it had he was in the middle of
(05:47):
a circle with a slash there. That's right, don't be
this guy. Uh. And of course in ancient Rome they
were big on uh big on trying to modernize everything,
and of course meant the tax code as well. And
Caesar Augustus instituted something called the uh vis sina herad titadium.
(06:08):
Is that right? I think so? My Romans not what
it used to herititardium. Apparently that translation is twentieth penny
of inheritances. Uh. And taxes, sex secessions, legacies and donations
after death. They should have called it death tax. They
should have whoever came up with that, I couldn't find
who did, but it's pretty clever. Uh. And like I said,
(06:29):
there's long been debate. Um. Even in ancient Rome there
were exemptions for close family Back then you could give
away some charitable donations, which is, you know, kind of
similar to what you can do today. That's a that's
a very long standing tradition, and it should be I mean,
like if you want to give a bunch of money
to a charity, man, there should you. That should be unfettered, yes, um.
(06:52):
And in fact you should maybe even get a little
text break for that sure as people do at least
a pat on the back from everybody in your community. Uh.
And then plenty the younger not the elder beer man,
which one's the one that's so hard to get? I
think plenty of the elder is the beer that's hard
to get, right, I don't know. It might be the
other way around. So there's a plenty of younger beer
(07:15):
as well. Versions one you can get basically all the time.
The other one like, you have to stand in line
for a week and a half outside of the brewery
to get it, and they give you a you have
to bring your own like bucket and they fill it
up and they make you chug it right there and
then they kick you in the butt as you're walking away. Yeah,
they're doing it right. Uh well, regardless of I'm not
(07:36):
sure which one, plenty of the younger criticize this tax
and he's like, you know what you're doing. You're taking
advantage of people of these families that are distraught over
the death of a loved one. Yeah, how unfair is that.
I would guess that plenty the younger may have been
rich from that quote. I bet you're right. Yeah. Uh
where else? We can go to England and France. Yea
(07:58):
we I mean we jumped over several centuries. I don't
know though, if the Holy Roman Empire was into death texas,
but by the time we arrive in uh well, feudal England,
that still would have been the Holy Roman Empire. I
think in the thirteenth century. In England, by the time
they founded the Magna Carta, death texas were so unpopular
that It's like one of the first clauses of the
(08:20):
Magna Carta, like you gotta lay off on the death texas.
You could do them, but not so much. I think
that was the verbatim quote in the Magna Carta. Every
time I hear Magna Carta, I think of Johnny Dangerously.
Did you see that? I don't remember that. I think
it's the end when they're taking like walking maybe Johnny
(08:40):
too his execution and they have the fake priests and
he's doing this fake Latin because Magna Carta, Master Charga.
It's just so dumb. Whenever I hear Magna Carta, I
think of that one Simpsons where Marge is training to
be a realtor and Lisa's teaching her like that if
you if you make a song out of what you're
trying to memorize, remember She's like in twelve fifteen running
(09:03):
Me do. It's funny. There's historians out there right now
going when I hear of Magna Carta, I think of
the Magna cartas. Uh. But moving on to the United
States because that's mainly kind of what we're talking about
here with the death tax um. It was debated in Scotland,
which carried over eventually into our own founding fathers. But
(09:25):
some notable philosophers and economists, and they used to be
very heavily tied, which I think is interesting. Yeah, philosophy
and economics. Yeah, I guess it still is in some circles. Yeah.
I think economists like to pretend that's not the case,
but I think you're right. I mean, there's a certain
philosophy to it. But we talked about people like John
Locke and Bentham and Adam Smith before and they've kind
(09:49):
of remained lockstep with their principles on on the death tax. Right, So, uh,
Smith and Locke, we're saying, no, no, no, that's not
the government's role the tax of person airs after they die.
Black Stone, uh, the very famous magician, said no, we uh,
we absolutely should be taxing people's estates when they die,
(10:11):
because we want to prevent dynasties. And finally somebody in
history comes out and says it like that's basically the
point of the estate tax. Yeah, and um, and then uh,
I think Jeremy Bentham said basically the same thing, like, yeah,
we we like like wells should not be able to
grow exponentially in a single family that's not that's bad news. Yeah,
(10:33):
and that's sort of, like you said, been the root
of the philosophical debate from black Stone to Bernie Sanders saying, um,
and we'll get into the what people commonly were called
the pros and cons. But one of the cons is
uh and whether or not it's I don't know if
you can prove it's true. But one of the cons
people point to is you leave these kids all these
(10:56):
millions of dollars, and they're gonna end up on dope. Well,
or they're less likely to be super product not much
much ass likely necessarily, but they're not as incentivized to
be constructive contributors to society. No, they're not. It's well put. Yes.
Uh So, like I said, this kind of transferred over
(11:19):
to the founding fathers of the United States. Yeah, because again,
I mean, the US was founded very much on enlightenment, thinking. Yeah,
so the guys who founded the US were looking over
to Europe and saying, like, what are those guys saying
right now? What do we think about that? How does
that apply here? Let's like, what are they saying over there?
I don't know. I'll let you know in six months.
Send a message on a boat the stamp tax of
(11:42):
seven and this kind of begins a long tradition of hey,
we're going to war, we need to raise some dough
because at first they resisted the UM death tax. Yeah,
but they needed to protect the colonies and that's expensive.
So UH to under war against France and naval war. Um,
(12:03):
they said, how about a stamp tax, which when I
was a little kid, you know, I heard of the
stamp tax and I didn't get it um. But basically
it was a tax on every piece of paper printed,
like every kind of documenticial document and newspapers and stuff.
If you had a document that you needed to file, right, Yeah,
for like the judge to release somebody's personal effects to
(12:25):
you their air, you had to show them this document
and for the judge to release it had to be stamped,
and you had to pay for that stamp. So in effect,
it was a government tax because this whole transaction couldn't
happen until the government officially got its cut, and the
stamp was proof that the government had gotten its cut
and the transaction transaction could proceed. Yeah. So anything from
(12:46):
UH an administrative letter to UH receipts for legacies, UH
even the attorney's license. Like apparently attorneys had to pay
like ten pounds powder for the wig just to get license,
which is about a thous and bucks. Now, yeah, I'm
sure they passed that. I'll bet that's about I'll bet
(13:06):
you it costs about that much. These days, they probably
ten grand for an attorney's license. I could see it.
That sound about right. They make that up pretty quickly, though,
I think so, you know, just a couple of hours,
a couple of hours sitting at the desk watching the
little bird dip its peak in the water, thinking about
(13:27):
the summers. I'm just kidding, attorneys out there, we love you,
everyone does. Um. They did have rules back then, though,
even for the stamp tax, which we're kind of carried
out throughout the years in one way or another. Estates
under fifty bucks were exempt, and then anything above fifty
(13:50):
had a graduated scale of tax, which is still kind
of what we have today. I read this this post
by this guy um on I believe Forbes, and he
his name is Bob Rywick, and he wrote a book
on tax pretty much literally um and he was saying
(14:10):
that for most of history there, especially the history up
leading up to America. There was not a question of
whether there should be a death text or not. It
was um, how much is the upper limit and what
are the exemptions, you know, or what's the minimum and
what are the exemptions. That's basically yeah, which is kind
(14:30):
of where we ended up in the modern times, just
sort of debating and going back and forth. Right, but
even still, I mean, like right out of the gate,
you know, back in Rome, we talked about how there
were exceptions where if you donated to UM to like
a charity or here, it's like if you of Rome,
right or UM, if your state's fifty dollars worth fifty dollars,
(14:56):
there's like no one wants that, and it's fine. Even
back in the late eighteenth century that wasn't very much.
It's like a hundred dollars today. Uh. So the stamp
tax was repealed in eighteen o two because the war ended,
or at least that particular war that they were funding ended. Yeah,
(15:17):
and they thought about it again during the War of
eighteen twelve, but that were ended before they had a
chance to get it through. And maybe we should take
a break here and pick up with more history. So
(15:48):
chuck Naval War with France funded by the Staff Stamp Act.
Death taxes go away for a while, and they came back.
They actually stayed low in the United States until the
Civil War. Yeah, and we should point out this, these
death taxes didn't like fund entire wars. They you know,
there were many other taxes involved for this stuff, right, Okay,
(16:11):
So when and when I mean stay low, I mean
like non existent, not that the rates were low. So, um,
in the Civil War death text came about, and um
it was it was different than what had been proposed
with the Stamp Act. So the people who received the
inheritance were the ones who were taxed. So it was
an inheritance tax, not in the state tax, right. Yeah.
(16:33):
And it wasn't like, hey, we're going to tax these stamps,
which is really kind of a roundabout way of making
a death tax estate tax, right exactly. This was actually
your your uncle died, you got that money, give us
some or we're going to break your legs all the
civiphor Italians. Uh. After that, there was an amendment two
(16:55):
years later where um, it wasn't just like person all
effects or maybe stocks or cash or whatever, but real
property came to be taxed as part of the estate
as well. And then lastly, I think in eighteen seventy no,
as part of that eighteen sixty four a moment, there's
(17:15):
also a gift tax, and this is a big loophole
that people would take advantage of. Yeah, it's funny, like
early on even people were like figured out a way, like, oh, well,
here's what I'll do. I'll just sell my assets and
for even if it's for even less money, just to
get it off the books, well to my kids or
something like that. Yeah, Like here's like my dad sold
(17:36):
me a car once for a dollar. Nice, that's a
sweet deal. Yeah, yeah, it was all right. Did you
pay him in like pennies? He actually wanted the dollar
and it ended up costing me like a lot of
money in repairs and it was sort of not a
great deal in the end. Did he say buyer beware chump. No,
And I don't want to be uh look a gift
(17:57):
horse in the mouth. It was a nice gesture only, Yeah,
very nice. So let's move on show. So the big
loophole with that gift taxes. If you want your kids
to have all of your stuff and you wait until
you die to pass it on to him, Well, if
there's an estate tax, the government's going to take a
big chunk. But if you're alive and you say, hey, kids,
(18:21):
i'm feeling a little, uh, a little over the hill,
and uh, I think I'm gonna die soon, So I
want you to have all of this stuff from my estate.
You can have a tax free because there is no
gift tax. The government finally said, and I think eighteen
sixty four, wait a minute, there's a gift tax now,
and uh, we see your loophole. But I think they
(18:41):
even made it. The gift tax was still less than
it was for an estate tax or an inheritance tax,
so it was still advantageous if you're a very wealthy
family to pass on your estate while you were living.
Then it was to leave it after you died, but
it would still be taxed. Actually equalized those right later on. Yeah,
(19:02):
but not for a few decades. All right, So let's
let's get into the twentieth century here. Industrialization. H One
of the byproducts of that was it led to a
concentration of wealth for a lot of families. So the
government was like, alrighty see, all you wealthy families out there,
thinking you can learn learn all that money and keep
(19:24):
it and pass it to your kids, and they can
pass it to their kids. We want our cut. And
it wasn't just the government. As a matter of fact,
I'm not sure how much the government had to do
with it, but the there was a populist movement that
arose that was basically like, we want our cut. And
you know, Wizard of Oz was was written during that time.
Frank really, Frank L. Bomb, the author of the Wizard
(19:49):
of Oz was a populist. And there's apparently it's a
very populist allegory. Yeah, lots of it, Like the Yellow
Brick Road is some commentary on the gold standard, the
fact that it's in can in this is um has
to do with the agrarian roots of the popular The
scarecrow is um, I don't know, Elvis, something weird like that, right,
(20:10):
put on some pink Floyd, right. So um. There was
this big movement, and part of this big populous movement was, Hey,
there's a lot of really wealthy people here. Um, you
guys should should stop this procession of wealth, you guys
being in the government. And they started to get there.
There was an income tax instituted in eighteen ninety four. Yeah,
(20:32):
I didn't realize this. I thought the first income tax
came later in nineteen sixteen. But they made they took
a crack at it in four but it was ruled
unconstitutional for reasons other than, um, the fact that it
was an income tax. Right, But it was ruled unconstitutional,
but not because of the death tax, for different reasons.
So they said, we'll get that income tax, don't you worry, Right,
(20:55):
that's plenty constitutions. Wait, just wait twenty years, twenty two years.
Then comes along another war, the Spanish American War, and
they instituted the War Revenue Act of eight And this
one looked a lot like the one that we have today. Right,
while it was in a state tax rather than an
inheritance tax. Yeah, and it had familiar exemptions. Uh. This
(21:16):
time under ten thousand left to a spouse was fell
under the exemption, and the rate of tax depended on,
of course, how big your estate was and then who
you were giving it to. Yeah, and those are still
around today in a lot of places. Um, if you
are somebody's nephew, you're probably gonna pay the full bracket
(21:39):
of taxation very according to uh, according to who you
are or if you like you're a drinking buddy, you're
gonna pay the full the full amount. If you're a
like a grandchild, you'd pay less than the drinking buddy,
but more than the spouse. And then the spouse is
usually and has been for a very long time, whenever
(22:01):
there's an exemption within the state tax, the spouse is
usually completely left alone. There's no tax if the entire
state goes over to the spouse. So that's the current
rules too. Yeah, boy, I get I need to look
up drinking buddy, So I gotta take care of Clem right, Well,
Clem is gonna pay through the notes, I'm afraid. Oh boy,
he's not gonna like that. He's really counting on me
(22:23):
dying leaving in my podcast fortune. Uh so with that one,
the War Revenue Act of again War ends. In nineteen
and one, Congress uh repealed the tax. Yeah, which is weird.
I kept reading that, like, what do you mean repealed
the text? When did they stop doing that? But apparently
(22:45):
they used to institute new taxes get the money they needed,
and then they would say we got enough, now they
have and then just more new taxes. Yeah. Um, so
this kind of marked a turn where people started to
get who wrote this was this Jane Jane McGrath, remember Jane, uh.
(23:08):
She calls it a growing distaste for inherited wealth. And
it started to kind of pick up steam, most notably,
UM in the form of President Teddy Roosevelt, who was
not a fan. No, he actually around this time there
was another there was another big push for the income text.
Remember it had been repealed, and Um Roosevelt was like,
(23:30):
I'm not sure about the income tax, but I'll tell
you what is great idea, that estate tax. Let's get
one of those in there. Um he said. Basically, our
national legislators should enact a law providing for a graduated
inheritance text. The prime objects should be to put a
constantly increasing burden on the inheritance of those swollen fortunes,
(23:51):
which it is certainly of no benefits to this country
to perpetuate. I mean that kind of lays it down there,
go out and make your own money essentially. Well, yeah,
and I think part of the other point, um, is
that really seems to apply today. If you've listened to
our Dark Money episode two. Um money very easily translates
(24:12):
into political power. Now it translates into political speech, but
it's always translated into political power. And if you have
more and more money just being passed along from one
generation to the next, that that that family is not
just amassing more and more money, they're amassing more and
more power. And that's not good for democracies. It's good
(24:35):
for monarchies, but not democracies. And that's what Roosevelt was saying.
Uh so Roosevelt support it big time. It also was
supported by Taft and Wilson, but it still took a
little bit of time and another war before Congress would
get back on board again with another death tax. World
(24:55):
War One. Yes, world War One, the US lowered terror
us on our allies and wanted to build up a
stronger defense, and all of a sudden they said, wait
a minute, we we need dough. Yeah, those new fangled
tanks aren't cheap, they're not building themselves. So they went
back and said, all right, maybe that income tax ideas
(25:17):
pretty good one. So they came up with the Revenue
Act of nineteen sixteen, and that's where the modern the
modern income tax and the modern um the state tax
were born. And there's been no going back. No, there
really hasn't because they were initially Apparently initially they planned
on repealing it after the war, and they're like, this
(25:38):
feels pretty good. I like rolling in piles of money,
so let's just keep it going. And at this point,
the exemption was fifty thou dollars and had a graduated
rate of one per cent on amounts under fifty grand,
up to ten on amounts over five million dollars. Right,
(25:58):
it's a lot of dough back in. Yeah, it also
text um real land, personal property. Uh, if you transferred
something at death or even in the two years before death,
that loophole. Yep, it was taxed um and then the
the gift tax, but there's still a loophole. See like
if you did it three years, if you transferred all
of it three years before your death, you're fine. Um,
(26:21):
you just had to live in poverty for the last
three years of your life and hope that you called
it correctly and that it wasn't like seventeen years. Right.
So in Congress said, we see what you're doing. We're
coming back with that gift tax again. That was a
good idea. I don't know why we ever forgot it.
We lost our institutional memory but we're putting it back in.
(26:41):
So they put in this gift tax, and now all
of a sudden it was um not smart too, it
was not a loophole any longer. Yeah, and then the
Great Depression had a lot to do with that, because
obviously income tax went down during the Great Depression, and
they said, our coffers are getting low, so we need
to equalize this again. That's right. And I think the
(27:03):
gift tax his state since then too, right, It never
went away, Yeah, because I guess it was challenged in
court and it was upheld by the Supreme Court to
be constitutional. But Congress is like, ah, we'll repeal it,
and then yeah, they brought it back and it's been
there ever since. Yeah. And here's a staggering stat you know.
We we've talked before about past income tax and uh,
(27:24):
how even though it might not seem like it, we've
got it pretty good today compared to certain years. But
the estate tax from World War Two, when they raised rates,
uh ninety one until nineteen seventy seven, the very top
estate tax was seventy seven percent. Isn't that crazy? Wow,
that's pretty high. Oh yeah, that's like Gerard Depardu fleeing
(27:48):
for the borders high you know what I mean. Yeah,
like you made all this stow in your life and
you get to keep your family gets to keep it
after you die. Yeah, and give us a smile. So
the m they stayed that way actually for a really
long time. It wasn't until yeah, it wasn't until nineteen
(28:10):
seventy seven that Congress brought that highest rate down from
seventy and they just brought it down to seventy then
and then um, Reagan came in and started whittling it away, uh,
little by little, um and it got as far down
as I think. Yeah. That was the Tax Reformact of
nineteen seventy six. And another thing came along with that.
(28:32):
It was something called the g s T tax, the
Generation skipping transfer tax, another loophole, yeah, which is like, oh, well,
I'm not gonna give my fortune to my kids, I'll
give it to my grandkids, wink wink. And then if
you had a really good estate planner, they could teach
you how to leave your assets to your grandkids, but
make your kids the beneficiary of any interest in income
(28:53):
arising from those assets. So both generations were taken care
of text free so they in nineteen seventy six they
closed that loophole with the generation skipping transfer tax, and
grandchildren around the world cried and cried, cried, yeah, and
that's when the um well, the exemption at that point
(29:17):
in nineteen seventy six went from sixty grand to a
hundred and twenty thousand dollars. And you know what, let's
take a little break here. I'm gonna leave people in suspense,
I think wed because I'm starting to get excited. All right, Chuck,
(29:50):
you've left this in suspense long enough. What so that
exemption rate, I said, in Uh, the Tax Reformact of
nineteen seventy six went from sixty grand to one at seven.
And we've explained what the exemption was, right like or
did we not? Even? I feel like we did, But
if not, just make it more clear. The exemption is where,
(30:11):
if you're the value of your estate comes and that's
part of the process is everybody goes in and says
this is worth this much, No, it's not, YESI and
then they come up with the value of your state.
If that value was less than sixty grand at that point,
then you're you could transfer it to any you could
transfer it to claim text free. It's exempt below the
(30:32):
level of sixty grands, okay, so super clear. So that
rose to a hundred and twenty grand and change. Uh.
And then in the nineteen nineties things kind of started
rolling a little bit. We had this uh big budget surplus.
I remember that, Yeah, the good old days. And then
George W. Came along and said, you know we're gonna
do we got this big surplus, we're gonna start giving
it back to the American people, um, and especially the
(30:57):
wealthy American people. And um, the the threshold really started climbing. Yeah,
Like it went from in two thousand nine, it had
climbed to six hundred and seventy five thousand dollars not bad.
And it jumped from six d seventy five thousand to
three point five million dollars, yeah, in two thousand nine.
(31:19):
So it went from from the eighties and of or
no I'm sorry, the seventies a hundred and twenty thousand
to thirty years later three and a half million dollars.
The exemption was. Yes, that that is quite a climb,
but it had an even more astronomical climb from two
(31:39):
thousand nine to uh two thousand thirteen because it went
chuck in the Taxpayer Relief Acts. So remember George W.
Came in and said, hey, it's not government's role to
have a bunch of taxpayers money and you don't know
what you're gonna do with it. Give it back. I'm
the man who's gonna get it back. And like you said,
(32:00):
and certain people got it back, some other people got
it back. But it was a transfer of wealth, right. Um.
Barack Obama came in and said, you know what, that
was screwed up. I'm gonna get some of that money
back for everybody. I'm gonna tax the wealthy. I'm gonna
get rid of these so called Bush tax cuts, which
is what they were called. And um, he didn't at all.
(32:23):
As a matter of fact, he signed into law in
two thousand twelve, the Taxpayer Relief Act of two thousand
and twelve, which took the Bush tax cuts which were
which had expired already, um, but then had been extended
temporarily for two years. He took those Bush tax cuts
he campaigned on getting rid of, and actually enshrined them
(32:45):
in law. And now for the indefinite future. They the
um the exemption is up to five million dollars for
in a state more than that now actually, so it
must have been at least five Well it's index for inflation. Yes,
And now for two thou and sixteen it was four
five point four five million um for a single individual,
(33:05):
ten point nine for a couple for a couple yeah. Uh.
And then um, the tax rates were set at fort maximum, right,
and that's after it had gone down to thirty five
under Busch. So I think that was part of the compromise,
and let's bring it up, but let's let's basically make
(33:25):
it permanent at five mill Yeah. And there was even
a year in there. This is crazy. Do you remember this,
this whole back and forth, like getting rid of the
bush tax? What's gonna happen? Yeah? And um, in two
thousand and ten there was I guess they didn't sign
a paper fast enough for something. But there was no
death tax in that year. So if you're wealthy and
(33:47):
Gladys died in two thousand and ten, you were you
you lucked out because the very next year, those uh,
those cuts got restored, or those those gifts taxes or
estate taxes out of store. And don't think that there
weren't some people in two thousand ten that were peeking
in on Aunt Gladys holding a pillow in their hands. Us. Yeah,
(34:11):
that's not funny at all. Killing a relative for their
inheritance is not funny. No, it's not certainly not in practice.
So here's the deal, and we're going to get to
the pros and cons in a second. But like I said,
for because of inflation, five five point four or five
million dollars is the lifetime exclusion amount. They have this
(34:32):
chart you can basically throw out the window that says like,
if you have a taxable state of four grand, you'll
low seventy thousand dollars plus thirty of a hundred and
fifty thousand because you have to pay a percentage on
the amount and excess of the lower limit. It's all
mine numbing if you're just a lay person. But throw
that all out the door, because anything under five point
(34:54):
four or five million, let's just call it five and
a half million bucks is under that ex lousion amount.
But here's the weird part. Because it's the United States
and we can't just make things simple. It's a unified credit.
It's how it's structured. So what what you have to
do is you have to structure it to pay on
the full amount, and then they give you a tax
(35:16):
credit back. Oh, that's just to make convoluted. That's not okay, though,
you pay the full amount and then they're like, and
then we'll pay you back what you I don't think
you pay it. Actually, I think it's just in the
computation different. But it still seems just unnecessarily convoluted, Like
you should just knock it off the top and see
what you got left. Here's the other trick. If you
(35:39):
have a lot of money, and we should say that
this is we do not qualify as text experts, or
if we're giving tax advice. If if you're subject to
the estate tax and you're using our tax advice, No, no, no,
how did you come up with that money? Yeah? Uh?
The gift thing, there's an annual gift tax exemption of
fourteen thou dollars per person. Oh yeah, so if you
(36:03):
have three kids, that's per year. Yeah, if you have
three per person per years. If you've got three kids
and they're all three married, and they have ten kids
between them, and they they all are successful, they don't
have drug habits or anything like that, right, you can
give fourteen thousand dollars a year to each one of
them per spouse. So that's four hundred and forty eight
(36:25):
thousand dollars a year to those three kids, their three spouses,
and those ten grandkids. And if you plan ahead way
before your death, you could potentially give away all your
money tax free by the time you die through gifts.
So that seems legit to me because that is clearly
(36:50):
middle class. It's upper middle class, but that's middle class.
That that cap, the five million, No, that gift tax. Yeah,
that cap of fourteen grand a year. It's not gonna
help funnel a massive estate tax free onto the airs,
but it does give a break to middle class, upper
(37:11):
middle class, but middle class families. Well, but you would
only be given that away though, if you were going
to be above the five million dollars, right, because anything
under that is exempted. So that ain't middle class. No,
that's true, you're right, you know. Okay, Well that was
that was a stupid thing for me to say. So
if you're out there thinking, even with the deduction at rate,
(37:34):
is a lot of money on an estate tax. They
give an example here in this article. Let's say you
have a seven million dollar estate knock off the five
point four or five million, that's one point five five
million at that's about six and twenty thousand. So if
you didn't look at that for the whole seven million
dollars state, that's only about nine. Yeah. And actually I
(37:55):
saw a two thousand thirteen Brooking study Text Policy Institute.
I think study found that of in that year, of
all of the estates that had to pay taxes, they
paid an average effective rate what they actually paid of
sixteen point six percent, nothing like and um in that
(38:21):
same year. There's another one too. There's there's a lot
of objection. We should talk about some of these objections.
Some of the objections to this is they're basically they
go into two tranches. One is that this kind of
tax stifles investment. That is the very wealthy and the
very rich, who are really that the economic engines of
(38:42):
America and capitalism't because they introduce capital to the markets
and that's what drives the markets and makes the economic
engine hum. And we're all better off as long as
the wealthier pumping money into this. Well, if we don't pump,
if we don't let the rich pump more money into it,
meaning the government comes along and says, your father just died,
give us of his of that vast estate that you
(39:05):
just inherited, Well, that's going to Uncle Sam rather than
potentially into the markets. Yeah. And also some people would say, hey,
that's attacks for being successful. Well, that's the other trunch
is that it's basically morally incorrect for the government to
come in and say give us some money wealthy person.
(39:25):
That yeah, that it's attacks on on success, that the
government has no business taxing inter family fortunes, um. And
then again that it stifles economic growth and development. Yeah.
And another thing if you're against this, someone might say is, hey,
we were already taxed on that stuff to begin with
(39:46):
during life. So now and not only that, but my
dad inherited that and paid in a state tax. So
it's just double and triple and who knows depends on
how long your family wealth goes back? Is how many
times it's tax Yeah, because not only was it taxes income,
it could be taxed multiple times. Is in a state
that same estate is what you're saying. Yeah, Then of
(40:08):
course a lot of people drop the mic with it's
a wealth redistribution scheme that you're trying to take money
from the wealthy and give it to the less wealthy
e g. The poor and um, home, we don't play that.
I remember Holming the Clown. That was great. Uh that
(40:29):
was a great show. Yeah, oh yeah in living color. Yeah.
It's crazy how many things kind of like carried over
and are still part of the lexicon. Home, we don't play.
We don't play that. Two snaps up. Let's bring all
that stuff back, two snaps um. Another knock is that
people say, you know what this is, state taxes is
(40:50):
less than like one per cent of what the government
collects annually, and they probably spend that much going after
it and litigating this stuff because nine times out of ten,
wealthy people are fighting this tooth and nail and you know,
just cause too much to go get it. And that's
a a lot of these, it turns out, are pretty disingenuous,
(41:11):
Like they sound right if you don't look into them,
but apparently a lot of them are not correct, like
the idea that the effective tax rate is sixteen percent
or seventeen percent, not fort Another one is that it
hurts small businesses. This is a big boogeyman with the
estate tax as well, like that you if you go
(41:34):
in and a family owned business or a family owned farm.
If the government goes in there and says you own
on that just because your father died, So go sell
some of the cows, go sell a tractor, you hay seed,
and give us the money. That's gonna have a really
negative effect on the family farm or the family small business.
(41:56):
It may even cause it to go bankrupt. It may
cause the farm to go under. That's not good. The
government can't do that. Yeah, you hear that, and you think,
of course that's awful, right, but the facts don't bear
that out, correct, right. That same two thirteen Brooking study
found that in two thousand thirteen, twenty twenty small businesses
and farms owed any estate tax at all, and on average,
(42:19):
those twenty small businesses and small farms that did have
to pay a state tax paid an average about four
point nine percent of the value of the estate. Um,
there's special there's special rules, especially for calculating the value
of farmland for estate taxes, in particular, that reduces their
value so that the tax is inherently lesser. Another reason
(42:43):
someone says might say that they're unfair. I'm sorry, you
might say that they're fair, is what we alluded to
a little bit earlier about the concentration of wealth is
not a good thing, not just economically, but um when
it comes to power, and it's dangerous to a democratic
society to have UM. The influencers of this country be
(43:05):
so few and only influencers because they have so much right,
and the average Joe's voice is lost in the process. Yeah, so.
Somewhere somebody pointed out that the estate taxes the most
progressive part of the entire U S tax code because
it truly only affects the people who actually can afford it,
(43:25):
or who are actually wealthy. It doesn't it has no
undoe or disproportionate burden, or any burden on people of
lower socioeconomic status or even middle socioeconomic status. Something like um,
two tenths of one percent of households are subject to
(43:48):
the estate tax in the United States this year. I
think two tenths of one percent. That's not much, that's true.
And then another one to address that, the idea that
it doesn't bring in very much, and the government spends
more money than it then it takes in it. Yeah,
we're fighting for it. Supposedly. I saw estimates of two
(44:11):
billion I saw one estimate of two billion UM between
two thousand seventeen and two thousand twenty six is how
much they expect the estate tax to take in, which
isn't much. It's like less than one percent of the
government's tax revenue. But the author of this one article
I saw pointed out that's like the combined budgets of
(44:34):
the f d A, the CDC, and the e p
A combined, So it's it's actually paying for stuff, you know.
And apparently it cost about seven percent for enforcement and administration,
whereas income taxes cost about four to UM chase down
(44:54):
dead beats, So there's that. It's about half the state
tax problems debunked you anything else? No, I thought I
thought that was fairly interesting for someone who doesn't like
I go a little uh foggy when I start talking
about finance and taxes, But for some reason this one
kind of interested me. Do you do your own taxes? No?
(45:17):
I love it? No, no, no, no, I love it. Man,
I love doing taxes. I not only do I not
like it, but I would say that I can't put
a percentage on it. But having a professional involved, really
really financially is beyond worthwhile. Like a thousand percent worthwhile
(45:38):
Yeah for what they can save you. Oh no, I'm
sure like like we're having somebody go back over my
figures this year, but um it's and I don't like
paying tech because it's not fun. But it's like this
big horrible ball like hair and teeth after like like
(46:00):
work into uh a usable yeah figure, I gotta turn
it into the venus. Gummy venus to Mila. So you
take a taratoma and you form that into a beautiful
statue right with no arms, and then I cry Matt's Texas. Uh.
If you want to know more about death Texas, type
those words into the search part how stuff works dot Com.
(46:22):
Since I said search parts, it's time for listener mail.
I'm gonna call this uh fan that found us through Delta,
all right. I know this would pay off one day.
You know, we don't know for still on. But for
a while we were on Delta flights. We're supposed to
be back on this year, are we? And I always
kind of wondered, like we got booted off? Does anyone
actually discover us board on a flight? That's what I'm saying.
(46:45):
We now come we have one person, so uh, Ethan
lives in Los Angeles and says he found us on
a Delta fight and a loyal listener ever since. Um,
I'm sure many fans have their favorite episodes, favorite sweets,
band names, ideas. Here if you my favorite jokes, and
I didn't remember a couple of these, so I'm gonna
test your memory. Josh, you had one look at those
(47:07):
look at these shoes. I'm the king of Rotterdam. All right, Nope,
he said. He laughed for five minutes on that one.
Chuck the Language of the Beard. He says, he's still
laughing at that. In fact, anytime I need to pick
me up. I scrolled to the forty three minute mark
of how the Stigil the Stigil Organs work. The whole
exchange is hilarious, including Josh's reaction. The joke verges on
(47:30):
toilet humor, but doesn't quite belong in that category. So
I don't remember that one. I have to look it up.
I do remember this one, Chuck the runner up his
Chuck's line when you realize that diesel fuel is named
after a person, Jimmy Gasoline. I remember that. I remember that.
I don't remember what episode it was in, though, but
I do remember that, but he has a little factoid
(47:51):
for us. He finished the Alexander Hamilton's show, uh and
he says, this saw the visit of the Grange a
couple of years ago and loved it. While there, I
learned something I'm surprised you mentioned as a testament to
his character. Not only did Hamilton's shunned slavery, as you mentioned,
he also defended Tories and British subjects as a lawyer
in court. And this was only six years after the
(48:11):
Declaration of Independence. What a guy. Wow, he really was
top knock. Yeah, that's from Ethan barber Er. Thanks a lot.
Ethan Ethan Barber or Barber one of the two. Oh
it wasn't Barbara. It was spelled different Barber, I know,
like the hunting gear right, I don't know barb barber whatever.
If you want to get in touch of this, like
(48:34):
Ethan did Ethan right, Ethan, it's his last name. That's
up for grabs. You can tweet to us at s
Y s K podcast. You can join us on Facebook
dot com slash stuff you should know. You can send
us an email stuff podcast at how Stuff Works dot
com and has always joined us at our home on
the Web Stuff you Should know dot com for more
(48:57):
on this and thousands of other topics. Is it how
stuff works? Dot com? Mhm
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