Another reason to hate corporations

[Kelgar]

http://moneycentral.msn.com/content/Ins ... P64954.asp

Does your boss want you dead?

'Dead peasants' insurance pays your employer a secret, tax-free windfall when you die. Insurers have sold millions of policies to companies such as Dow Chemical.

Right now, your company could have a life insurance policy on you that you know nothing about. When you die -- perhaps years after you leave your employer -- the tax-free proceeds from this policy wouldn’t go to your family. The money would go to the company.

What’s more, the company might use this policy to pay for retirement benefits and other perks not for you or your fellow workers, but for your company’s top executives.

Sound outrageous? Such corporate-owned life insurance is also big business:
Companies pay a whopping $8 billion in premiums each year for such coverage, according to the American Council of Life Insurers, a trade group.

The policies make up more than 20% of the all the life insurance sold each year.

Companies expect to reap more than $9 billion in tax breaks from these policies over the next five years. The policies are treated as whole life policies. So, companies can borrow against the policies (though the IRS won't let them write off the interest). And the death benefits are tax-free.
Hundreds of companies -- including Dow Chemical, Procter & Gamble, Wal-Mart, Walt Disney and Winn-Dixie -- have purchased this insurance on more than 6 million rank-and-file workers.

These policies, nicknamed “dead janitors” or “dead peasants” insurance, soared in popularity after many states cleared the way for them in the 1980s. Congress recently tried to crack down on the practice, to the howls of the insurance industry -- which earlier this year managed to derail reforms.

The policies have generated lawsuits by survivors who got little or nothing when insured workers died. A couple of examples:
Jane St. John had two children and was pregnant with a third when her husband, a butcher at a Winn-Dixie store, was killed in an auto accident. When the Killeen, Texas, woman called the company to ask about insurance, she said she was told about a $17,500 policy to which she was entitled. St. John said Winn-Dixie told her nothing about the $102,000 the company collected from a corporate-owned policy on his life. She found out about it this summer, eight years after his death, from a lawyer who researched court records. The idea that the company would secretly insure lives, and then not share the benefits with the families, "is sick," she said. "That is creepy."

Mike Rice was a 48-year-old assistant manager when he died of a massive heart attack at the Wal-Mart store in Tilton, N.H. His widow, Vicki, became the lead plaintiff in a class-action lawsuit against the company after she discovered Wal-Mart collected $300,000 from a life insurance policy it owned on him. Vicki Rice believes job-related stress contributed to the heart attack and says it is “totally immoral” for Wal-Mart to profit from his death.
“In a lot of circumstances, the families don’t get anything,” said attorney Mike Myers of Houston’s McClanahan & Clearman, which represents survivors suing companies over corporate-owned policies. “The company tries its hardest to keep the policy a secret.”

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[Voronwë]

the tax code in this country is written to favor the ultra-rich.

Democrats and Republicans alike share the blame. Unless you can afford a $5000 a plate dinner party, there is a pretty good chance the government doesn't care if you die in the next 5 seconds.

[Chmee]

Megan McArdle had a good post about this last year.

http://www.janegalt.net/blog/archives/0 ... tml#004012

Companies buy the insurance for two main reasons. One, as a hedge to try to cover the risk of a loss. Pretty much the same reason why a family buys life insurance, particularly on the primary sources of income in the family. Just how much of a loss for the company varies by employee, probably substantial for a CEO, probably very marginal for a janitor. The other reason they do it is because there is a tax advantage. This is hardly the only case that corporations do something they wouldn't otherwise do because our tax code encourages it and it doesn't mean that corporations are being evil. Most individuals try to take advantage of any legal tax breaks available to them as well. From a PR standpoint it may not be that good of a deal for the company, and some companies are shying away from it now for that reason.

[Chmee]

the tax code in this country is written to favor the ultra-rich.

Democrats and Republicans alike share the blame. Unless you can afford a $5000 a plate dinner party, there is a pretty good chance the government doesn't care if you die in the next 5 seconds.

If the tax code is written to favor the ultra rich, then why does the top 0.1% of returns for federal income tax account for 8 percent of total income, but 16 percent of total taxes.

http://www.irs.treas.gov/pub/irs-soi/01in03ts.xls

Yes, the rich typically have more ways to try to minimize their tax burden, but the top income earners still pay a lot of taxes.

[Voronwë]

yes that top 0.1% of people pays a large portion of the tax burdon realatively.

but the relevant question is not what portion of the tax burden per capita.

the relevant question is what portion of the tax burden as a ratio of the proportion of total wealth they control.

think the top 27,000 earners have the same amount of income (a number smaller than their wealth) as the bottom 99,000,000 earners. paraphrasing that stat, will try to source it.

i dont think all people should forfeit 33% of their earnings, or anything stupid like that. but i will say that there are lots of deductions for ultra rich people that are ridiculous, like being able to write off large portions of corporate jet trips for personal use (ie: 18 holes at Pebble Beach).

Middle Class people right now have extra taxes on them that rich people don't have to worry about.

I mean i have to do my Alternative Minimum Tax calculations in addition to Capital Gains calculations to determine how large of a margin i need over basis to excersize my Stock Options.

I'm going through this shit, and for the purpose of AMT, i dont even get my dependent child deductions? WTF kind of bullshit is this?

PS I could totally be misunderstanding AMT, cause its...well...confusing...First year i've had to figure it out.

edit: removed stat that was wrong. $600 billion from now till 2010 is estimated revenue from AMT

[Chmee]

I think there is a lot of things in the tax code that are silly and distort behavior at all levels. Yes they probably are more prevelant at higher income brackets since their taxes typically are more complicated. I certainly would like to see a vastly more simplified tax system.

[kyoukan]

If the tax code is written to favor the ultra rich, then why does the top 0.1% of returns for federal income tax account for 8 percent of total income, but 16 percent of total taxes.

I'm going to strangle the next idiot that drags that statistic out. They still don't pay their fair share in taxes relevant to how much they earned.

[Chmee]

If the tax code is written to favor the ultra rich, then why does the top 0.1% of returns for federal income tax account for 8 percent of total income, but 16 percent of total taxes.

I'm going to strangle the next idiot that drags that statistic out. They still don't pay their fair share in taxes relevant to how much they earned.

They pay a larger percent of what they earn in federal income taxes than people with lower income (on average). Perhaps you think they should pay even more, but that is subjective.

[Marbus]

I think they should definitely pay more... I couln't agree with Kyoukan more. Growing up my friends grandfather use to send $300,000 checks to Ronald Regans' reelction fund every quarter to keep from paying such high taxes. Hell if he had paid that money in taxes AT LEAST someone somewhere might have gotten a little benefit from it...

Marb

[Akaran_D]

I must be losing my soul, but I don't see a huge problem with it.
People profit from other people dieing all the time (read as: inheritance).
While it's not exactly the nicest thing I've ever seen, and it's fairly tacky.. it's extra revenue that the company can claim to increase stockholder earnings, which spreads the bonus around some more.

Maybe I'm strange, but when I die, I want it to be in a fashion that'll help as many people as possible.. even if it is through cold, hard cash.

It might help take the sting out of the familes (like in that case, the 100k vs the 17k the family recieved) if they split it, but as long as the company itself is paying the premium, they are under no legal obligation to do so.

[kyoukan]

They pay a larger percent of what they earn in federal income taxes than people with lower income (on average). Perhaps you think they should pay even more, but that is subjective.

No they don't. They don't pay anywhere near a larger percentage than what joe shmoe pays. It looks like they do on paper until they use every loophole they've bought from government until most billionaires don't even come close to 5% of their income.

Take a look at how much wealth the top 1% of the country controls and compare it to how much they pay. There's a reason they bribe the collosal holy fucking bejeezus out of every politician they can; and it's not because they are nice.

[Deward]

I am by no means rich but I am moving up into the higher tax brackets. Why should I be forced to pay more to the government than poorer people. I worked pretty damn hard for my money and I am going to use every advantage I can to pay less. It isn't fair to me and my family to be forced to pay for a over fat government.

I don't have a problem paying taxes but I hate how they are spent. I think there should be more equality in tax rates. I would like to see a lower flat tax of around 10% across the board along with a little higher sales tax. This way everyone is paying the same for their income level but if you spend more then you pay more.

[Chmee]

They pay a larger percent of what they earn in federal income taxes than people with lower income (on average). Perhaps you think they should pay even more, but that is subjective.

No they don't. They don't pay anywhere near a larger percentage than what joe shmoe pays. It looks like they do on paper until they use every loophole they've bought from government until most billionaires don't even come close to 5% of their income.

Any actual data?

[kyoukan]

I am by no means rich but I am moving up into the higher tax brackets. Why should I be forced to pay more to the government than poorer people. I worked pretty damn hard for my money and I am going to use every advantage I can to pay less. It isn't fair to me and my family to be forced to pay for a over fat government.

Because it is government and society that allows you to be rich in the first place. Besides, if you earn a million dollars a year I can pretty much guarantee you don't work 50 times harder than someone who makes $20K.

I don't fault people for using every tax loophole and stupid writeoff to pay as little taxes as they can. I fault government for being so utterly without shame and allow themselves to be bribed into making the loopholes in the first place.

[masteen]

They pay a larger percent of what they earn in federal income taxes than people with lower income (on average). Perhaps you think they should pay even more, but that is subjective.

No they don't. They don't pay anywhere near a larger percentage than what joe shmoe pays. It looks like they do on paper until they use every loophole they've bought from government until most billionaires don't even come close to 5% of their income.

Any actual data?

Given that they hide a shitload of their assets in places like the Caymans, VI, ect, real data on these people is very hard to acquire. There are thousands of lawyers who do nothing but funnel funds of rich fucks into offshore tax shelters.

[kyoukan]

Any actual data?

Dude, what the hell? My "data" is the same fucking links you drag out every time you try and debate this. Look at how much of the tax burden the top wage earners in your country make and then look at how much of the wealth they control.

Are you actually trying to say that the ultra wealthy don't use loopholes and shelters to get out of paying their fair share of their earned income?

[Chmee]

Because it is government and society that allows you to be rich in the first place. Besides, if you earn a million dollars a year I can pretty much guarantee you don't work 50 times harder than someone who makes $20K.

To some extent a government can provide the conditions that make it conducive for people to make money. They can defend the borders, enforce contracts, respect property rights, establish the rule of law. Of course, the amount of money that goes to those functions are only a percentage of government spending (and a pretty small one with the exception of defense, and even defense I think is only somewhere in the neighborhood of 20 percent of spending). But that is not to say that government or society "allowed" someone to become rich. People have a right to the fruits of their labor. It does not belong to the government by default, and to contend it does reduces people to be nothing more than serfs, or slaves, to the state.

[Lalanae]

Because it is government and society that allows you to be rich in the first place. Besides, if you earn a million dollars a year I can pretty much guarantee you don't work 50 times harder than someone who makes $20K.

To some extent a government can provide the conditions that make it conducive for people to make money. They can defend the borders, enforce contracts, respect property rights, establish the rule of law. Of course, the amount of money that goes to those functions are only a percentage of government spending (and a pretty small one with the exception of defense, and even defense I think is only somewhere in the neighborhood of 20 percent of spending). But that is not to say that government or society "allowed" someone to become rich. People have a right to the fruits of their labor. It does not belong to the government by default, and to contend it does reduces people to be nothing more than serfs, or slaves, to the state.

As a capitalist government, yes they do "allow" you to make money. That's part of the deal. If you were under another form of government, you may not be "allowed" "the fruits of your labor."

[Chmee]

Any actual data?

Dude, what the hell? My "data" is the same fucking links you drag out every time you try and debate this. Look at how much of the tax burden the top wage earners in your country make and then look at how much of the wealth they control.

Are you actually trying to say that the ultra wealthy don't use loopholes and shelters to get out of paying their fair share of their earned income?

The link data says nothing about controlled wealth, it talks about income (which is what federal income tax is based on). It says the top 0.1 percent of returns are responsible for 8 percent of the adjusted gross income and pay 16 percent of the total income tax. From what I have read, it seems as if adjusted gross income is calculated before most of the deductions/itemization etc take effect. But I would genuinely like to see data on what it does exclude and how much of a factor it is. But I would like to see actual data, not just mere assertions that it is true.

I am sure the wealthy do take advantage of any tax avoidance they can, just like the non-wealthy do.

I am also pretty sure that my assessment as to what their "fair share" is and yours probably vary considerably.