The estate tax: McCain vs. Obama
With rates for “the death tax” changing each year, family business owners trying to plan for succession are left chasing a moving target. What do you think of the two candidates’ plans?
Comment
Email
RSS
DiggScott,
Your grandmother’s estate would pay $0 because $20,000 is well under federal and state estate tax exemptions.
The entire $20,000 would pass to her heirs.
Another common mistake I see in this article is people stating that it isn’t the dead person paying the tax, it’s the people who inherit it. That is a false assumption.
It is called the “Estate Tax” for a reason, it is the estate left behind that is responsible for the tax. But where the confusion comes in is that it is usually the person who inherits the estate who ends up handling the paperwork and logistics of paying the tax. That’s not the same thing as paying the tax. The person who inherits the estate doesn’t need to submit one document about their own wealth, income or tax situation to handle the tax on the estate.
For example, often times an estate is left to multiple people (children etc). Many times one of those people takes care of the tax logistics and the others just wait for the tax to be paid before they receive their share. They don’t have to pay a dime.
To all the people claiming that the Estate tax was put in place to prevent the passing on of vast sums of wealth, you need a history lesson.
-The first estate tax — enacted July 6, 1797, to help pay for naval rearmament — required only the purchase of federal stamps for wills and estates, but was terminated four years later because the need for the revenue passed.
-A direct tax on inheritances imposed in 1862 during the Civil War ranged from 0.75 percent to 5 percent.
The top rate was raised to 6 percent in 1864; but the tax was then abolished July 14, 1870.
-In 1898, an estate tax with a top rate of 15 percent on estates over $1 million was imposed to pay for the Spanish-American War — then repealed on April 12, 1902.
-America’s fourth estate tax, enacted in 1916, set a top rate of 10 percent on estates over $5 million. It was raised to 25 percent in 1917, but this rate applied only to estates over $10 million. Unlike its predecessors, it was not repealed after the war, although the top rate was dropped to 20 percent in 1926.
-President Franklin Roosevelt raised the top rate to 60 percent in 1934, and to 70 percent in 1935. The same bill increased the top income tax rate to 75 percent and increased corporate taxes
So, before you make claims about the founding fathers trying to prevent the redistribution of wealth, think again. Oh and another thing to take note of was that the exemption level in 1916 was $5 million. Adjusted for inflation that is just over $100,000,000 today.
We pay taxes on money we earn (whether as wages or as profits). When we spend what’s left over, we pay sales taxes on what we buy. Then we pay property taxes, excise taxes, licenses & fees, service taxes, inventory taxes – and somehow we still manage to scrape together businesses & farms through a lifetime of blood, sweat & tears.
When we die, the government wants take from our children what we’ve managed to build. It’s hard enough for our kids to learn our businesses and be successful with them without the government bankrupting them when they are most vulnerable.
The economy won’t recover as long as the government and a few oligarchs keep taking so much away from us.
The death tax stinks. Both my parents’ small estates were practically wiped out, one in California and the other in Massachusetts (no surprise) because they died just before the Bush tax breaks, sigh. We hoped to pass some money on to our kids. But now even my husband’s small business will be slammed come 2010. His business makes enough to creep over the limit but not enough to absorb the loss or be shielded by protection mechanisms utilized by the big guys. Thanks Obama…
All of the talk on estate taxes has been about businesses that are passed on to the next generation. What about personal residences that for many families have risen in value, yes even in the face of the current housing market downturn. When mom and pop bought the primary residence and the vacation home they were living the American Dream: working hard and garnering some benefits from all that hardwork. Now, when they die, they can’t pass those family properties onto to heirs without the heirs having to sell the properties to pay the death taxes. Not fair.
Personally, I think the “death tax” is the most American of taxes. Simply put, the concept of being a free people with the right of the individual to choose his or her own destiny without regard to the status of your family is central to the American ideal. What you have to remember is that what the “death tax” captures is the free transfer of vast sums of wealth between generations. Numerous laws in our country were adopted to prevent rich patriarchs from exerting control of their fortunes long past death. The “death tax” is an extension of that ideal.
A modest estate is not subject to the tax at all – which is what the vast majority or persons leave. With an estate taxing system the Paris Hiltons of the world do not get to collect $350 million free and clear for simply being born. Admittedly, there are a few “in between” people who could get caught in unfortunate situations as described in the article, but in a country of 350 million people when you are a talking about a few hundred a year, that is pretty good.
The only change I would make is to greatly increase the rate of the “death tax” on estates above $1 million and have a corresponding cut in income taxes so that people who are actually earning the money can enjoy it while they are alive. Maybe if people know they cannot easily gift vast sums of money to their children they will spend more time teaching their children how to make money (which they obviously know how to do) instead of just spend it (as the children of multimillionaires are wont to do).
There is no moral justification for a government to steal one dime of inherited wealth. It provides no benefits whatsoever to the deceased, and has already taxed the estate while it was being earned. The continued existence of any estate tax is inexcusable.
Daniel in Houston-have you ever heard of the idea that you try to make sure that you children have it better than you did. Just becasue you don’t want to leave a legacy for your children doesn’t mean that other Americans (who earned every penny of their wealth and made prudent financial decisions) don’t have that right. The only reason the government needs so much money is because of so many entitlement that DO NOT WORK. If we abolished welfare (it was origanilly supposed to be a temporary program anyway -NOT a generational lifestyle), social secruty (in favor of a private investment strategy), and the income tax (in favor of a federal consumption tax-i.e. The Fair Tax), we would not need to unfarily take that which was honestly built from the ground up by earlier generations. If you truly think that people “should make their own living without privledges”, I guess you would agree that government provided housing and other entitlement programs should be done away with in favor of community service programs in which individuals who want government assistance can at least perform a public service for that “privledge”.
I’m mystified by the argument that people who inherit wealth should be taxed on that inheritance, whether it’s $50 or %50,000,000. The redistribution of wealth is NOT a fundamental of democracy – or, for that matter, a fundamental of the Republic.
Inheritance tax (and income tax, for that matter), is confiscation by the government of what someone else earned. We’d be horrified if the government charged our 7-year-old taxes on his allowance, or even our 20-year-old on the cash we put up for their education. Why do we think it’s ok for the government to confiscate and redistribute larger amounts of money?
We’re penalized, by the income tax and by the inheritance tax, for being producers in an economy that depends on producers. We’re penalized for taking care of our wealth and saving, for the benefit of our children. We pay the price, while those who are not saving and protecting their assets benefit from our frugality – those are the folks getting bailed out because they aren’t paying their mortgages, and the banks getting bailed out because they have no capital to lend – because we the people don’t see any benefit to caring for our wealth and saving it.
It’s insanity, and always has been, to penalize people for saving and protecting wealth. Taxes should be levied on consumption, not on contribution. Until we get that figured out, the economy will continue to suffer from the boom and bust cycle, and the government will continue to encourage the wasteful, careless use of wealth that got us into this mess.
The real point is that the Estate Tax is, agree with it or not, a moving target. A strong arguement can be made that it is even a voluntary tax in that with proper planning, the tax can be greatly mitigated or circumvented all together(legally and often to benefit of charity). But without clear guidance on what the rules are, or will be, how does one make those plans? That is the real issue.
If I hit the lottery by taking a small risk each week should I pay no taxes? I mean if I hadn’t played I wouldn’t get the money would I?
Remember despite the name, death tax, dead people (you in this case) pay no taxes. The people paying the taxes are getting money they didn’t earn, you earned it. Once your dead nobody is taxing you. Your children hit a lottery of sorts and just as I would playing the lottery they pay the tax.
The desire to take care of our children and grandchildren is certainly understandable. But if I hit the lottery will the government give me a tax pass on the first 3 million like with the estate tax?
You do have options to take care of your children and grandchildren while they are alive.
As to working hard. Have the people who got rich investing with Warren Buffett really worked hard? Really made a smarter investment decision that those who didn’t know Warren 50 years ago? I do understand your desire to take care of your children and wouldn’t blame someone with over $3 million in assets to try to pass along all they can. But a lottery winner and the child of a rich person have much in common.
Thanks
So let me try to understand this better, I work hard all my life and earn a lot pf money upon which I pay income taxes. I am now very rich with $5 million in the bank. I am free to tak all the money to Nevada and spend every penny on gambling, booze, and women and no one cares. But if I want to give it to my children or grandchildren as an inheritance, that’s somehow not acceptable and the government confiscates a chunk of it. Did I get that right?
I pay income taxes on my pay which I EARN. When I hire a repairman and pay him, I also pay sales tax on the bill (is that double taxation?),
He then reports that as income he EARNED and pays tax on it as well
(taxation again?).
For those against the inheritance tax:
Are you really saying that the only time we do not tax the transfer
of money is when it is involves millions of dollars and is UNEARNED?
I live in farm country. Those with large farms and sons/daughters working the farm pay them the prevailing wage in money and land. The sons/daughters pay income
taxes on that transfer and then that land is theirs. By the time the parents are ready to retire, the
next generation has control of the farm.
This country was the first modern country to abolish inherited political power and we are much better off for it.
Why is inherited economic power good?
The idea that this is double taxation is silliness. My child pays sales tax on his allowance expenditures that I’ve already paid federal income tax and social security taxes. Wa, wa, double taxation. Should I pay no state sales tax or property tax because it’s double or triple taxation? Great argument but I don’t think my state or local government will buy it.
I can see an argument for indexing the tax to inflation. But for the whiners, why don’t you just do what us poorer people who aren’t in line for a huge inheritance do and just buy the business? Get off your bottom and quit complaining and buy a farm or business on your own like the rest of us.
Has everybody forgotten about “pay as you go”?
If all capital were “marked-to-market” every year, there would be no need for the estate tax. With a low cap-gains rate (such as we have now), buy-and-hold as a tax deferral strategy isn’t such a big deal. The only purpose I see in the estate tax is for the gov’t to recapture capital gains taxes that have been deferred since hector was a pup.
It’s based on the value of the estate. The tax would be applied to the amount over the exemption and up to the value of the estate (in this case 5 million). Then the assets would be split and distributed to the 5 kids.
This has never made sense and in my mind never will. It is socialism pure and simple. The reason the government gives for doing this is, to break up wealth and not let a small group of wealthy families become too powerful and horde what they deem as excessive wealth. However, the Kennedy’s have been passing down their family fortune (mostly generated by bootlegging) for generations. The so called American royal family has more than enough wealth and political clout to avoid the break up of their family fortune, but Joe public can’t fight City Hall. A person can go out and work their whole lives to make a good living and upon their death give the Government more than half of what they actually worked for. If you or I go and take half of our neighbors’ assets upon their death it’s called grand theft, but when the government does it it’s a tax. What gives the government the right to assets someone else has worked their whole life for? This is not Russia, this is America. Well they make the laws and therefore dictate rights. I’ve never understood why people can’t pass their assets down to their family upon there death without government interference. The government does not consider nor do they care that a persons family members have most likely sacrificed a lot to build something from the ground up. The government does not work, it takes, which is why they will never understand what it takes to own and operate your own business, the sacrifices that must be made, the sleepless nights, the long hours, the stress etc. Also not considered by politicians, who spend there whole careers suckling off the teat of society, is the fact that these small business employ people, donate to local causes and generally help in every imaginable way the communities in which they operate. Again the government does not care or consider the consequences to a community when a local small business is put out of business because they have more assets than the exemption allows but not enough cash to pay the death taxes. All they know is once a person is dead that person can’t fight for what are rightfully their assets to pass down to their heirs. There is no justice for you and me, but the Federal Government can live beyond its means for decades on end and take whatever they deem necessary. Of course irresponsibly running up a nine or ten trillion dollar deficit tells me that they clearly do not have the judgment necessary to “deem” anything necessary or otherwise.
Sorry guys but none of you get it do you? All of these conversations do is exactly what the Government wants you to do; stay in confusion! Everybody gets taxed, alive or dead, everyday of your lives, on every dollar you spend; save; or whatever, all the politicians should be taxed the same as us; have to give an accounting for all the money that gets stuck in their pockets from people that want to change the rules in their favor. The Government is NOT going to do anything to change it’s life style for anybody. The Constitution is changed everyday by the one that can make the most bucks off of it. If you don’t believe it look at your dollar bill. What does it say? In GOD we trust, all others pay cash, no matter what form. When you as a child, go to public school you are taught what the Government wants you too believe; that it can do no wrong. And you believe everything a new face says. Don’t give up hope; maybe it will be better this time. I doubt it! I saw the handwritting on the wall when I was 17 years old. I’m 61 and keep seeing the foretold future unfolding at the speed of light every day. Thanks if this gets printed or read. If not I got good practice anyway.
I don’t think this tax is fair at all. Like one business owner said, this property and it’s assets have been taxed over and over for as many years as it’s existed. Then to have to give the government over half of it’s net worth? That’s robbery. Also most times the family member have been instrumental in the development of the company for most if not all of their working lives. They are probably just as responsible for the growth and success as the original founder. Such a penatly on them at the founder’s death is just so unfair. If I was a business owner in this catagory, I would make sure I sold the business to my kids before I passed away. The tax of the sale would be far less than this insane death tax.
RIGHT WHERE IS THE JUSTICE IN THAT. ALSO I WANT SAY THE FAMILY FARM IS NOT , I REPEAT NOT GONE. THEY ARE THE BACKBONE OF THIS COUNTRY. FEEDING THE WORLD AND WORKING, SAVING. NO JUSTICE IF THEY ARE TAXED.JUST GUESS WHAT WOULD HAPPEN IF THE HUGE CORP OR GOV. TRIED TO FEED THE WORLD. MIDDLE AMERICA AND THE SOUTH ARE FEEDING THE WORLD WITH VERY LITTLE THANKS, NOT JUST BIG CORP FARMS.
THERE ARE MANY FAMILY FARMS AND RANCHES. THE NOTION THEY ALL BELONG TO HUGE COMPANIES IS INCORRECT.PEOPLE WHO DON’T KNOW MIDDLE AMERICA AND THE SOUTH , THINK THE FAMILY FARM IS GONE.IT IS NOT.HOWEVER THEY DO NEED GOV. HELP AS THEY ARE NOW GETTING SOME NOW. TO LET FAMILIES LOSE FARMS WOULD TRULY BE THE DOWNFALL OF U.S
The government should have no right to seize anything after you die. It should go to whomever you designate it to. You pay taxes on everything you earn, own, save, buy and sell and then the government wants to take everything else so they can give it to some entitlement program. This is not a communist country and I’m damned tired of the government wasting my money. I’d like to have a little to waste myself and leave the rest to my children.
well said.
The estate tax is an abomination. It is the government seizing assets that have already been taxed throughout the life of the deceased after they are dead and openly stealing a lifetime of work from the deceased heirs. No logical interpretation of our constitution provides the government with the legal right to 45% of a citizens life time of hard work. Only a liberal would view the estate tax as legitimate and only because they embrace the concepts of Karl Marx that says from each according to his means to each according to his needs. Basic wealth redistribution which is the mantra of liberalism. This is America, if you want to have as much money as someone else, get off your dead ass and work for it the same as I do and the same as any other successful buisness person does. NO One handed me one damn thing throughout my 51 years of life in fact my family were all life long military servants who retired as enlisted men with pensions that were a pittance and barely kept them above the poverty level. I worked two jobs while going to college after serving in the Navy and with a wife and two children, if I can do it so can the rest of you that think we owe you a living and a share of our hard earned money. The constitution guarantees the right to pursue life, liberty and happiness it does not guarantee anyone a free ride.
Neither of the two major party candidates have a good plan. Why was the writer of this article limiting the discussion to just two presidential candidates?
There shouldn’t be any estate tax in any form which is why Bob Barr or Chuck Baldwin are far better choices for America.
why not just keep making it progressive? if its a wealth tax lets be honest there is a difference between someone who has 20 million dollars and an extended family to provide for and warren buffet.
Have a code that exempts say the first 5 million. then from 5 million to 20 million you tax them at say 25% or the capital gains rate or 45%. Then after 20 or 100 or 200 million you have the serious taxes of 60% top rate. so few estates would fall in that range and those that do would be so fabulously wealthy that they could absorb it and couldn’t complain publicly. The gov’t still gets most of the tax base and small upper middle class people are not squeezed.
basically just make it ultra progressive and account for more than just millionaires but the super ultra rich that have hundreds of millions or billions.
If the federal estate tax exemption is allowed to revert to the 2001 level in 2011 ($1M) it will once again grossly discriminate against those in the middle class who SAVE. Forget the super rich for a moment. Two middle class individuals can make the same salary but Person A buys a car every five years and an elegant home with a high mortgage, eats out frequently, goes on expensive vacations, buys the latest electronics, amasses credit card debt; Person B buys a car every 13 years, purchases a modest home, eats in and grows veggies, doesn’t bother with cable, likes local culture, lives within his means.
Person A dies with a less than $1M and his estate incurs no estate tax. Person B dies with $1.5M and pays $70k in federal estate tax. Where’s the justice in that?
Obama’s plan would exclude 99.7%? Why have a government process for the 0.3%? Note that there is no qualifier on the value or impact upon the USA if a business is forced into foreclosure to pay the estate tax. It could be a high security technology company that has a genius as a founder …and jobs destroyed. The estate tax aim is blindfolded garnishing prior tax-paid money and property for an expanding government. There is no other purpose. Talk about greed, and envy …please.
I think the estate tax should just be abolished and the loss of revenues balanced by having government officials pay social security like everyone else, and not get lifetime incomes.
Why should the government be able to pick our pockets after we die and deny our children what is rightfully theirs; it has already been taxed over and over.
First and foremost, the term “death tax” is a brilliant example of colored political terminology.
A person that amasses or creates wealth usually pays tax on it (though not always), and usually doesn’t do so again while they hold it.
Upon the aquisition of a deceased person’s wealth, tax is paid by the new owner, who is almost certainly not dead. What is taxed is what is always taxed; the movement of wealth from one owner to another. As has been pointed out, it can be as capital gains or as inheritance tax.
Very few families of small business owners have anything to fear from estate taxes, especially if good legal counsel is used to invest the family properly in the business. The threshold is too high.
However, 30% of all billionaires in this country inherited it. That unearned wealth gives them enormous economic and political power without any concommitant responsibility. It also provides them the means and motivation to protect and maintain themselves in their condition.
A threshold of several million dollars for the estate tax is an acceptable thing, but dynasties of the descendants of wealth and privilege is not.
Follow the money. Who has a personal stake in keeping huge estates untaxed -McCain? Or Obama?
Why should the federal government collect a tax on assets that have already to been taxed when they were earned and paid for. It’s like making people re-pay for their business every time some one dies.
It’s absolutely the stupidest thing ever.
We’re killing small business and innovation in America.
Here is and issue that nobody seems to really get. There should be a safety net under 1 million, or preferably a higher amount that is consistantly adjusted due to inflation. This will help the middle class be able to somewhat maintain in our current economic crisis. One thing that can be done at least in my state (MO), is a person may add their “heir” onto their property/business “deeds”, making them joing owners. . . Real estate is protected this way, and is how my family dealing with the issue of not losing our long standing farm/business. Our local prosecutor/lawyer set this up to help us keep what is rightfully ours. I’m not sure how this tactic would work according to finances although. . . Might be able to own at least your share, and pay taxes on the share of the deceased? Any comments?
My father will be 85 in a few days. He still works 5 days a week in his commercial real estate business, so his 3 children can have a better life when he is gone. If the federal estate tax stays at 45%, including the Kansas estate taxes, we will be paying 50% in taxes when he dies. According to IRS rules, we will have 9 months to sell his property and pay them,unless he dies in 2010. What is fair about this?
If Obama wins, he will cause the death of family farms and businesses.
The Estate tax scares the heck out of me, what has happened in my case is Imy family owns a small cattle ranch which I am currently operating. The price of land has sky rocketed but the income has not, there is no way I can raise enough cattle to pay an inheritance tax. The very rich have again found a way to force the sale of prime scenic land to them. I’ld much rather turn my place into a nuclear wasteland than watch some rich person buy it , build a monument to themselves (big fancy house) and enjoy the view.
The estate tax is a double tax as applied to personal assets. One pays income taxes all his life on what he earns, building an estate, then has to pay again when he dies. Business assets that have been deducted business expense should be finally taxed, but at the regular income tax rate, not the exorbitant “death tax” rates.
I am an estate planning attorney in California. One major thing that people do not realize is that in 2010 when the estate tax is repealed, assets inherited will be subject to capital gains tax. If you inherit assets not subject to the estate tax, then it is subject to capital gains. There is no exemption amounts for capital gains tax so a person inheriting assets will have to pay capital gains on the entire inheritance. Most people are better off in a system with the estate tax and with the exemption amounts. I agree that there is a lot of uncertainty and the next president must make a permanent law so people can plan better and estate planning attorneys can better serve their clients.
The estate tax prevents accumulation of wealth by a single family over many generations. It prevents creation of the idle rich and it prevents control of money and power by the very few who would otherwise own everything in sight. The serfs of England who worked for the nobleman knew the need for an estate tax. When the few own and control everything, democracy is not possible.
In my opinion, most of us miss the real issue. Don’t guide your frustration at “wealthy” because they’ve worked hard. Instead, deal with the core issue, which is an unbelievable tax (i.e. government).
Why in the world should business or individual(s) be taxed because an individual has died or passed the assets to family? Any justification of this action is simply ludicrous!
The government is over extending its reach and digging to far into the pockets of the citizens. This must stop. The government needs to find a better way to fund its projects…look at the post office selling collector stamps. That Department is self sustaining!
The Estate Tax needs to be kept intact. There is absolutely no reason to scrap it, unless you want to give the wealthy yet another huge tax break, which would be shouldered by the middle class and poor. Its amazing that the right-wing has sold so many Americans on this bill of goods, that getting rid of the Estate Tax is somehow a good idea. Its a terrible idea for 99% of the country.
re: The estate tax: McCain vs. Obama
A question I have always had about the estate tax is whether the tax is based upon the inherited amount or the estate amount. Even in your article you use both as if they were inter-changeable. Assuming my parent’s estate is $5 mill but each of five children only recieves $1 mill. Is each child subject to the estate tax based upon the $1 mill, which means zero taxes, or his or or share of the taxes based upon the $5 mill estate?
As a specialist in the area, I would like to respond to three comments that I hear alot regarding the unfairness of the estate tax.
First of all, with respect to the estate tax revenue earned versus the cost the IRS spends on compliance, note that those numbers do not take into account the significant amount of tax-shifting behavior that takes place. That is, the wealthy engage in activities that generate income tax revenue for the government in order to avoid the gift and estate tax. Thus, repeal of the estate tax would cost more than the budget line item that you see made public.
Second, I have never seen a “small business” go under because of the estate tax. Why? Because IRC §6166 allows the successors to legitimate small businesses to pay the estate tax, with relatively low interest rates, over 15 years. I say “legitimate” because much of the rhetoric in the media and on this blog fails to pose a fundamental question – What is a SMALL business? My parents owned a restaurant, but their debt and lease obligations meant that their estates would never would get close to the current $4 million estate where estate taxes come into play (for a married couple). My ex-parents-in-law were small family farmers, but due to crop loans and the like, they too will not get close to the $4 million threshold.
To be sure, small businesses are lost because the patriarch/matriarch did not do any estate planning. But invariably, this has little to do with TAX planning. I am talking about providing enough liquidity for the child who works in the business to buy out his/her siblings or a second spouse of the entrepreneur who died so the business can continue instead of liquidating. THAT is where TRULY small businesses are lost. But is it easier to blame family dynamics and sheer greed or the tax law?
I also get a big kick out of the assertion that a “death tax” is somehow “un-American.” Anyone who has read the Federalist Papers and Anti-Federalist Papers or studied the U.S. Constitution in any sort of detail would realize that the founding fathers intentionally left open the opportunity to impose an estate tax – BUT NOT AN INCOME TAX (which took the 16th Amendment). Why? They saw what the accumulation of wealth in smaller and smaller families did to the British empire. The estate tax is very much American. Love it or leave it.
Finally, as a professional who practices in this area, I would welcome the 2001 Bush tax cut to go into effect in 2010 – the repeal of the estate tax along with repeal of the adjusted-income-tax-basis-at-death rule. That is, under current law, the income tax basis of assets (for capital gains tax purposes) are adjusted to fair market value at death; under the “repeal” for 2010, there will be only a limited adjustment to income tax basis ($1.3 million + $2 million for spouses). I will have MUCH more work under that regime. From what I understand, the draft tax return being developed by the IRS is over 24 pages, and THAT will cover MANY more estates than the Obama or McCain proposals for estate tax reform would.
Sigh. Most of these comments show that the estate tax propaganda has been swallowed hook, line, and sinker. Estates consisting of family farms and businesses may elect to pay their estate taxes over time. (Don’t worry that estate taxes will somehow hurt our food sources, most farming in this country is done by huge corporations. Also, a lot of our food comes from other countries) Very few estates are subject to the estate tax. Yet, so many Americans are “scared to death” they will have to pay the “death tax.” Come on people, quit believing everything the “talking heads” spew.
I keep hearing that communities value locally owned job-creating businesses. They create the stability in a community, offering jobs at the entry level for high schoolers or at the part time level for retirees. They are not at the mercy of decision makers far away, and the businesses can tell trends for a long way off. Large publicly owned businesses cannot respond to local community needs, and have to respond to stock market concerns with layoffs and cutbacks, often with very little warning.
If we want these private companies to survive into the next generation, they must be allowed to keep their assets. A $5 million death tax tab has to be paid for with life insurance on the owners, at which point it stops being a death tax, and becomes a tax on the employee. The premiums for those insurance policies come out of the money that should be in payroll.
The death tax brings in about $20 billion a year, costs the IRS about $21 billion to collect, and costs businesses $500 billion in protection money (life insurance premiums, trust management, legal advice).
Notice who is fighting for the estate taxes to stay: lawyers, insurance companies, accountants, and the museums, libraries, symphonies, etc that want the wealthy to donate to them.
Fact is, most wealthy folks donate to many needs, and do not pass billions to their kids. Lets keep it simple, and honest. Get rid of this massive waste of time and effort. Axe the tax.
Oh please! I do estate tax for a living. No one is losing the family farm – who do you know that even HAS a farm? To keep the business running? Get real. The second generation can’t liquidate Mom and Dad’s assets quick enough. The IRC has a relief provision for a cash poor estate – it’s called a 6161 election. The downside? You pay the IRS interest until you pay the tax.
Repealing this tax only benefits the wealthy. Most families don’t even pay federal estate tax. It’s a big to-do about nothing and unfortunately the American public has bought into the spin by the media. 99.9% of American taxpayers won’t even be close to paying the estate tax. The estate tax exemption goes up to $3,500,000 1/1/09. It should be frozen there and all this posturing can stop.
The remedy to the estate tax will be to tax in another area. No one will like that solution either.
Ms. Massey,
Your article raised a number of good points, but left me scratching my head on a few things. My family (who owns farmland) is right in the middle of estate tax planning and it is turning into a real headache.
There seems to be such a small number of people affected as sited in your article it’s bordering on the unbelieveable. I can name six people in the small county I live in who are farmers with “valuable” land holdings who will have to sell half of their land just to pay estate taxes. Before the real estate boom most of us had very little to worry about, but the “value” of the land increased ten fold in the last 8 years. Most of that increase happened between 2000 and 2004, now values are coming down, but not as quickly as we “need” them to. Most of the farmers I know, including my family, do not want to sell the land for any purpose, much less to pay the death tax.
You made some very valid points, but I think many, many more people will be affected by the tax than sited in the studies you mention. We happen to live in a coastal area of North Carolina where because of our proximity to the ocean land value has skyrocketed. I would imagine there are many, many more business owners, not just farmers, who own land that will be affected by the tax. Sounds like a good idea for a little more investigation and reporting.
1. Noone should have to pay any government a tax on his/her/its wealth solely because of death! Period.
2. The Federal estate tax should be eliminated and the associated State estate tax which some states levy should be prohibited.
3. The Federal government can replace any revenue which the current estate tax generates by increasing the tax rate on the highest income taxpayers which would spread the pain over a broader base of constituents and would result in a more predictable annual income source for government operations.
4. Of the two positions presented, Obama v McCain, I would select the later but I resent having to spend my time and $ planning an estate because of government tax regulations. The Living Trust is an example of $ taxpayers must waste to avoid estate taxes.
Dear Doug,
You are wrong…
”Check your history. The founder did not put ANY TYPE OF INCOME TAX IN PLACE. This tax wasn’t added until 1916 after the 16th Amendment to the Constitution was added. “
First the Estate Tax is not an income tax. The first estate taxes were enacted in 1797 and call the “Legacy Tax”. The tax was repealed and rewritten many times over the years, but it has always been around in one form or another. It just so happens that the Estate Tax you know today was rewritten in the 16th amendment and made permanent. You should check your history.
The Estate Tax (a.k.a. Legacy Tax) is one of the oldest taxes in the country. Again it affects a tiny number of small businesses that are too dumb to plan. If a small business gets caught-up in this tax they deserve to have to pay it.
The vast amount of money this tax generates comes from huge inheritances not small businesses. Taxes are a part of life. I am amazed at all of the brainless comments from people saying this tax is stealing.
Taxing people for becoming a success. Double taxation. That’s the estate tax, plain and simple. Of all the taxes, it’s by far the most unfair. Those who say “well, they can afford it”, well that misses the point of what this country is or what it used to be about. Someone is successful, they should not be penalized for it.
I have no doubt that Obama is saying he will keep the levels at the 2009 point- until he is elected and has a Democratic Congress behind him. At that point, he can do whatever he wants, and watch out!. When I have grown a business for twenty five years from nothing and have paid taxes on my profits in every year that I have had them, I can find no justification in anyone paying additional taxes just becuase I died.
The estate tax is theft, plain and simple, and therefore should be abolished. I reject the idea that it represents capital gains capture. If you want to do that, then require those who inherit capital gains to pay capital gains tax using the original basis WHEN THEY SELL, not when it is inherited. Otherwise, those who inherit can pay tax as usual on dividends, etc. as they are actually received.
Terry – the 440 figure referred only to the number of small businesses & farms taxed in 2004. The vast majority of estates paying the tax include no business among the assets; the estate consists of personal wealth. That’s where the $522 billion # comes from.
Estate taxes are good for our economy. We should avoid taxing the small estates (under $2MM) and not give tax breaks to the larger estates. We are losing our Middle Class, CEO’s are receiving outrageous salaries and large corporations receiving tax breaks paid by the middle class are sending US jobs overseas. Obama is in touch with what the US needs today.
America needs its farm land to remain whole and any land used for farming should be exempt from the death tax. This tax on farms forces the owners to sell the land that usually ends up in new housing plots. Farm land is shinking and the tax is forcing american farmers to move out of the country and establish new farms and import their produce. Farm land should be exempt from any taxes when it is passed down in a family. The death tax is regressive and forces the small farms business out of business just to pay the tax. The american dream to provide for a family and leave their children some future financial gains destroys that american dream and the right to provide for a family. There should be no inheritance tax that destroys a faimly dream. America was built on dreams by legal immigrants and this tax is a dream destroyer. For any taxes not collected, adjust, just as we do to provide aide to businesses who employ illegal foreign nationals who pay no taxes. What is america doing about those lost taxes? Is it okay to allow illegal aliens tax exempt jobs yet destroy the american dream and generations of devotion to america?
Mostly a JOKE! The number subjected to it is insignificant. These whiners had a LIFETIME to prepare PROPERLY, but they are simply greedy, lazy or simply DUMB! If you NEED to play SUPERPOWER/We’re No. 1! then pay thru the nose and the butt for the privilege!! Stop the internal rot that is destroying this country thru endless free rides for Wall Street thieves and CEOs who make sooo much money, they PAY, in reality, NO TAXES.
The third paragraph of your article states that the estate tax affected only about 440 small businesses and farms in 2004. The tenth paragraph then includes the statement that “A permanent repeal would cost $522 billion in lost tax revenue over the next decade, according to the Treasury Department’s evaluation of President Bush’s 2009 budget proposals.”
You mean that those 440 “small businesses” and farms would pay $522 billion in taxes over the next decade if the tax is not repealed? That is over $1 billion dollars taxes paid per business / farm per year! I think your numbers don’t add up.
The death tax should be repealed completely since it is double taxation, period.
it should be eliminated altogether since it only applies to the hardest working, savers, builders who are in the middle ground of wealthy. Why is is right to take from the family that accumulates 10 million and skips over the billionaires. More importantly why would we single out or burden the highly productive small businesses that create and maintain many jobs in rural America.
The death tax is usually triple taxation and is definitely unfair, especially to people with assets around the threshold. You work hard to earn money your whole life and pay taxes on those earnings (tax one). Then you likely invest what is left in the stock market and pay taxes on any capital gains, dividends or income (tax two). Finally, you die and death taxes are owed on what is left (tax three). Don’t forget to throw in other taxes you might pay such as state income and death taxes, real estate taxes, sales taxes, SS, medicare, etc. If you make a good living and save money during your lifetime, the various taxmen could easily get two or three times more of your lifetime earnings than you and your family. The very wealthy can avoid much of the taxes through creative estate planning that others can’t afford but, even if they don’t, their heirs still have many millions or even billions left over after all of the taxes are paid.
The estate tax may be the hardest tax to justify. A person works all of their life and pays taxes on the money they earn. Then the government gets a confiscatory percentage of any money they managed to save or accumulate after all the taxes were paid. The tax can be avoided in all or part by developing complex legal structures that have little or no impact on the economic reality of the assets in the estate. If you choose to spend or invest money unwisely, you owe no tax. So the only persons who pay are those who manage to save the money they made. There is no rationale basis for this type of tax, unless you think class warfare against people who work hard and invest in our economy is okay. The entire tax should be abolished.
the estate tax is wrong and should be done away with, pure and simple. and any politician that says to keep it is an Dumb A__. and any politician that wants to keep it likes to steal money.
I agree with the post of Dean Eiteman. I don’t think the estate tax should eliminated but the rate should not be punitive.
“I agree with Obama and McCain that the estate tax should Not be repealed. I also accept Obama’s exemption of $3.5 million but a tax rate above that amount at 45% is too high. I believe the tax rate on estates above the $3.5 million should be lower–like at 25%.
I think that McCain’s exemption of $5 million is too high and his suggested tax rate of 15% is too low. Finally, I hope estate tax law continues to establish a new basis (market values of the assets) for the inherited assets at the date of death.”
I tell my parents and my In-Laws to spend every single penny. Leave enough to cover their “final resting” wishes, give away things you want to “keep in the family” now, have a trust set up if you want to leave a few bucks to the grandkids. End of the day… the Gov’t gets NOTHING, because there will be nothing to get.
Twenty years ago I bought a nice house for no money down. I was a single mom and will finally have the mortgage paid off when I am 70 years old. I raised my only child in the house and will have worked hard for many years to pay retire the debt. Now it is worth about $8MM. If I die, my handicapped child will have to sell the house and start all over because we do not have the millions that the IRS wants on the value of our home! This is a fair tax? Hardly. It is grossly UNFAIR.
It is categorically NOT the case that the Estate tax always represents double taxation. Suppose Great Grandma bought 1000 shares of IBM in 1939 and held them until her death last year. She never, not once, paid taxes on the large capital gains from these shares while alive. The Estate tax basically ensures that capital gains taxes are captured at death.
No one “likes” taxes of any variety, but almost everybody likes things like roads, a legal system, and national defense that taxes pay for.
Our tax system should be fair. My personal belief is the estate tax should remain in place maybe with a $5 million exemption and anything over that taxed no more than 25%. The tax in my mind is more of a social tax, equilizing wealth at the time of death, but should not be punitive. As time goes forward the exemption growth should be indexed to asset values so twenty years from now we don’t have another punitive tax.
“The estate tax is taxation on assets that have already been taxed under the income tax laws.”
This is a foolish statement. The assets are not being taxed, it is the people who are being taxed. All income belonged to someone else at one point! When you inherit an estate it is income to you!
I agree with Obama and McCain that the estate tax should Not be repealed. I also accept Obama’s exemption of $3.5 million but a tax rate above that amount at 45% is too high. I believe the tax rate on estates above the $3.5 million should be lower–like at 25%.
I think that McCain’s exemption of $5 million is too high and his suggested tax rate of 15% is too low. Finally, I hope estate tax law continues to establish a new basis (market values of the assets) for the inherited assets at the date of death.
The estate tax is levied against an ESTATE. The people who generated these vast sums of money are no longer in need of them. I find it hard to believe that someone could consider it a “death penalty”. That is just rhetoric. As someone has said, the estate is taxed before it is passed on to one’s heirs. Consider the $1 million dollar limit, and a tax rate of 50%. That means that if someone left you $1 million dollars, you get to keep ALL of it. If someone left you $2 million, you only get to keep $1.5 million. It’s not as though you are going to have trouble putting food on the table, even if you are marginally a productive member of society. It is also likely that the person who is leaving the money to you hasn’t forced you to live in poverty until the day they died. Allow a certain amount to be tax-free, and let the excess be taxed. The next generation can build up it’s own huge sums of wealth if it wants.
You need to think of it like this.
Forget about the wealthy.
They are going to have money regardless of this tax. They have the money to plan for the distribution of their wealth to family or were ever they want to send it.
This tax hurts everyone else. Let’s say your grandmother passes on $20,000. The government gets 55% of that. That’s a little over $10,000. For what? What did the government do to deserve it? Your grandmother saved that money after tax. So now the government is going to come in and tax it again. How is that fair? That 10k could mean the difference of a better education or any number of thing. If the IRS thinks that a $1,200 stimulus check is going to turn the economy around what would $10k do? The federal government can waste $10k is a millisecond. I say the government has no right to take what any family is able to save and pass on. That includes the wealthy. They are americans too.
“I couldn’t disagree more. The Estate Tax is one of the oldest taxes put in place by the found fathers of our country. It was designed to prevent people from passing on vast sums of wealth thus creating an American Aristocracy.”
Check your history. The founder did not put ANY TYPE OF INCOME TAX IN PLACE. This tax wasn’t added until 1916 after the 16th Amendment to the Constition was added.
The money has been taxed. It’s not your money, is the family’s money. I don’t care how much money is passed the government has NO BUSINESS TAKE IT. I don’t care if it only effects 10 people, it immoral and should be outlawed.
A note on the comment about our founding fathers putting in the estate tax to keep from having an Aristocracy: The founding fathers did not have an income tax or many of the other taxes we’re saddled with, but did have this one. Food for thought….
You can tell the people that are FOR the estate tax never built a business. It is double taxation – plain and simple. It also basically amounts to the government stealing what someone worked their life to build. What right does the government have to be someones largest heir? It is an evil tax that is for sure. Taxing the dead? That is false. It is absolutely a tax on the living (the heirs). For my own personal business, the tax would make it so that the business would have to be liquidated to pay the associated taxes. Nope – ‘proper planning’ is not going to make the tax go away. Only congress/IRS can do that.
Everyone always wants others to be taxed – not themselves. Double and triple taxation of ‘the evil rich’ is ok as long as it does not affect them.
Dear echo,
Again people have it wrong. If the “Scare” tactic worked and thats what is being done, then where is our portion of the “500 BILLION” that they collected. do you realize that $500 billion is about 250 dollars per voting elligable CITEZEN in this country? The government collects too much, spends too much, and WASTES entirely too much.
As a fourth generation farmer, it is unfortunate that I have to tell my father that he is going to have a “hunting accident” in 2010.
Daniel is insane. I think he wants noone to have a job in the next 100 years. Just imagine, the government, taking control of GM becuause the leading 3 share holders die. And then taking over the banks because their owners die. They would take over everything, and only those alive with the money to buy some of those things would be able to. That would truely be an aristocracy, assuming we aren’t communist russia and want the government owning all business.
I think it is a political ploy to stir up a lot of emotion. With the exemption of $2 million or $3.5 million, there are effective ways to plan. What is not vigorously debated is the non-spousal step up being capped at $1.3 million. This accomplishes two things. When heirs sell inherited asssets they could face an enormous tax liability, or when they die, there will be a larger pool of decedents with estates above the exemption!
Why can’t we just get rid of taxes on estates themselves. Instead we would tax people who receive bequests from estates.
I agree it doesn’t make sense to tax an estate, because the person who accumalated the estate has already paid taxes. But an individual who receives a bequest from an estate should pay ordinary income taxes on that bequest.
In short, bequests from estates would be treated like any other income.
The standard should be to provide for your family, both when you are alive and when you are dead – why would you want your family to have to start over at square one after you die? If you are a small business owner and the business must be liquidated after you die, what about your employees? They get to start over too along with their families. Eventually you have the whole country starting over effectively ending any ongoing growth and improvement economically and in general.
You have to think about the cascading effects of everyone involved, not just those receiving the inheritance.
The death tax and capital gain taxes should be severely reduced or eliminated. Just because I can use my brain and invest intelligently, I lose more to the government than someone who earns their money by using their back? That’s not fair. And, yes, I work for a living – I don’t have money handed to me. Besides, if cap gains weren’t taxed as high, then it would encourage more investment in US companies. They could use that right now. The current system discourages investment.
First off, the FOUNDING FATHERS did not enact the estate tax. The estate tax was enacted in the early 20th century by statesmen who were effected by the very legislation they enacted. The original intent of the legislation was to keep an aristocracy from rising as did in the ‘robber baron’ days of Rockefeller, Carnegie, Mellon, Morgan and others. While business owners are affected, a greater majority affected are the wealthy who do not necessarily own businesses. There are carve-outs which are already in existence which exempt most business owners. Don’t believe all the BS being batted about how evil the estate tax is. Having worked at a large NYC law firm you wouldn’t believe all the tax dodges the wealthy employ to keep their booty.
The estate tax is double taxation. The taxes have already been paid when the money was earned. And, if one is lucky enough and smart enough to amass an estate to pass on to ones children, why does anyone think that the government should have the right to raid that estate in the name of the redistribution fairy? Our system is based on capitalism, not socialism. The founding fathers never saw it any other way!
A reply to Daniel in Houston, TX
My father started a business in 1971. I have three older brothers who, including myself, have all worked with our father over the years to build this company. I have nephews who are also working to help continue to build and expand our operations. There are forty other people who work for my father’s company who have families themselves that depend on this business for their livelihoods. Are you suggesting that my brothers, the forty employees and myself have no right to continue in this business after my father passes away? That our collective effort means nothing, and the government should confiscate it all to redistribute it? We have all worked very hard in contributing to its success, does that mean anything? That after my father dies, we should all be unemployed and with nothing left to continue this company? I believe that we can come up with a better solution than reverting to what sounds to me like hyper- socialism.
This article is very misleading in stating the impact of this tax. There may only be a few hundred small businesses affected, but there are millions of families affected – one can include any who own real property. The levy of the death tax on real property is financially devastating and unfair, as it requires immediate payment of the tax on an illiquid asset that may require months or years to sell. Without a sale, beneficiaries of the estate may not have the wherewithall to pay the tax, and the estate is seized by the probate court. Not much is left after the lawyers and the government have paid themselves.
I doubt the founding fathers ever intended for this usurious treatment to occur.I will not even get into the issue of quadruple taxation that this represents, when combined with income taxes that the estate beneficiary must also pay.
The system is in dire need of an overhaul. Super-wealthy individuals like George Soros and Warrn Buffet, who have millions invested in legal circumvention to the existing law, will loudly protest any changes on the basis that taxes are good. This is a lie. They resist change only because they have some much heavy investment in the status quo.
And while $1.0 million may have been a lot of money when the tax was enacted decades ago, it is chump change today and not even adequate to support retirement. For the rest of us poor regular folks, the tax should not apply for estates less than $4 million single or joint, as that is the amount a couple needs to retire on without being forced towards a risky investment strategy (anything beyond money-market), with enough principal to support medical disaster. This is especially critical given today’s crumbling healthcare system and skyrocketing out-of-pocket costs even to insured people.
The existance of the estate tax, a government windfall resulting from a families loss, is proof that we are no longer a free country.
My response is to Daniel, from Houston Texas – When my wife and I, we should have a say as to what we want done with the property we have accumulated. My wife and I have worked hard for what we have, and if we want to give it to our kids, to help them and their family, or to whoever we want, that should be our choice. I sure as hell don’t want to see what we have worked our whole lives, go to people who won’t get off their behinds to better themselves, or leave it to our elected officials to decide to spend it on some entitlement programs.
McCain is right on the money. He has the solution. The enormous estate tax rates in place now create ridiculous solutions and force the creation of foundations and other exotic solutions. By taxing at a reasonable level of 10-20% with the ability to defer payments, all of this nonsense will go away. We also need to protect the exemptions of both spouses without the need to set up trusts. By simplifying this tax, the government will get more taxes and the wealthy will not be forced to make poor economic decisions.
The death tax is nothing more than double taxation. Income is taxed when you make it. Now that you worked your entire life the government should get half…I don’t think so. They would only mismanage it anyways.
To Daniel in Houston….so you think it should be 100%? Then why don’t you start working for free? They will just take it anyway when you die.
any wealth exempted for a reasonable level should be okay. The common people paid taxes on that at one time. Govt. can creat an index and increase the amount as per the market condition.US$ is down in world market and 1million $ is not a big amount. In california and NY state a simple house is costing 750k an average. So limit like 2milliom per person and 6 million for a couple will be a reasonable amount. Then apply the index.
Many people work very hard so that their children will have better lives. Not having every hard earned penny, that has been taxed many times before, not go to who you want it to is a sham and reeks of socialism.
I agree that it should not revert and should not be completely repealed. Small family owned businesses should be protected. A father should be able to pass a buisness to his son without having to be concerned about the impact of the taxes. However, Large privately held companies should pay the taxed so that the vast wealth can be redistributed. The circulation of money is what keeps the economy moving.
Please, if I built it, earned it, and want to leave it to my children than the government has no right to any of it. (Daniel from Texas, Russia is to the east, why don’t you head over that way)
Never in the history of our nation has an increase in the tax rate generated an increase in tax revenue to the government. It is always assumed that behavior will remain the same and thus a revenue increase will result. This just isn’t the case.The tax code modifies investment behavior and investors/business owners change accordingly. The root issue is spending not taxation. Others have commented that the govt ‘needs’ the money. Let’s cut out the waste first. Others will say the wealthy should pay their ‘fair share’. How do we define fair? What is lost on those that want to increase the estate tax is that the ‘wealthy’ create liquidity in the market place and create jobs for people like you and me. By imposing heavier tax burdens ultimately impedes the growth of our economy as a whole. As has been said here by many, this money has been taxed numerous times only to be taxed one last time. As John F Kennedy once said in a speech to the National Press Club in the the early 1960’s , ” The only way to increase revenue to the government is to reduce taxation”. This approach provides incentives for individuals to put their capital at ‘risk’ hoping for a ‘return’ on the investement. We should not discourage wealth accumulation within our economic system , we should encourage it by reducing or eliminating the estate tax. And for those who believe the ‘wealthy’ don’t contribute to our society; who is the last ‘poor’ person you know that created a job for someone else? ( and thus more tax revenue to the govt) Let’s all start to understand the full economic ‘circle of life’ before we jump to emotional conclusions.
I prefer the higher individual exemption because when you’re talking estate taxes you’re frequently talking about widowed people, not couples.
An exemption of $5 million is good because it exempts the many smaller estates.
A 2 or 3-tier tax is a good idea because it allows an easier rate for large estates and a higher rate for huge estates, or those who can certainly afford it.
Estate taxes are insane. A person pays taxes on earned and investment income and then another tax when you die.A stealth tax which harms business continuation plans.
I couldn’t disagree more. The Estate Tax is one of the oldest taxes put in place by the found fathers of our country. It was designed to prevent people from passing on vast sums of wealth thus creating an American Aristocracy.
Even with the most basic planning small business owners can avoid this tax. The Bush administration proposed this not to help small businesses, but so his rich oil buddies could avoid paying taxes pure and simple.
Small businesses that do no planning and are hit by this tax have no one but themselves to blame.
People should not have any rights over their property when they die. Also, if the constitution doesn’t say it, it should be immediately amended so it would state that dead people have no more rights over their property in life and everything goes to government for redistribution. The estate tax should be 100% of the estate! New generations should make their own living without privileges.
The estate tax is a confiscatory tax and should be permanently eliminated. It is taxation on assets that have already been taxed under the income tax laws. The only way to justify the estate tax is if you believe that the government has the right to say how much wealth you should get to keep at your death. Where was government given that right in the Constitution? In fact, doesn’t this violate the clause that say’s that the people shall be secure in their property?
Do something that will be beneficial to the country. Remove the exemption and tax at individuals current tax rate. It would be a one time charge (although high) and our country would not have to face this question again.
The Bush administration has done more to create problems for the United States in the long term than anyone the history of our country (possibly the world). None of the Bush tax cuts should be extended. Look at our deficit (and debt).
The estate, or so-called “death tax” needs to be entirely abolished. Once an individual has worked his or her entire life to improve their financial position, why should they be taxed “again” on the same money on which they already paid taxes along the way to accumulate? It’s double taxation. Income is taxed and quite heavily, why should wealth be taxed.
The estate tax should be abolished or at least reduced to a level equal to capital-gains tax, as in the McCain Plan. All one’s working life they pay taxes why should they pay taxes after death on what was taxed while living! Congress must control spending, stop give away programs, encourage honest work and ethics, reduce size of the Federal Government, begin to understand taxing is not the answer to every problem, and stop serving special interest groups. If we were to follow the design of our democracy the Federal Government would provide for our security and economic stability and let the states manage the social programs.
It is clear that the Republican scare tactic worked yet again. The estate tax is designed so that there would be a redistribution of the wealth, that is why it is in such a high percentage. While Majority of the business won’t be affected by this tax, the republicans made it sounded like almost every small business will be affected.
The key here is education, if people really know what is going on, fear tactic won’t work.
You’re not taxing the dead . . . you are taxing those who it is passed on to. Those profits were already taxed twice in some cases (corporate and personal). They should not be taxed more than once. That would be like taxing your personal income twice.
The purpose of this tax was originally to prevent the ultra-wealthy from founding dynasties with too much influence. It has done this, as the wealthy leave their money to charity rather than give it to the government. Whatever plan emerges must retain this as its central point. We should raise the exemption enough that ALL small businesses and family farms are protected and keep the rates high enough that multimillionares will still give most of it to charity. We could limit how much the wealthy can avoid paying – make the very rich pay enough to make up for the lost revenue from the middle class.
The Government already recieves taxes every year on those properties & businesses so I cant understand this shortfall they are talking about. How they determine a figure 522b. When they dont know the life expectancy of the current owners of the estates in question.Also why are they entitled to more taxes anyway as was stated earlier they recieve taxes yearly is that not Double Taxation?
The estate tax should be 100% of the estate! New generations should make their own living without privileges.
The estate tax is a good thing. The problem in the past was the level where taxing began was too low ($600,000). Once that was raised to where it is now, it seems to be very reasonable. Besides, our govt needs the money. Taxing dead people beats taxing the living.
Features-
In a tough economy, more business owners are bartering for the stuff they need. More -
In Oregon, the Recovery Act is paying for a local small business to protect nearby communities from wildfires. More -
Smart entrepreneurs are now doing deals in 140 characters or less on Twitter. More -
As more customers choose - or are forced - to fill prescriptions by mail, independent pharmacies are struggling to survive. More -
A Texas hospitality company considers where to invest and where to cut back to weather the recession. More -
How 7 innovative companies are inspiring workers and boosting the bottom line. More -
42 startups duked it out in the world's most lucrative business plan competition. We trailed one team to the bitter end. More
For all those who think estate tax is “unfair” consider this:
All taxes are collected to provide for our common needs including safety, defense, public works, education etc.
It is simply more efficient to pool resources to “buy” these valuable services.
Different taxes raise money including income, estate and GST tax. This is the price of living in a free and safe society.
So “fair” or not, we need tax revenue and estate tax is an important part of the equation during these hard economic times.
The right answer is Obama’s: keep the exemption high (3.5MM per person) and the rate reasonable (45% or less – ideally around 25%).
Also, give Americans simplicity and certainty so they can plan their estates once and for all.
For all those small business owners and farmers worried about liquidity, spend a few thousand dollars on a qualified lawyer to help you with insurance and gift planning.
You’ll solve your liquidity problems in a matter of weeks and can redirect your valuable energy and resources on growing your business rather than on estate tax worries.
Don’t want to spend a few thousand dollars for good estate planning? Well, I don’t like spending money on my CPA, but I do each year because she is an expert who saves me lots of time and money. I know that not investing in her expertise would cost me much more in terms of time, money and mistakes.
I would hope that everyone focuses on solutions at this point.
We could endlessly debate tax policy but the reality is that estate tax is not going away and we need to take steps to plan for it.
The sooner you plan, the sooner you and your heirs will feel better about whatever changes are in store for 2010 and beyond.