House extends estate tax

[My Good Babushka]

Source: The Washington Post

The House approved Thursday a measure making the current estate tax rate permanent, overcoming the objections of an unusual coalition of liberal and conservative critics.

The bill passed, 225 to 200, with 26 Democrats joining all Republicans present to vote no. It would make permanent the current estate tax rate of 45 percent, with an exemption of $3.5 million per individual. If Congress does not act, the estate tax would disappear altogether in 2010, then return in 2011 under the higher rates -- 55 percent and a $1 million exemption -- that existed before President George W. Bush took office.

Read more: http://voices.washingtonpost.com/capitol-briefing/2009/12/house_votes_to_make_current_es.html?hpid=topnews

[no_hypocrisy]

1. At least they haven't been eliminated altogether.

That was Bush's dream.

[Warpy]

4. That was actually the GOP dream

I find the current rate acceptable. What I wouldn't find acceptable is handing over estates in the billions of dollars tax free. That's the surest way to an aristocracy that I know of.

Still, were the estate tax to disappear completely, the wealthy would still find a way to scream about expenses levied on estates.

I say tax them and let them scream, since they're always going to do it anyway.

[Yupster]

18. This was a fair compromise

Leaving current law would be a disaster. There would actually be people gaining or losing millions of dollars based on whether grandpa died before midnight or after.

I'm glad they reached a reasonable law.

[Robbien]

2. The headline is so misleading

The Bush years gift to the rich isn't just extended, these House Dems want to make it permanent.

Pfft.

[midnight]

11. Thanks for the clarification.

[Beavker]

3. Not surprised...

Every single Repug wants low taxes so their rich kids stay rich and get their fortune without having to pay taxes (or very much compared to those that worked for the money), and there are undoubtably several Blue Dogs showing their true, RED blooded selves by making sure they are in the same boat.

Right along the voting lines with everything that deals with taxes or keeping the rich, rich.

And yes...at least there still is a Tax a guess.

[ElboRuum]

5. My guess is that...

...the liberals on the "no" side wanted the estate tax to elapse and go back to the pre-Bush quantities. The Repugs probably wanted to assure that it did not get to be permanent in hopes to erase it utterly at a future time should they ever get the House and Senate back.

[harkadog]

6. No law is ever "permanent".

Any future Congress can change or eliminate any law that a previous Congress has passed.

[ElboRuum]

7. True...

But my guess is that by voting against the "permanence" it gives Repubs one years' grace (and additional popularity with the rich) and 10 more percentage points to whine about the year after. Unlikely to happen, but of 2010's a repeat of 1994, it may give them the ammo they need to kill the estate tax entirely.

My point was is that both groups have reasons to kill this, just makes for strange bedfellows is all.

[ieoeja]

13. What liberals voted against it?

[ElboRuum]

17. Dunno, just stated the number. n/t

[Kali]

8. Just an FYI from a Dem that has a stake in this.

I hate to give rich assholes a break but some of us who favor this are by NO means in that class.

For me this is about the small ranch that has been in my family for 5 generations. Sure we could live well off the $$$ if we sold the place, (at least the current generation) but for those who value place over money we are kind of stuck - sitting on "valuable" acreage and basically in poverty as far as lifestyle.

Please remember the small family farms and ranches - even some small businesses, I suppose - when thinking about this issue. The monetary value of land has unfortunately way outpaced the value of any living one can make off of it other than development. Until we as a society find a way to "compensate" for the intangibles of open space/agriculture this break at least allows the next generation to remain on the land.

[JDPriestly]

9. A family ranch worth $3.5 million? That's some ranch you've got there.

Let's say it is 500 acres. That is $7,000 per acre. Now, with that much land, not all of it can be cultivated.

Here is a link that shows asking prices on some of the best farmland in the U.S. http://www.landandfarm.com/lf/asp/search_results.asp?state=Iowa

There is no better, more valuable dirt than Iowa farmland. The topsoil is thick and fertile.

The only reason some of these properties are so expensive is that they have potentially commercial uses. Otherwise, you have no problem with your ranch. It probably is not worth nearly what you think it is. Your ranch will be exempt from inheritance taxes under this law.

[SOS]

14. One thing...

The Senate must act on this.
In 2010 (and only in 2010) all estates, no matter if they are worth $100,000 or $50 million will be subject to a 15% capital gains tax.
This is insanity.
Someone who inherits $3.5 million in 2009 pays no tax, but someone who inherits $50,000 in 2010 must pay 15%.
Then in 2011 it goes to a $1 million exemption under the current laws.

It would be a grotesque injustice to tax the smallest of estates for only one year.

[Kali]

15. until the crash they were getting 3500/acre near here, not sure what it is now

but I see new houses every time I go for the mail less than 10 miles away. Yes the overinflated values are because of development. You made my point - those kinds of prices are not doable for ag - hence the problem of KEEPING it in ag/open space.

No this place is not worth 3.5 (although I have seen smaller places asking for more - just don't think they got it) but the 1 mill is a possibility if the economy were to recover, I have no doubt. We would be stuck in a situation of having to sell land to pay a large tax - and that is the beginning of the end of family held places. Once you start selling it is VERY hard not to do it again for the next big "emergency" and before you know it the whole thing is gone.

[SOS]

16. Re your stake

Write your Senator and ask for immediate action.
Please see my post #14 for details.
If an inheritance takes place in 2010 and the Senate does not act, you will be subject to the most unfair tax imaginable.
Every penny (under current law) will be subject to a 15% capital gains tax during the year 2010!
In 2011, the exemption goes back to $1 million.

If you inherit in 2010, you may be really financially damaged unless the Senate acts.

[JDPriestly]

19. You are talking about state estate taxes, but not federal ones.

You probably would not pay federal estate taxes on $1 million since you could exempt $3.5 million from the federal estate tax as I understood the OP. So, unless you are inheriting a lot besides the land, you would not have to pay federal estate tax as I understand the law.

I agree. You should not sell it piecemeal. But this bill would not impose taxes on you. Your state's laws might impose taxes on you should you inherit the ranch.

[TheFarseer]

21. 500 acres is small for a farm

let alone a ranch. That said, I've heard the federal estate tax almost never touches family farmers. The real killer is the state estate taxes.

[aquart]

10. Yeah, that's how my stepfather thought.

Nothing was worth what that sucker thought it was.

[sendero]

25. I don't CARE..

.... I want to live in a meritocracy. The fact that someone's DAD built a ranch is MOOT. Estate taxes should be 100%. If a parent doesn't trust their children enough to give them title of the assets before they die, not my problem.

[Javaman]

12. Who runs this country again? nt

[TheFarseer]

20. something you all are missing

The 1 million exemption was created years ago. Since then inflation has made $1 million not as much money as it once was. I can't imagine why this was not indexed to take into account inflation like normal income tax exemtions. I think this is the solution that was needed except they might have allowed for indexing in the future.

[RUMMYisFROSTED]

22. I can imagine why it wasn't indexed to inflation.

[TexasObserver]

23. It's good they passed it, but there's the senate to deal with.

The senate is the personal valet of the wealthy, and that's who wants to gut the estate tax.

The estate tax is designed as a tool of public policy, not a revenue producer, at least on the federal level. State level is all about revenues. The objective of the estate tax is to prevent the kind of huge wealth accumulations that history tells us are bad in a society. Too few people controlling too much wealth is a bad idea. We already have the Walton family controlling more wealth than 100 million Americans combined. We don't need that. We need a system that does not allow permanent formations of billions of dollars controlled by a family.

The concept is simple: When you have that much, give most of it away before you die, or we - as a society - will take a huge chunk upon your death, and we will redistribute it for you. This kind of "radical" stuff traces itself back to the Teddy Roosevelt Trust Busting days.

I think $3.5 mil is too low. The lifeblood of the country is the medium sized business that flows a million to $10 million a year. Any time there are estate tax consequences to those businesses, there are likely jobs that are going to be lost in that process. I favor a higher exemption, to help keep together family farms, ranches, and businesses.

Up thread was some discussion of the value of a farm or ranch. There are vast investments in the equipment and physical plant of farms and ranches. Fences, roads, pipelines, water wells, watering systems, feeding systems, solar and wind energy production, silos, dams, etc. Then there's trucks, combines, tractors, etc. They are fully running businesses, with all the assets a typical business requires. The land is only part of it, and that is going to be 500-5000 acres.

[alfredo]

24. If the estate tax is allowed to disappear for that one year

a lot of old capitalist will be killed by their spawn so they won't have to pay the estate tax. A good number of the killers will be caught and thrown in prison. I think that would be a win win situation.