House Votes To Keep Current Estate Tax Rate

[BREMPRO]

Source: Washington Post


The House approved a measure Thursday that would make the current estate tax rate permanent, setting it at 45 percent for individual estates worth more than $3.5 million.

<snip>

Most Republicans oppose the estate tax on philosophical grounds and want it abolished. "Death should not be a taxable event," said Rep. Dave Camp (Mich.), the top Republican on the tax-writing Ways and Means Committee. While Republicans invoked distressed farmers and business owners Thursday, Democrats suggested that the GOP is more interested in shielding the wealthiest Americans from taxation.

"Abolishing the estate tax would add billions and billions to our deficit -- and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer," said House Majority Leader Steny H. Hoyer (D-Md.).

Under the current rate, .23 percent of all estates are subject to taxation in 2009, according to the Tax Policy Center, a think tank. Since the exemption of $3.5 million for individuals -- married couples can generally exempt estates of up to $7 million -- is not indexed for inflation, that percentage will gradually increase over time.


Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/12/03/AR2009120304433.html?wpisrc=nl_pmpolitics

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some wanted a higher rate, but at least it's being renewed and not being abolished as the Republicans have wanted for years. Leave it to the Republicans to try to protect the wealth of the top .23% of Americans at the detriment of the budget and public services.

[gateley]

1. I've kind of always philosophically opposed estate taxes, too. It

just seems wrong to pay tax again on funds that have already been taxed.

[Larkspur]

3. The heirs are the ones being taxed. Not the original owner

and the "Paris Hilton" or "spoiled rich kids" tax, which is another name for the estate tax, helps prevent a permanent aristocracy from emerging.

[harkadog]

9. The original owners are taxed when they make the money.

Unless they printed it.

[Jeff In Milwaukee]

11. I don't know where to begin with that statement....

If I earned $50 and paid taxes on it -- let's say I paid $10 in taxes -- and then invested the remaining $40 in a piece of land and that parcel of land grew in value to $100, I would pay taxes on the $60 in capital gains -- the sales price of the land minus what I paid for it. I wouldn't be paying taxes twice because the $40 I invested is not taxed when I sell -- only the $60 in gains.

Now after every $Dollar amount in the preceeding, add the word "million" to the figure and you'll get an idea of what we're talking about here.

[WriteDown]

13. What if its a loss and not a gain...

What if you invested 2.5 Million of your life savings in the stock market and when you die its down to 1.5 Million?

[Jeff In Milwaukee]

21. In that particular case, you estate wouldn't be taxable

It wouldn't meet the statutory minimum

[WriteDown]

26. I meant in additon to other assets...

Sorry, should have been clearer.

[SOS]

27. Re statutory minimum; the Senate must act before Dec. 31

The current law exempts $3.5 million up to 12/31/09.
On 1/1/11 the exemption goes to $1 million.

But in 2010, every penny of every estate will be taxed at 15% capital gains.

Someone who inherits $3.5 million this month pays nothing.
Someone who inherits $100,000 next month will get a tax bill of $15,000.

It's insanity.

The Senate must act now.
If not, they will have a lot of justifiably enraged people to deal with.

[harkadog]

16. You crafted an example to meet your argument.

BTW when you add millions to the figure none of those people pay estate taxes. They create trusts before they die and taxes don't touch them. Never have. (Example Gates, Buffet, Rockefeller, Carnegie, etc.) The only people who pay estate taxes are small family owned businesses including family farms.

[Jeff In Milwaukee]

22. You got it wrong....

You're right that with some simple estate planning, the amount that can pass tax-free to one heirs can be significantly increased. In the case of charitable trusts, of course, the heirs never receive the funds so there's no reason that they should pay taxes. Family-owned businesses and farms are rarely (if ever) touched by the estate tax. Based on CBO figures, only a handful of family farms would have a tax bill larger than the liquid assets of the estate.

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/23/AR2005072300741.html

Bear in mind that it would require a "family business" worth millions to make the estate tax kick in -- $7 million for a married couple. We're night talking about the neighborhood pizzaria or a mom-and-pop construction business. Who pays the estate tax? Currently only the weathiest 0.27% of Americans are effected by it - so the image of a family business being sold to pay the estate taxes is pretty much a myth created by the Republican Party.

And Warren Buffet? He favors the estate tax, as does Bill Gates, Sr.

[harkadog]

23. Married couples rarely die at the same time.

So don't try and double it. Of course the Gates family and Buffet favor it because they are not affected by it. They have created complicated series of trusts controlled by family members.

[katkat]

17. wrong, Jeff

If you earned $50 and paid $10 in tax on it, when you died the remaining $40 gets taxed again, at nearly 50% in the worst case.

[Ruby the Liberal]

12. +1 I have always called it an 'inheritance tax'.

Free money to the heirs.

[Jeff In Milwaukee]

4. Most of them have not been taxed....

In massive estates, the single largest items are unrealized capital gains - primarily real estate. That is, Grandpa went out and bought 100 acres of farmland back in 1960 that is now being rapidly encroached upon by the suburbs, and it's worth a small (or medium-sized fortune) as an office park. The gain on the sale of that property, since Grandpa never sold it, has NEVER been taxed.

[KittyWampus]

8. and insisting on making heirs pay estate tax on the full value ensures more of that land will become

housing.

[Jeff In Milwaukee]

10. Not quite sure what you mean there....

Estate taxes are paid by the estate and not by the heirs, and that was a theoretical example. The same could be true of stocks or any other capital investment.

[mbperrin]

5. We pay tax on funds already taxed all the time. Pay your income tax.

Now with the money left, buy gasoline. Are you paying tax now on that money, even though it's already been taxed? Sure.

Now go to the grocery store and buy potato chips.

Or buy a battery and see if you don't pay an excise tax.

Nothing odd or strange about paying more tax on money already taxed.

[Iowa]

14. That's not the point...

The point of the estate tax is to prevent the formation of a plutocracy. An estate tax is crucial in that regard.

There's also the matter of subsequent generations and their unearned wealth. The first generations (the ones who figure out how to generate wealth) often come from modest means. They know what it's like to live like most people live. Example: My grandfather was a wealthy man (farmland); but he thought, lived, and voted like the poor man he once was. Furthermore, there are a number of problems associated with handing off massive fortunes to subsequent generations who (usually) haven't earned it. It typically ruins them (Warren Buffett understands this). It also poses a danger to our society (think about Sam Walton's worthless offspring, or GW Bush, or Richard Mellon Scaife... and the list goes on).

3.5 million is more than enough.

[ret5hd]

2. Death isn't a taxable event...inheritance of (for now) $3.5M is.

[gmoney]

6. Some assets are never taxed.

David Cay Johnston explained this when he was supporting one of his books (Free Lunch or Perfectly Legal) -- for instance, Bill Gates' wealth is largely made up of Microsoft stock, which he's held for ages, and it's appreciation has never been taxed because he's not sold it and realized the capital gains on it.

The Estate Tax is more like a "wealth tax" in that regard. He explained it a lot better than I can though...

[n2doc]

7. Just amazes me that the rate is set here

We keep getting hit with the fact that we have a HUGE deficit and HUGE debt. This seems like a relatively painless way to put a dent in them. But no, we gotta keep ALL of W's tax givaways to the wealthy.


All this amounts to is continued borrowing from the Chinese so that the rich don't have to pay for their wars.

[WriteDown]

15. Don't really care about this anymore....

Was going to be a big problem for my Aunt's estate(house) on Long Island, but now that the market has fallen so much, it shouldn't be a problem. Silver lining I guess.

[Sgent]

25. Um... 45% is better than 0%

which is what it would be next year if this didn't pass. Even worse, the gift tax would essentially be lifted for a year, so ppl could transfer assets tax free to their heirs and reimposing the estate tax in 2011 would result in almost no collections.

[katkat]

18. the estate tax is government theft

In the first place, the wealthy have their attorneys craft ways around this. And it hardly prevents the formation of a financial overclass, unless you haven't noticed what's been going on lately in this country.

What the estate tax is on "regular money" is double taxation. That has already been taxed when acquired, now it gets taxed again when someone dies.

Plus it hits families who own small businesses or family homes that have appreciated in value. Now they have to go out and sell the old family homestead or small business or family farm to pay the estate tax or incur crippling loans often leading to business failure in order to pay the estate tax.

Taxes should be due only when income or other profit is realized, not because someone has had the poor planning to die.

Under the old $650,000 rule, my mother, who worked all her life as a secretary (I guess that's the moneyed class nowadays), had her estate hit with the tax because the family house had appreciated, and my brothers and I had to go into debt to save it.

[BREMPRO]

20. I thought this was a democratic site?

There is NO way anyone you know will be hit by this. it's only the top .2% of estates. Couples with assets of less than $7 million dollars will be exempt. There aren't many family farms or small business that would be hit by this. I don't think that the tax you paid was on mother's house was an estate tax, perhaps a capital gains tax? This is completly different designed to prevent inherited wealth from accumulating into an elite class. When was your mom's estate settled?

[TwentyFive]

19. I'm more fiscally conservative than not.

But I think estate taxes are a good idea to collect revenue. The deceased can no longer use the money...and heirs of millionaires are probably the most fortunate group in America. I know that kids of rich people often are messed up worse than kids from poorer families....but having a few more bucks will not help them.

[autorank]

24. What a bunch of hosers. This is the Republican Holy Grail

"Permanent" - nothing is permanent. Fuck that. Take it back to pre-Bush times, factor in inflation,
and that's that. If people want to run the family business, they need to buy their parents out.
That's what everyone else does who want's a business - stasrts one or buys it.

This is entirely expected, however. There's just one party, The Money Party and those who voted Yea
on this are in it.

[BREMPRO]

28. Your reaction is puzzling. The so called "Republican holy grail" of eliminating the estate tax

has been defeated (at least for now). Why are you upset that the inheritance tax has been renewed? It was renewed at 45% tax rate for all estates 3.5 million or greater, 7 million for couples. Your reaction seems reflexively cynical rather than based on the facts.