The terrible "death tax"
High on the Bush agenda is abolishment of the Estate Tax, or as the Right calls it, "the death tax." Their claim is that thousands of family farms and businesses will need to be sold off to pay the estate tax.
The thing is, according to the non-partisan Congressional Budget Office, in 2000 only 300 farms would have had to pay the estate tax and only 27 of those didn't have enough liquid assets to pay the tax. That's under a $1.5 million exemption. Democrats have proposed raising the exemption to $3 million or $5 million in order to "protect" more families, but the Republicans want it abolished altogether. Read more at Think Progress.
Now the Alternative Minimum Tax (AMT) is starting to affect many, many thousands of middle income families who were never intended to be subject to this tax. Bush will only approve a fix to this growing burden to the middle class if the remedy is "revenue neutral." But the estate tax must go with no plan to make up the difference, estimated to be almost $1 trillion over the first ten years.
That's fair!!! Right???
The thing is, according to the non-partisan Congressional Budget Office, in 2000 only 300 farms would have had to pay the estate tax and only 27 of those didn't have enough liquid assets to pay the tax. That's under a $1.5 million exemption. Democrats have proposed raising the exemption to $3 million or $5 million in order to "protect" more families, but the Republicans want it abolished altogether. Read more at Think Progress.
Now the Alternative Minimum Tax (AMT) is starting to affect many, many thousands of middle income families who were never intended to be subject to this tax. Bush will only approve a fix to this growing burden to the middle class if the remedy is "revenue neutral." But the estate tax must go with no plan to make up the difference, estimated to be almost $1 trillion over the first ten years.
That's fair!!! Right???
posted by Jim at 9:17 PM
5 Comments:
I actually started one in 2001. I looked at it recently, and the last post was 9/11/2001.
Thanks. Hope you can join the debate regularly, that is if anyone will debate.
The Estate Tax does more than affect those who die. From a recent editorial on National Review:
"...Also, many studies have shown that estate taxes drain capital from small businesses, force them to pay heavily out of current earnings for life insurance to cover the tax, encourage the sale of family businesses to larger competitors, and force other actions that may not be justified economically. That is why economists have long held that the estate tax is especially pernicious. For example:
— Adam Smith: "All taxes upon the transference of property of every kind, so far as they diminish the capital value of that property, tend to diminish the funds destined for the maintenance of productive labor."
— C.F. Bastable: "Succession duties first of all possess the grave economic fault of tending to fall on capital or accumulated wealth rather than on income; they therefore may retard progress."
— Joseph Schumpeter: "As long as an inheritance tax remains a true inheritance tax it always involves a conversion of capital into income, hence an act of economic waste which is damaging to all."
Gates, on the other hand, seems mainly concerned about the impact of eliminating the estate tax on charitable giving. Although much charitable giving is made through estates, this is only because people want to make sure they have enough to retire on before giving their assets away, and because estate tax rates are higher than income tax rates, thus increasing the value of charitable deductions."
I'm not an idealogue on this subject, but I would offer this scenario:
Let's take the Hilton fortune. I don't know how much it is, but for argument's sake, lets call it a billion dollars and the heirs are Paris and Nikki. Let's say the tax is 50%, so $500,000,000 becomes revenue to the government.
So now the government has a half billion dollars that it does not have to borrow from the Chinese or the Saudis. This lessens the deficit, the national debt and interest expense. The revenue goes to highway and infrastructure construction, defense spending, and national security. In other words it creates jobs which produces more tax revenue, improves the economy, and makes us more secure. My kind of trickle-down theory. And Paris and Nikki are still doing pretty well.
Or we could just let Paris and Nikki keep the entire billion and spend it in Nice, Paris, Rome, London and elsewhere overseas.
Which is the greater good?
Well, that's what's called a false dilemma- undoubtadly there are some situations where that sort of thing occurs. But for ever one Hilton scenario there is at least 1, if not more that results in money going directly back into the economy.
Also note that one of the main points in the article was that although there is quite a bit of money that goes to the government through the tax, it sucks an equal amount out of the economy in the form of life insurance, etc.
While I appreicate your position, I think there's more to the argument than the Hiltons.
While I doubt that buying life insurance is that big a burden (would like to see citations of these "many studies"), I would suggest that nobody likes to pay any kind of tax. But it's something citizens must do to provide for things that only a government can provide.
Since this country is severely in debt, it doesn't make sense to me to significantly increase this debt by eliminating a large source of revenue. One may argue that estate tax is justified or not, but to end it without providing a replacement source cannot be justified.
If you wanted to phase out the estate tax (assuming it was justifiable to do so) that might be something to try. Raise the exemption over twenty years, for instance.
However, since the government is not doing anything to reduce the amount of money it needs to operate, the money has to come from somewhere, and I don't see why it is better to come from the middle class than from the very wealthy.
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