The so-called "death tax" refuses to die.Despite pleading from Republicans to kill the estate tax, President-elect Barack Obama plans to do no such thing. According to the Wall Street Journal, Obama and congressional leaders "plan to move soon to block the estate tax from disappearing in 2010."
George W. Bush has made eliminating the death tax one of the cornerstones of his economic policy before the current crisis. Critics of the tax dubbed it "the death tax" as if Uncle Sam in standing before the pearly gates of heaven with his hat in his hand. They claim it is a huge burden to small businesses. Nothing can be further from the truth.
Data from experts show that a small number -- several hundred -- small family businesses ever pay the tax. Only individuals with estates of more than $2 million and couples with more than $4 million estates are subject to the tax. Estate taxes are designed -- in theory anyway -- to prevent the U.S. from developing a European-style aristocracy based on familial wealth. That's why Warren Buffett backs the tax.
The Bush administration has already cut the estate tax, slashing it from a 55% maximum tax rate on all inherited assets above a $1 million exemption to a planned 45% rate in 2009 with a $3.5 million exception, according to CNN/Money.
"Current law calls for the tax to be repealed for one year in 2010, but without congressional action to either reform the estate tax or make the tax cuts permanent, it will revert back to 2001 levels in 2011," the August 6 CNN/Money story says.
Repealing the tax would cost the government more than $500 billion over a decade.
In the current economic environment, that's a tax break for the rich the country can't afford.
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Reader Comments (Page 1 of 1)
1-12-2009 @ 3:57PM
Sheldon L said...
It actually makes little difference to the super wealthy.
They just create tax advantaged foundations and trust funds with their offspring as the trustees and CEO's with huge annual salaries.
The Rockefeller's and Kennedy's as two prime examples.
The government will see little of that money.
1-12-2009 @ 5:15PM
Bill said...
If there is a desire to have family members continue in a small business after the prime owner dies, there are plenty of ways to accomplish that. But the owner needs to work the issue as a part of his/her estate planning.
Estate taxation is appropriate in our society. Excess money gained by one generation gets passed back to the broad public from whom it came.