Estate taxes in the future?

From: the fellow behind the tree.

There are no run-of-the-mill people subject to the estate tax. Anyone with an estate of more than $5 million (or $10 million for a couple) is not run-of-the-mill.

Bob Sandler

And why should the estate tax interfere with that choice?

Well, as everyone else say: "not from me!".

But realistically, MOST people should be paying more tax. If anyone is paying the estate tax, then MANY people should be paying the estate tax, just so everyone has skin in the game and are more realistic about what they expect government to do. If government largess costs many people nothing, then they are all for it. Not good government by any stretch of the imagination.

And the oddities of the estate tax should be eliminated: Why is there a multi million dollar marriage benefit? Why are single people discriminated against? Why is a taxpayer who sells assets, pays gains taxes, and then dies and pays the estate tax treated differently, i.e. taxed higher overall, than the taxpayer who holds his assets unsold until his death?

The fact that few people pay the estate tax is a big reason there are such oddities in the estate tax - people don't care about the unfair treatment of someone else, as long as they are not the ones paying the tax. I take a broader view.

: And why should the estate tax interfere with that choice?

: > : >> And don't tell : >> me they should just pay the second generation more, blah, blah, : >> blah. That is not how many such businesses and families operate : >> and I don't like tax policy further eroding the family unit. : > : > It costs the business owner next to nothing to slowly transfer : > ownership to his heirs over the year. If he does not do that, : > that's his choice. : > : >> The biggest problem with the estate tax is that it is another : >> "one size fits all" government policy, and people look at Warren : >> Buffet and Bill Gates to think about how out estate tax should : >> be. They are a rather special case, and nothing done to the : >> estate tax, other than not allowing charitable deductions prior : >> to figuring the tax, will effect them whatsoever. Not so with : >> more run of the mill people subject to the estate tax. : > : > True family businesses have provisions in the tax code to pay : > estate taxes over time at low interest rates. But someone has to : > pay taxes to fund the government. Where would you prefer that : > money comes from? : >

: Well, as everyone else say: "not from me!".

: But realistically, MOST people should be paying more tax. If anyone is : paying the estate tax, then MANY people should be paying the estate tax, : just so everyone has skin in the game and are more realistic about what they : expect government to do. If government largess costs many people nothing, : then they are all for it. Not good government by any stretch of the : imagination.

: And the oddities of the estate tax should be eliminated: Why is there a : multi million dollar marriage benefit? Why are single people discriminated : against? Why is a taxpayer who sells assets, pays gains taxes, and then : dies and pays the estate tax treated differently, i.e. taxed higher overall, : than the taxpayer who holds his assets unsold until his death?

: The fact that few people pay the estate tax is a big reason there are such : oddities in the estate tax - people don't care about the unfair treatment of : someone else, as long as they are not the ones paying the tax. I take a : broader view.

I am not advocating this suggestion but it is not somethinkg I have seen put forth. It would eliminate some of the arguments people have about the Estate Tax. It is an eff an effort to say that, like the income tax, everyoneshould be involved payign the Esatate TAx.

One simple thing would be to replace the large tax credit that is equal to the total tax on $5,xxx,xxx, so the tax starts at a very high rate,, I believe this is left over from the old $60,000 estate being untaxed. the tax should start at a very low level at some small estate size and increase slowly and progressively until the rate becomes quite high, even higher than today, if wanted. This would remove the "tax the guy behind the tree" arguments as everyone , even wit a small estate woudl be paying , at least a small bit.

I don't see it gettign enacted, or do I thinkit, necessarily would be preferable. It is just a possibility.

Wendy Baker

On 2015-02-28 22:51, Reggie wrote: [...]

You are the one who wrote earlier, "I don't like tax policy further eroding the family unit."

Make up your mind, is it eroding the family unit or supporting it? You don't seem happy either way.

What is the effect of this multi million dollar marriage benefit? I would imagine some folks would get married just for the tempting benefit. Hardly supporting the family unit.

Further, the prior comment dealt with a multi generational family unit in business together, not just some old wealthy guy picking up a hot blond at government expense.

Just jumping in the thread here, not specifically responding to Bob, whose post I chose...

For those who still complain that the estate tax is destroying family businesses, farms, etc., just how many Estate Tax returns do you think are filed each year?

Sorry, posted before I was finished...

There are about 2.5 million deaths in the US each year. In 2013, there were 10,600 estate tax returns filed, of which 4,700 were for taxable estates. So we're looking at a tax that affects 0.2% of the population. I think the superwealthy have done a wonderful job of brainwashing the masses on this issue.

Ira Smilovitz

The estate tax is specifically a tax on the very rich, or perhaps on the heirs of the very rich. It is intended to make it hard to pass huge estates from one generation to the next. As someone else pointed out, 99.6% of estates don't have to file a return, and 99.8% of estates don't have to pay any tax.

The complaints about family businesses and family farms are political nonsense. There are plenty of family farms and businsesses, but not very many that are worth over $10M, and the few that are can take care of themselves.

R's, John

No sure how that makes any difference if it is messing up family businesses, etc.

Actually what appears to be a marriage benefit actually is a counter to what is in reality a marital penalty.

Say a married couple have estates large enough to pay estate tax. When the first one dies there is an unlimited marital deduction. That seems like a benefit for their family. However when the second one dies the tax will be higher than if the estate of each spouse paid his/her own tax.

So the marital benefit is just there to make it more fair, so that the family of a married couple doesn't have to, in the end, pay more in estate tax than if the people had been single.

Well, sure in your example. Take another example: single guy works hard, sacrifices, takes risks, creates jobs and wealth. Figure his estate tax. Now single dude gets marries to someone with no assets at all. Now figure the estate tax. Why is the single dude discriminated against if he remains single?

The single dude is not discriminated against. When he marries he is treated as giving away half his wealth to his spouse. Because in reality that's what many courts will treat it as if they divorce.

The single dude doesn't only get that "benefit" of lower taxes by giving half his property to a spouse. He can give it to anybody. Yes, giving to a spouse without tax consequences allows giving an unlimited amount all at once. Giving to anyone else would have to happen over time. But it can still be done - and is done by some people.

Now you're just being argumentative. There are about 23 million Schedule C returns filed each year and 1.8 million farm returns. That doesn't include the millions of partnerships, S-Corps, and C-Corporations which might also qualify as closely-held (ie., family). Even if every single Estate Tax return involved a family business we would be looking at 4 out of every 10,000 operating businesses being affected (that is, having to file a return) and only 2 out of 10,000 having to pay Estate Tax. How many of those 2 would have to be sold to meet the Estate Tax liability? Do you really believe that any number greater than 0.0000% is too large?

Ira Smilovitz

Single guy would have to give $14,000 over a period of 385 years or so to give away $5.4M. Not feasible.

There are more than one way to accelerate that. First, he can give money to more than one person. Or instead of money he can give an equity position in appreciating property, and that will make the gifts much more valueable than cash over time. For example.

If someone has net assets worth nearly $11 million (or more) and only one heir, there are many ways he can minimize the tax issue. If he doesn't, he has only himself to blame.

Not at all. Just because it doesn't effect ton of people doesn't make it a fair tax. Especially since the stated reason for the tax is to take away that amount of money that is deemed by some people (Congress) more than a person should have.

But if he marries, he can do BOTH. Or just take the easy route not available to the single guy. So, remaining single is still to be discriminated against.

It is so easy to say rich people can avoid all the taxes they wish, but that is just not so.

It's not about taking more money away from people than Congress thinks they should have. It's about minimizing dynasties by reducing the amount of money going to people who have not earned it.