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The problem with the estate tax is that it was passed in the name of getting back at plutocrats but has worked over the years mostly to make it difficult to kee

The problem with the estate tax is that it was passed in the name of getting back at plutocrats but has worked over the years mostly to make it difficult to keep family businesses intact when the founder dies. From the article itself: "Currently, the tax applies to about 5,500 taxpayers a year." (Emphasis mine.) 5500. We're not talking about upper-middle-class family business owners. We're talking about people who are seriously rich. Still a highly unsatisfactory situation for the public, and one that has the politicians squirming as well, especially since the estate tax (speaking in relative terms only) does not really raise that much in revenue for the federal government. This is because the estate tax threshold has been getting higher in every year since 2001. If Bush had left it alone, this would not be the case. Also, there are good reasons for an inheritance tax aside from revenue generation.

grellas 17y ago
There is an interesting thread here (including my detailed post outlining some of the history on this issue) on whether inheritance should even be allowed (http://news.ycombinator.com/item?id=1009053 http://news.ycombinator.com/item?id=1009053). You may find the relevant figures for the estate tax in 2001 here (http://gift-estate.com/article/tax2001.html http://gift-estate.com/article/tax2001.html). At that time, the exemption was $675,000 and everything beyond that basically got taxed at significant rates, obviously affecting a lot of middle class people. If the tax is allowed to revert to the old rates in 2011, there will likewise be a significant impact on middle class people. That is why the politicians are squirming and why the exemption amount will likely be increased for 2011 and beyond to something that excludes many such people from the impact of the tax. By the way, I have worked as a business lawyer with family businesses since 1984 and am pretty familiar with their concerns in this area (for example, in almost desperately trying to use vehicles such as family limited partnerships as a way of trying to avoid or minimize this tax and thereby preserve their businesses for their kids on death). Those concerns are real and they do not apply simply to the ultra-rich (who, by the way, have ample mechanisms available to them - e.g., foundations - to bypass the estate tax altogether).
DougBTX 17y ago
From the article itself ... about 5,500 At 2,426,264 deaths in the US per year, the top 0.2%.
- riffer 17y ago
  Nope. The tax may apply to a small number of people, but it isn't the top x-percent. There are a lot of strategies for getting around the estate tax, and the people who pay it are not the richest people but instead are upper middle class people who (for whatever reason) don't employ the strategies. The it-only-hits-a-few people argument also has at least two other issues. One is that these things morph over time: the AMT was created to apply to just several dozen people, and now Congress passes a patch every year to make it apply to hundreds of thousands of people instead of millions of people. And anyhow, how can a tax be fair because it only applies to a handful of people? Isn't that the same thing as the tyrannical many taking from the few? I would prefer to have a tax system where everyone pays enough in taxes such that they want to keep the overall system as small as possible.
anamax 17y ago
> From the article itself: "Currently, the tax applies to about 5,500 taxpayers a year." (Emphasis mine.) > We're not talking about upper-middle-class family business owners. We're talking about people who are seriously rich. Actually, we're not. The super rich aren't subject to the estate tax because they've arranged their estates so it doesn't apply. For example, neither Buffet's nor Gate's estates will pay a dime. You remember Buffet. He's the guy who pushes the estate tax while selling insurance to help people pay it.
- jsm386 17y ago
  Well, that's not really the gist of the debate going on here. Gates and Buffet have given away the vast majority of their money to charity. That's very different than attempting to work around the estate tax through insurance, trusts, etc in order to pass as much money as possible on to your heirs.
  - anamax 17y ago
    Want to bet whether their heirs benefit from those "charities"?
    - Locke1689 17y ago
      Sure. Why not? "Want to bet" isn't really an argument in any shape or form. Edit: Interesting. After looking into the Foundation (http://en.wikipedia.org/wiki/Bill_&_Melinda_Gates_Foundation http://en.wikipedia.org/wiki/Bill_&_Melinda_Gates_Founda...) I've actually become incredibly impressed by the transparency and general properness with which they have composed themselves. Given the track record of the foundation, I see absolutely no reason to suspect them of foul play now or in the future.
- cabalamat 17y ago
  > The super rich aren't subject to the estate tax because they've arranged their estates so it doesn't apply. For example, neither Buffet's nor Gate's estates will pay a dime. Surely that's the problem? Why should an estate with $10 million have to pay this tax if an estate with $10 billion doesn't?

grellas 17y ago

There is an interesting thread here (including my detailed post outlining some of the history on this issue) on whether inheritance should even be allowed (http://news.ycombinator.com/item?id=1009053 http://news.ycombinator.com/item?id=1009053). You may find the relevant figures for the estate tax in 2001 here (http://gift-estate.com/article/tax2001.html http://gift-estate.com/article/tax2001.html). At that time, the exemption was $675,000 and everything beyond that basically got taxed at significant rates, obviously affecting a lot of middle class people. If the tax is allowed to revert to the old rates in 2011, there will likewise be a significant impact on middle class people. That is why the politicians are squirming and why the exemption amount will likely be increased for 2011 and beyond to something that excludes many such people from the impact of the tax. By the way, I have worked as a business lawyer with family businesses since 1984 and am pretty familiar with their concerns in this area (for example, in almost desperately trying to use vehicles such as family limited partnerships as a way of trying to avoid or minimize this tax and thereby preserve their businesses for their kids on death). Those concerns are real and they do not apply simply to the ultra-rich (who, by the way, have ample mechanisms available to them - e.g., foundations - to bypass the estate tax altogether).

DougBTX 17y ago

From the article itself ... about 5,500 At 2,426,264 deaths in the US per year, the top 0.2%.

riffer 17y ago
Nope. The tax may apply to a small number of people, but it isn't the top x-percent. There are a lot of strategies for getting around the estate tax, and the people who pay it are not the richest people but instead are upper middle class people who (for whatever reason) don't employ the strategies. The it-only-hits-a-few people argument also has at least two other issues. One is that these things morph over time: the AMT was created to apply to just several dozen people, and now Congress passes a patch every year to make it apply to hundreds of thousands of people instead of millions of people. And anyhow, how can a tax be fair because it only applies to a handful of people? Isn't that the same thing as the tyrannical many taking from the few? I would prefer to have a tax system where everyone pays enough in taxes such that they want to keep the overall system as small as possible.

anamax 17y ago

> From the article itself: "Currently, the tax applies to about 5,500 taxpayers a year." (Emphasis mine.) > We're not talking about upper-middle-class family business owners. We're talking about people who are seriously rich. Actually, we're not. The super rich aren't subject to the estate tax because they've arranged their estates so it doesn't apply. For example, neither Buffet's nor Gate's estates will pay a dime. You remember Buffet. He's the guy who pushes the estate tax while selling insurance to help people pay it.

jsm386 17y ago
Well, that's not really the gist of the debate going on here. Gates and Buffet have given away the vast majority of their money to charity. That's very different than attempting to work around the estate tax through insurance, trusts, etc in order to pass as much money as possible on to your heirs.
- anamax 17y ago
  Want to bet whether their heirs benefit from those "charities"?
  - Locke1689 17y ago
    Sure. Why not? "Want to bet" isn't really an argument in any shape or form. Edit: Interesting. After looking into the Foundation (http://en.wikipedia.org/wiki/Bill_&_Melinda_Gates_Foundation http://en.wikipedia.org/wiki/Bill_&_Melinda_Gates_Founda...) I've actually become incredibly impressed by the transparency and general properness with which they have composed themselves. Given the track record of the foundation, I see absolutely no reason to suspect them of foul play now or in the future.
cabalamat 17y ago
> The super rich aren't subject to the estate tax because they've arranged their estates so it doesn't apply. For example, neither Buffet's nor Gate's estates will pay a dime. Surely that's the problem? Why should an estate with $10 million have to pay this tax if an estate with $10 billion doesn't?