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You have to pay estate tax on gifts too. Otherwise rich people could avoid estate tax by giving their assets to their kids before they died.
by pg 16y ago
You have to pay estate tax on gifts too. Otherwise rich people could avoid estate tax by giving their assets to their kids before they died.
- pingswept 16y agoI believe that is not the case for amounts below $13k. See http://www.nolo.com/legal-encyclopedia/article-30095.html http://www.nolo.com/legal-encyclopedia/article-30095.html A less comprehensible explanation is available from the IRS here: http://www.irs.gov/businesses/small/article/0,,id=108139,00.html http://www.irs.gov/businesses/small/article/0,,id=108139,00....
- pg 16y agoYes, there's an exemption. I'm talking about a marginal dollar, as he is.
- pingswept 16y agoIf by "he," you mean Mankiw, I agree. But I think you probably mean mikeryan. I don't think he was talking about a marginal dollar. His point was that the first $12k ($13k in 2010) gifted are taxed differently than dollars beyond that threshold. I suppose the real question is the relative importance of the behavior at the margin versus the behavior for the first dollar. For the ultra-rich, $13k is obviously irrelevant, but for someone near the $250k annual income threshold like Mankiw, I don't think it is. The present value of $12k per year given every year for 30 years is substantially larger than the same amount invested and then hit by estate tax at year 30.
- pg 16y agoI mean Mankiw.
- lotharbot 16y agoIt's $13k per person (giver and receiver) per year. Additionally, there's a $1 million lifetime exemption (for the giver) which is only cut into once you pass the $13k/year limit.
- ivankirigin 16y agoFun fact: that $13K limit can actually be a lot bigger. That is the limit from one person to another. Mom gives daughter $13K, mom gives son-in-law $13K, Mom gives kid #1 $13K, dad gives daughter... Not a good way to rid yourself of millions, obviously.
- deleted 16y ago[deleted]