Those who were involved 10 years ago when this goofy law was enacted wanted to replace the estate tax revenues with a tax on the appreciation in inherited assets ["Lapse of Estate Tax Raises Doubts About Democrats," usnews.com]. This was supposed to be a revenue-neutral tradeoff. The problem was that the Joint Committee on Taxation (JCT) never thought the new carryover provision would bring in any money for the government. They said they didn't have accurate information on the amount of appreciation heirs would receive, nor did they have information on when the heirs would sell those assets (and pay tax). So the JCT punted and has to this day ignored any revenue for the new carryover basis rule. This is ridiculous! I have pointed this out numerous times, but my critique of the situation has fallen on deaf ears. Your article makes the same mistake—pointing out the loss of revenue from the repeal of the estate tax, but ignoring the revenue that the government will pick up from the new carryover basis rule. It also ignores the fact that collecting the estate tax has many costs associated with it, including costly litigation to establish the value of nonmarketable assets, a huge division within the IRS to administer the law, more assets flowing into life insurance which takes those assets off the tax rolls at an estimated cost of $25 billion per year (Yes, that's right, $25 billion per year) and the cost of planning by lawyers, accountants, bankers, and appraisers. As an aside, I will travel to Orlando in three weeks along with nearly 3,000 other estate tax professionals to attend a seminar on estate planing. All of the cost of which is deductible. This is just one seminar and hundreds are held each year. Think of the cost of this to the Treasury. We would be far better off to collect a capital gains tax once an asset is sold than impose the estate tax on assets held at death.
Comment by John of MN
The estate tax is particularly costly to family farms. When an heir has to raise money he has to sell land, reducing the size of his farm or ranch. After several generations of double taxation, we may end up starving when farmers and ranchers cannot provide us with fruits, vegetables, and meat. You can't eat a subdivision.
Comment by Jill of CA
As long as both parties continue to live beyond our means, they will continue to bleed wealth from the people. I'm facing the future situation of losing a family vacation home that my sisters and myself hoped to keep for ourselves and our children. We as a family built it for a bit under $40K, and it has appreciated since 1969 to the point we will be taxed right out of it. Some truly rich person will end up with our hard work because we will not be able to afford the government "hit." Not very American, is it?
Comment by Chris Petty of GA
If [Bill] Gates and [Warren] Buffett thought the United States government has such a splendid means of spending money, why did they create a foundation with billions, rather than giving the money to Uncle Sam? Perhaps they thought their wisdom was superior to that of the federal government, which other than the military is incapable of running anything.
Comment by Walter Leon of TX
It's easy to promote the increase of taxes when you have over a billion dollars that you know you couldn't spend in five lifetimes. For the average citizen being crushed by the burden of taxes, there is no relief in sight. It has been the politicians (both Republicans and Democrats) that have destroyed the future of what was the greatest country on the planet. Zero accountability, zero integrity, and zero leadership is what we have to look forward to.
Comment by John Burke of MO
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Reader Comments Read all comments (2)
Linda Sorenson of TX 2:47PM January 08, 2010
Small Business Owner of IL 9:47AM January 07, 2010