Resurrecting the Estate Tax as a Shadow of Its Former Self

By :: December 14th, 2010

For nearly a year, we’ve had no federal estate tax. The estates of those who died in 2010—including at least five billionaires—have passed to their heirs with nothing going to Uncle Sam. Compared to the estate tax in place in 2009, the tax hiatus cost the government an estimated $14 billion in desperately needed revenue.

The compromise tax bill worked out by President Obama and congressional Republicans would reinstate the tax for 2011 and 2012 with a $5 million exemption and a 35 percent tax rate. Though obviously a tax increase compared to what estates pay this year (i.e., nothing), that would be much less onerous for the wealthy than the $1 million exemption and 55 percent top tax rate that will take effect in January if Congress makes no changes. Absent congressional action, about 2 percent of estates would pay the estate tax (see red point on graph); under the compromise agreement, less than a tenth as many would owe anything (blue dot). That 0.2 percent would be the smallest percentage of estates owing tax since at least 1934 (other than 2010, when the one-year hiatus exempted every estate).

Those relatively few estates—just 3,600 by TPC estimate—would pay much less tax: an average of just over 14 percent of the estate’s value compared with about 19 percent if the law isn’t changed. According to the Joint Committee on Taxation, that will cost the federal government $68 billion in forgone revenue over the coming decade.

House Democrats have called for returning the estate tax to its 2009 level: a $3.5 million exemption and a 45 percent tax rate. That move would impose tax on a few more estates—an estimated 6,500 in 2011—and would raise the effective tax rate to roughly the same 19 percent that current law would claim. Making that level of tax permanent would save more than $35 billion over the next three years compared to the compromise proposal but would still lose more than $250 billion between now and 2020 compared to what would happen if Congress made no changes in the law.

Given the nation’s dire fiscal straits, with huge deficits predicted to swell rapidly, it’s hard to justify giving up nearly $70 billion in revenue that only the wealthiest two-tenths of one percent of people would pay. Congress and the president can justify many of the tax cuts in the compromise bill as stimulus badly needed while our economy is still weak and unemployment remains sky-high. But cutting the estate taxes for the wealthy will do little or nothing to boost the economy and only represents further fiscal irresponsibility.

91Comments

  1. Anonymous  ::  5:30 pm on December 15th, 2010:

    Pssst. It's not the government's money “lose”. Pass it on.

  2. Anonymous  ::  5:31 pm on December 15th, 2010:

    I hate it when someone says tax reductions 'cost' the government. This is illogical accounting, unless you presumes that a government has prior ownership of everyone's property and labor.

  3. Anonymous  ::  5:32 pm on December 15th, 2010:

    It doesn't matter how big the estate is. The deceased owner already paid taxes on it; the government should not be allowed to tax it a second time.

  4. Anonymous  ::  5:32 pm on December 15th, 2010:

    Why is the government entitled to even a dime of someone's estate? I'd like to see some articles that decry the explosion of government spending, rather than assuming that the government is entitled to however much it chooses to spend. How about this alternate headline: “Kill off waste and save $250 billion”.

  5. Anonymous  ::  5:33 pm on December 15th, 2010:

    You completely avoid the crucial question: When someone dies why should the government get a second tax on money that has already been taxed (when it was earned)? It's unethical and punishes success.

  6. Anonymous  ::  5:33 pm on December 15th, 2010:

    Liberals, liberals. Taxation is not the way to fix our nations deficit. The administration needs to stop spending money we do not have(it has not worked & is weakening the dollar). It is not the responsibility of the rich to fix everyone's problems.

  7. Anonymous  ::  5:33 pm on December 15th, 2010:

    I'm surprised nobody said “think of the children”, which in this case is just as that. Children of that “extremely wealthy” will get taxed because parent died.
    Heck, why not just take all of the estate away? Think of how much that would help to reduce the deficit. And who cares that all applicable taxes were already applied. If someone manages to amass several million dollars they are too rich and need their money taken away.

  8. Anonymous  ::  5:34 pm on December 15th, 2010:

    The estate tax is the most egregious tax in existence. Money that comes from estates has already been taxed multitudes of times from both the federal government and states. Family businesses are often lost because of estate taxes. There should be zero estate tax and better tax REFORM.

  9. Anonymous  ::  5:34 pm on December 15th, 2010:

    The Estate tax is just a way to redistribute wealth with the government being the middle man, of course taking their cut before actually redistributing it…

  10. Anonymous  ::  5:35 pm on December 15th, 2010:

    Outrageous. That estate was taxed at every point during the persons life. As income, as capital gains, as real property. It is simply unconscionable that the gov't should take HALF again what youve built over a lifetime.
    And it's quite obviously not “LOST”, it will be “FOUND” enriching the lives of my loved ones!

  11. Anonymous  ::  5:35 pm on December 15th, 2010:

    Agreed with prior posts. This isn't the governments money. They didn't earn the revenue. Just because a taxpayer dies before he spends his money does not entitle the government to the money. Why is this liberal story even posted on CSM?

  12. Anonymous  ::  5:35 pm on December 15th, 2010:

    If I have worked my whole life and paid taxes on my income my whole life. And have even paid taxes on my property, the things I have purchased, the interest on most of my investments, and more taxes ad nauseum, why should I (my estate) have to pay 35%, 45%, or 55% more upon my death? This is absolutely ridiculous. Hasn't the government already free-loaded enough of my money throughout my life?
    I don't want Social Security, I don't want medicare or medicaid. I just want to take care of myself and those that I CHOOSE to help. I promise that I will, and do make better decisions with MY money than Uncle Sam can.

  13. Anonymous  ::  5:35 pm on December 15th, 2010:

    Taxing money or estates is double taxation. Regardless of how the Socialists want to spin it, it is wrong. The idea that it somehow belongs to the government is a pernicious lie from the Progressive era of deceit. Stop useless spending elsewhere and leave the estates of the people alone.

  14. Anonymous  ::  5:35 pm on December 15th, 2010:

    The real beneficiaries of estate tax is not the government, but the estate lawyers who charge substantial fees to set up trusts that shelter beneficiaries from estate taxes. The losers are the uninformed or procrastinators, often elderly widows, who have depended on a loved one to take care of them and now are at the mercy of the probate courts and estate tax laws.

  15. Anonymous  ::  5:36 pm on December 15th, 2010:

    The left always wants to hold up the Wealthy as the bad-guy, and tax them into submission. The problem with a punitive estate tax is that the wealthy don't pay it anyway. They have money managers and estate planners who see to that. The estate taxes hit the small family business owner and family farm owner the hardest. These “estates” then don't get passed on to the next generation to keep operating – they have to be sold off and liquidated just to pay the taxes. Short term gain by slowly destroying the small business economic engine of the country.

  16. Anonymous  ::  5:38 pm on December 15th, 2010:

    I'm sorry to learn that mr. Williams is highly UNINFORMED. In the year 2010, where there is no estate tax at all, there actually is a tax on the money inherited: the CAPITAL GAINS tax. All money inherited in 2010 will be subject to capital gains taxes when sold. It is estimated that this will bring in more money than an estate tax would.
    Some background: when the estate tax is active, the cost base of the inheritance is reset to the current market value, which means all the capital gains in the inheritance will go untaxed. Replacing this capital gains tax, which would apply to lots and lots of people, with an estate tax, which only applies to a few, basically is another example of class warfare. Don't tax everyone a little, but only tax a few a lot.
    John Riser

  17. Anonymous  ::  5:40 pm on December 15th, 2010:

    What about assets they own that have gone up in value? What about the fact that much of the earnings that those in this bracket have “earned” have avoided full income taxation to begin with?

  18. Anonymous  ::  5:40 pm on December 15th, 2010:

    Intersting that there is not a single post defending the article. That speaks volumes to just how ignorant this reasoning (estate taxes) really is.

  19. Anonymous  ::  5:43 pm on December 15th, 2010:

    Please, Mr. Williams, tell us by what right does the government presume to confiscate any part of what a man chooses to bequeath to his children? Shall I and your neighbors come and help ourselves to a portion of your estate upon your demise? Or would that be “fiscally irresponsible ” of us, since we all certainly could use your money and goods ourselves?

  20. Anonymous  ::  5:43 pm on December 15th, 2010:

    Estate Taxes are the most un-American idea I can think of. Shame on the government of this country, and it's politicians.
    What gives you the right to penalize a family every time someone dies???

  21. Anonymous  ::  5:46 pm on December 15th, 2010:

    Why shouldn't dead people have property rights just like the rest of us?

  22. Anonymous  ::  5:47 pm on December 15th, 2010:

    “The tax hiatus cost the government an estimated $14 billion in desperately needed revenue.”
    It's desperately needed by the government because of profligate government spending. Government irresponsibility hardly justifies a cash grab.

  23. Anonymous  ::  5:49 pm on December 15th, 2010:

    That's exactly it! The governments view is that it owns every thing and it allows you to keep a portion of it. That is the view of our Congressional leaders.

  24. Anonymous  ::  5:50 pm on December 15th, 2010:

    My decision not to go rob a bank has cost me an estimated 250,000.00. I really could use that revenue so it is ok if I go rob that bank. What kind of logic is that. The American taxpayers have no right to 45% of anyones estate. Anyone who thinks we do is no different than a bank robber. This is coming from someone who makes under 100K a year with six children, credit card debt, an upside down mortgage.
    Pricnciples are principles. taking someones money is taking someones money. The same American's who think they have the right to “rich” people's money are themselves extremely rich compared to billions of poor people around the world. Do those very poor people have the “right” to your wealth. Principle are principles.

  25. Anonymous  ::  5:52 pm on December 15th, 2010:

    What a bunch of socialist crap. Screw the government! We already pay too much taxes while we're alive, and now this idiot blogger suggests the government take it when we're dead??? Here's a suggestion, Mr. Williams, why doesn't the government get off it's spending bender and start eliminating the trillions of dollars it flushes down the crapper every year on entitlements and handouts.

  26. Anonymous  ::  5:53 pm on December 15th, 2010:

    “Resurrecting the Estate Tax as a Shadow of Its Former Self”.
    Why resurrect it at all? This tax affects less than 1% of the population; the portion that can give Uncle Panhandler the finger and move elsewhere. We need real capital (plant and equipment) to stay here in the U.S., not move abroad. Why is TaxVox such a big advocate of punishing U.S. citizens who manage to accumulate wealth, while saying nothing about how little non-resident aliens pay in the way of capital gains taxes. For those who don't know, they pay nothing. If a non-resident alien tripled his investment AAPL and sells it, he owes not a dime of capital gains tax. States always treat their wards with great contempt; don't fall for the 'tax the rich' propaganda– it's what led to our current income taxation system.

  27. Anonymous  ::  5:53 pm on December 15th, 2010:

    Articles like this are *INFURIATING*. The implication here is that the government is somehow entitled to my money when I die. No, sorry, the money doesn't belong to DC. It is mine and I have accumulated it to leave a legacy for my descendants. I paid taxes on it already. Must I be raped in the grave?
    The entitlement mentality is bad enough when displayed by citizens. It's orders of magnitude worse when the government thinks IT somehow deserves to get MY money. Screw that.

  28. Anonymous  ::  5:54 pm on December 15th, 2010:

    This may seem naive, of course, but if individuals have worked hard, made sacrifices and paid taxes throughout their lives, why would an additional tax be imposed at the time of their death? Moreover, why would this be applied only to a certain income level? This seems sort of discriminatory to me. Does anyone have an answer for this? Sadly, I do not have the time to go through the reams of information in the tax code – more of a flat tax for all person myself. Be happy to hear if I'm off base here, or if someone has a reasonable explanation for this.

  29. Anonymous  ::  5:54 pm on December 15th, 2010:

    The government loses money from the estate tax in the long run! Most of the huge estates end up in foundations where any potential capital gains taxes are lost forever. I wonder what the multiplier effect of money locked in foundations is as a benefit to the economy?
    With no estate tax, there is a carryover basis and capital gains taxes when the assets are eventually sold. And almost all large estates are disbursed after two or three generations. Conversely, the Rockefeller Foundation, which started two months after the start of the estate tax in 1916, is still in existence today, almost a hundred years later. Net to the treasury: zero.

  30. Anonymous  ::  5:55 pm on December 15th, 2010:

    I just have to put in my two cents here. Isn't part of the American Dream to start from nothing and build up an empire to give to your kids? I'm not sayingt hat most of us will be able to do that, but isn't it fundamentally wrong to go to the family of someone who has died and during their life they worked hard, paid taxes and did their part and managed to accumulate say two million in assets. And then tell the family, you know, you're too wealthy and you don't deserve what your deceased relative worked their life away for, so now that 2 million is going to be 1.45 million.
    I don't see that anyone has that right.

  31. Anonymous  ::  5:56 pm on December 15th, 2010:

    Why do you think the government is “due” this money just because someone died? Making death a taxable event sounds like the middle ages to me. Leave it dead!

  32. Anonymous  ::  5:56 pm on December 15th, 2010:

    Thats the point–you can take all the money of the rich — alive and dead and the government would still be broke! Then take all the money from the Middle Class and guess what–the government is still broke!!

  33. Anonymous  ::  5:57 pm on December 15th, 2010:

    Here's a new estate tax we could all live with:
    1. If at any time in your life, you have announced publicly you are not opposed to an estate tax, you will pay the estate tax rate which will be 100% above $5 million. Otherwise, there is no tax at death under the principle of “no taxation without representation.” (This of course would not be in force in Chicago, where even the dead are regular voters.)

  34. Anonymous  ::  6:00 pm on December 15th, 2010:

    I was just thinking this morning about the hundreds of millions that I lost not winning the lottery. Same logic as the author.

  35. Anonymous  ::  6:00 pm on December 15th, 2010:

    Shouldn't I have say as to who gets my money when I die? The States will still have a death tax despite what the Fed gov't does.

  36. Anonymous  ::  6:00 pm on December 15th, 2010:

    Lets see…
    The government spends 1 Billion Dollars per week keeping Iraq & Afghanistan going. 250 Billion is only 2.4 Billion per week. Minus the war money = 1.4 Billion per week. Exactly how much are you paying Bill Clinton to step in and fix this mess?

  37. Anonymous  ::  6:02 pm on December 15th, 2010:

    This article is bad reporting and misleading in the extreme. It completely neglects to mention the other option; reducing government spending.
    How about some objectivity? How about some journalistic integrity? You are implicitly taking a side in this article.

  38. Anonymous  ::  6:05 pm on December 15th, 2010:

    Agree, with the above statement. People were taxed all their lives building these fortunes and their families deserve every penny of that fortune NOT being taxed, unless, that fortune has been sold and capital gains made on the sale/income. How dumb is the common person in this country to think that Government won't just build more wasteful Government taking “more than 1/2″ the value of the inheritance? When will the common person understand that the biggest, greediest business in this country is BIG government not small business who employs people. GET a CLUE – America, we are now in a hand-out mode to large quantities of people and special interest government institutions. Our country as we have known it is done, people now expect this country to provide for them vs. people providing for the country. I fear America is to far gone, not much can be done to change the path we are on. I am waiting to see what happens the day the dollar is devalued to nothing due to bankruptcy and how that will effect the work economy and world security. Good luck to all the liberals getting any Government assistance then. I am NOT a business owner, just a common husband with 5 children who lives in Iowa. But smart enough to know that giving to those that won't contribute will be the downfall of this country. Hope and pray I am wrong.

  39. Anonymous  ::  6:05 pm on December 15th, 2010:

    I'm sure the Omnibus Bill currently before congress would be a good source of funds to make up for the “lost” revenue by not resurrecting the death tax. Cut out some of the thousands of earmarks and let the American people and their heirs enjoy the fruits of their labor.

  40. Anonymous  ::  6:05 pm on December 15th, 2010:

    And when has it ever been ok to tax earnings twice. All of the money that went into the estate was taxed when it was earned and now you want to TAKE more of it just because I gave it to someone else. What is next, a tax on Christmas gifts or charity donations?

  41. Anonymous  ::  6:06 pm on December 15th, 2010:

    I'm begging for someone to explain to me why this or any government “deserves” any monies in the event of someone's death. I'm assuming you might say it's not the death, it's the passing of the estate from one person to another (i.e. a gift). That doesn't cut it for me. The person who has died somehow amassed the estate and has already paid income, sales and property taxes on everything in the estate. If he or she chooses to give it to someone else, how does that by default justify the government getting some of it? This article says the government needs more money. $2 trillion is not enough money? Are you freaking kidding me? This government needs to learn how to live within it's means. This government needs to shutdown social programs that do nothing to help people (like permanent welfare, foodstamps, extended free unemployment benefits, etc). This government needs to leave the American people alone, and it needs to stop being driven solely by special interest groups, unions, etc. If this government in fact did need more money it should be getting it from the millions of people that do not currently pay any taxes, not from the people that already pay 80% of all taxes.

  42. Anonymous  ::  6:06 pm on December 15th, 2010:

    Actually under the compromise that 2 million would be $1.72 million. And the theoretical reason why it's “right” is because those wealthy people benefited far more from public institutions and services than those who made much less.

  43. Anonymous  ::  6:07 pm on December 15th, 2010:

    Look, my family is by no means wealthy. Solid middle-middle class all the way. My grandparents have worked hard and invested wisely through many decades, though, and I expect that they, rural family farmers (not corporate), will have an estate worth a few million. This will be divided between several children and dozens of grandchildren. I see no reason why their estate should be cut in half just because it falls above a million, or two million, or even five million. A million dollars is NOT a lot of money these days, anyway! An estate tax will directly harm my family's finances. For my own middle-class (and in my case, lower-middle class) interests, I strongly disagree with an estate tax.
    I'm a liberal in that I agree with liberal social agenda items and think the liberal social policies should be funded, but I also don't see the sense in taxing people who have enough money they can live where they choose (or at least somewhere else). This isn't as great of an argument on a federal level, but there are multiple examples of states creating or increasing estate taxes, and anyone with half a brain and the resources move across state lines. The revenue for the state with the estate tax decreases.
    Another example (non-estate tax) is that I live in a city with enormous property taxes and a lot of vacant homes. The majority of the metro population lives in the county. Why pay huge property taxes when you don't have to? The city could conceivably increase revenue if they lower taxes. More people would be inclined to live in the city they work in, more resident-oriented businesses would then move in, and the tax base would increase. With a larger tax base fueled by low taxes, social policies tcould actually be supported.

  44. Anonymous  ::  6:07 pm on December 15th, 2010:

    Mr. Williams; Why do we need an Estate Tax when we have Capital Gains taxes?
    If I understand the law (and I may not completely), the exemptions you mention equate to a capital gains tax forgiveness threshold. Estates below the exemption level pay no Estate Tax, and the beneficiaries inherit at current market value so their capital gains basis is almost always substantially raised from that of their benefactor’s. If we require all estates to establish the asset transfer of ownership to be at the benefactor’s cost basis what would be the impact on capital gains tax revenue in the future?

  45. Anonymous  ::  6:07 pm on December 15th, 2010:

    Cutting thousands of trees would be how I would pay the Estate Tax. Multiply this by a million Baby Boomers that die with forrested estates and there will be billions of trees cut to pay the Estate Tax. This might be bad for environment and fixing the damage could cost much more than the tax collected by Estate Tax.

  46. Anonymous  ::  6:07 pm on December 15th, 2010:

    “…cost the governmment an estimated $14 Billion in desperately needed revenue…”
    What the government is in desperate need of is responsible leaders.
    The populus is sick and tired of the government's wasteful spending, lax management and the audacity to cry for more money after squandering so much of it!
    Estates are taxed already in the form of income and property taxes and will continue to be taxed once they are passed on. It makes me furious that some would believe that the government should be entitled to a cut of someone's private property upon death.
    Cut the politics out and make the tough choices. Cut redundant, needless and wasteful programs.

  47. Anonymous  ::  6:08 pm on December 15th, 2010:

    Why is the Christian Science Monitor letting someone post a blog about how our government should be allowed to revert back to stealing even more sums of money from its citizens? If someone is successful and accumulates wealth, they are not socially or fiscally liable for a greater tax burden, especially when they have already paid a great deal of taxes on that wealth in the form of income, capital gains, sales, property and other kinds of tax. To propose anyone in this country be subject to ever greater taxation is simply absurd. Any 8th grader could tell you that the solution is for the federal government to SPEND LESS MONEY!

  48. Anonymous  ::  6:09 pm on December 15th, 2010:

    Could this article be anymore one-sided and myopic? Amazing how he skips the part where taxes have already been paid on this money.
    This plan (and article), are nothing more than a liberal attempt to redistribute wealth.

  49. Anonymous  ::  6:09 pm on December 15th, 2010:

    The bigger issue revolves around the content of an estate. When a family farm is passed from father to son upon his death, there is typically very little cash changing hands. In fact, the father is likely passing a cash deficit on. But the land looks mighty valuable to the government and the estate tax forces the sale of the family farm to pay the taxes. The land gets sold to some hollywood bigshot for their personal paradise never to produce feed,seed or meat ever again. Millions of acres being taken out of production in Montana alone. Little towns dieing on the vine because showbiz wants a piece of paradise that they can go spend two weeks a year at.

  50. Anonymous  ::  6:12 pm on December 15th, 2010:

    This really has nothing to do with how many times something is taxed. Your income is already taxed twice anyway – once as income tax, and once as sales tax when you buy something with it. This is a difference of degree only, not a black and white distinction. There's nothing particularly morally repugnant against a death tax – you could make a morality-based argument against sales taxes as well, for example.
    The point of the estate tax is only secondarily to help with a fiscal problem. It was originally intended to be a defense against the vast unchecked collection of wealth into relatively few hands. From the perspective of the country when it was enacted, passing on a huge fortune to your descendants who didn't earn it, is NOT the American dream.
    It comes down to whether you view the American ideals of egalitarianism, or economic freedom, as more important.
    I am not sure why farmers and small businesses don't just incorporate to address the tax issue – if poor college students can run businesses as a corporation, I'm sure any estate large enough to be subject to this tax can manage it.

  51. Anonymous  ::  6:13 pm on December 15th, 2010:

    Why is it that a family who has money is expected to pay more than anyone else at the death of a loved one? As pointed out above, the money has ALREADY been taxed in other forms, why should the Government get over half when a loved one dies? Leave the wealthy families in peace, and let them take that money and donate it to the causes THEY choose and where the money can be spent on programs which empower people, not on government programs which don't work.
    Somehow it's become a crime to be “too rich” in our society. What happened to prosperity for ALL? It is not the responsibility of the wealthy to pay more than everyone else, however, it is everyone else's responsibility to take lessons from the wealthy in how they accumulated that wealth. And contrary to the spin the news wants to play,, the majority of wealthy families did not accumulate wealth by corrupt means. The wealthy are not the villains. Quit playing it out that they are at fault for having money.

  52. Anonymous  ::  6:14 pm on December 15th, 2010:

    The Rockefeller Foundation is a fantastic example of why this WORKS, not why it's a bad idea. The estate tax is an incentive against a hereditary plutocracy of contribute-nothings. The goal here isn't for the government to “win” by getting revenue, it's for society to benefit by encouraging the extremely wealthy to do something, ANYTHING different with their wealth than swim around in it, Scrooge McDuck-style. Think of government revenue as a social benefit of last resort.

  53. Anonymous  ::  6:15 pm on December 15th, 2010:

    The idiocy shown in these comments is painful. Are all the posters above really the children of multi-millionares? You'd think so from how defensive they're acting.
    A family business is not part of the estate. Nobody ever loses their business this way.
    Billionaires hoarding their wealth -hurts- the economy. The estate tax encourages them to invest that wealth, and actually DO something with it before they die. It also discourages the formation of dynastic empires, much as that still happens anyway.
    And do you people really expect me to feel for those poor, poor multi-millionaire children? They might only inherit 60 million instead of 100? When unemployment is over 9%? My heart, it weeps SO much.

  54. Anonymous  ::  6:16 pm on December 15th, 2010:

    To keep all this in perspective we have to remember that the US government does not need to tax or even sell treasuries before it can spend. The US government has monopoly control over its currency, meaning that it can print endless amounts with inflation as the only consequence. It doesn't need you to pay your taxes as a prerequisite for buying a pizza for a poor Haitian.
    That said, the tax code in the US is less a vehicle for funding than it is a means by which the US government engages in social engineering. All the blather in this article relating to funding, like “Given the nation’s dire fiscal straits, with huge deficits predicted to swell rapidly…” is nonsense and a dead giveaway that the author lacks even the most basic understanding of government finance.

  55. Anonymous  ::  6:18 pm on December 15th, 2010:

    No estate taxes does not mean no taxes. Various taxes have already been paid all along by the owner before he died, and gift taxes and inheritance taxes come into play upon the transfer of ownership, and additionally periodic taxes such as property taxes will continue to be paid by inheritors.
    Estate taxes are an *additional* tax, a form of double taxation, imposed upon the occurrence of the death of the original property owner. It's just wrong to portray no estate tax as no tax.
    Additionally, there is the obvious point that should not be ignored in such discussions that if the federal government is spending too much money then rather than raising taxes it should cut spending. That's the flip side of the coin that tends to be ignored all too often in these kinds of discussions.

  56. Anonymous  ::  6:20 pm on December 15th, 2010:

    This is nonsense. It's okay if only a small portion of people – the people who create jobs & give to charities – have to pay. What about the small government, smarter spending principles that Americans just overwhelming supported at the voting booth? How about we cut spending by 70 billion and leave the estate tax dead? Those of us in the real world are cutting our budgets, so should our politicians who act as if they're playing with Monopoly money, which really is far from the truth considering how much money we're printing these days. Maybe Obama shouldn't take as many vacations in 2011, that will save several million dollars alone. As Obama likes to say, elections have consequences – the spending spree is over!! It's time for Democrats to grow up and say we can't afford everything that we want. I should give them some credit though, their very recent (shall we say since November) interest in the nation's deficit is encouraging.

  57. Anonymous  ::  6:21 pm on December 15th, 2010:

    What a bunch of tools you are… This has nothing to do with “rights” or a “deserving government”. Budget deficits are a problem; the national debt is a problem. The only realistic path to deficit reduction is a combination of tax policy (such as minor increases to a tax that will affect, I'm guessing, just about nobody *you* know) and spending reductions. When you're prepared to see defense spending cut (as the Department of Defense has suggested it should be), and 100% of income included in the payroll tax for Social Security (rather than the first $106,000 earned), and Medicare extended to all (which would hurt nobody but high-priced specialists), then perhaps you're serious about dealing with the deficit. Everything else in the budget is chump change. Cut all you want, it won't fix the problem. Until then, yap yap yap, you're simply awaiting the inevitable: the US defaulting on its debt, a shiny new Greater Depression, and social upheaval worse than anything imagined by the right wing in this country.

  58. Anonymous  ::  6:23 pm on December 15th, 2010:

    I like the one phrase, “give up” (instead of the more appropriate “take from”). I'll never fit into the wealthy enough category for this to be a personal issue, but honestly I've never heard a single compelling (or even coherent) argument for the existence of this tax in this first place. Why exactly should an estate tax even exist. Income and all sorts of other taxes on a families money has already been paid over the years. Other than the wealthy being a easy target what an individual does with his estate should be their own business and the idea that the government should somehow take a piece of it (in the name of the whole) is supercilious nonsense.

  59. Anonymous  ::  6:24 pm on December 15th, 2010:

    Estate taxes. Hell no! The answer to mounting deficits is to expunge evil encroaching socialism and government spending! Just say no to public education for the slothful 95% (who CARES if we have an educated workforce and strong economy in the future?!). Let the sick and poor die. Scrap social security and let most old people go homeless and die, too. Those of us who HAVE have worked damn hard sucking up to our thieving forebears, none of whom ever used so much as a bridge, highway, or airport for their industries. And you should all be ashamed of yourselves for making such disproportionate use of such infrastructure yourselves. Pull up them boot straps and get with it.

  60. Anonymous  ::  6:24 pm on December 15th, 2010:

    If only all those small business owners and farmers were just as smart as you. Incorporating does nothing to the estate tax. The individual still owns the stock of the corporation and the value of the corporation is still included in the estate tax. The estate tax is far and away more immoral than a sales or income tax. Taking the property of a dead person (used to be called grave robbing) so that their heirs can't have it is just flat wrong. What gives the government and society a higher claim to the money than the heirs? Most of the opposition to decreasing the estate tax centers around redistribution of wealth. That is in direct opposition to the American dream. Defending against the vast unchecked collection of wealth is also ridiculous. The truly wealthy have already established mechanisms to avoid the estate tax so that their fortunes are passed on to their heirs thus defeating the point of the estate tax. I also find that in real life, most fortunes are squandered within a generation or two anyway. When you look at the wealthiest in this country (Bill Gates, Warren Buffet, etc), they are advocating for an estate tax. Why not just have them leave their fortunes to the US Treasury if they feel so strongly about it? The hypocrisy is telling.

  61. Anonymous  ::  6:36 pm on December 15th, 2010:

    You're an idiot if you think the wealthy are hoarding their money. Wealthy people use their money to make more money (they invest it). It's called the American Dream, and noone does it better than the wealthy. Your “justification” for an estate tax is ludicrous…just like this article. The idea that the US Govt needs encourage wealthy people into investing is simply the dumbest thing I've ever heard in my entire life.
    You'd be singing a different tune if the govt said 45% tax for everyone that dies (not just the rich). I'm guessing you probably don't even pay taxes. You working on your 3rd post-grad degree with grants from Uncle Sam?

  62. Anonymous  ::  6:36 pm on December 15th, 2010:

    Go ahead and tax estates for the super rich. The dead aren't going to miss it and the living can use it. The heirs still get way more than most of us will see in a lifetime, and the taxed portion will let the rest of the country be part of his/her legacy.
    As for the Bobs of this world always coming to the same end… In this world, we all come to the same end eventually. As for the next one, I don't know him well enough to speculate.

  63. Anonymous  ::  6:42 pm on December 15th, 2010:

    The idea of increasing the estate tax to a high level seems good to me. I view skeptically the idea that a very small handful of fortunate children somehow deserve to inherit vast wealth, while everybody else pays higher taxes and/or enjoys a lower level of benefits like social security, medicare, medicaid, educational assistance and the like. The estate tax does not cost the vast majority of families any money at all, and never has. Let's be conservative for once and keep a tried and true, worthwhile, unbroken concept around!

  64. Anonymous  ::  6:47 pm on December 15th, 2010:

    While we have every right to criticise the mess our polititians have created, we have to separate spending and funding. Our government's spending has to be funded through various tax schemes – when you earn it, when you spend it, when you give it away, when you invest it, ane when you retire and live off of it. All of these have an upside (revenue to spend) and a down side. Income taxes punish effort and success and make it hard to save. Sales taxes make it hard to take care of family needs, and discourage business, investment taxes discourage business and job creation, etc. etc. etc.
    Estate taxes? It may be true that it has been taxed before, but what is worse? I'd rather pay the tax when I'm dead and relieve the others while I'm alive. Remove the impediments to wealth creation and accumulation. Then tax it. We would end up with fewer brats who now receive benefits they haven't earned. Would anyone miss the antics of a few Parises?

  65. Anonymous  ::  12:37 am on December 16th, 2010:

    Most of you don't seem to understand how taxes work. In most cases, the estate tax is not “double taxation.” Here's a simple example: If I earn $1,000 of income, I pay income taxes on that $1,000. Assume I then invest that $1,000 in company stock (or a farm, or any other business), and the value of my investment grows to $100,000. Then I die and pass the investment to my children. The value is $100,000, but $99,000 of it HAS NOT EVER BEEN TAXED. So go ahead and oppose the estate tax, but at least don't lie and say that it is “double taxation.”

  66. Anonymous  ::  12:47 am on December 16th, 2010:

    99% of people who are against the estate tax will never have to pay it. What you don't realize is that you are just stooges for the rich. Think about it – how does the average middle class person accumulate wealth? Usually it's by investing in a 401k-type plan. Over your working life, you might contribute $100,000 into your 401k, and it might grow to $300,000. Too bad for you that all that growth is taxable at ordinary income tax rates – even if you die before spending it and pass it to your children, they still have to pay ordinary income tax on the whole thing. Sorry sucker! Meanwhile, the very rich don't bother with 401k plans. They might invest $100M during their lifetime, watch it grow to $300M, then die and pass it on to their children COMPLETELY TAX FREE if it were not for the estate tax. So keep defending the rich while they laugh behind your back.

  67. Anonymous  ::  1:35 am on December 16th, 2010:

    If you earn a $1,000 and pay tax you will only be able to invest what is left, $520 – $640 depending on state income tax rates as well as Federal. Then, every investment you make will be faced with taxes – either income, short term capital gains or long term capital gains – now or later. There are very few investments that can grow without taxes now, or when sold. Think of what happens if you have to sell the farm, or family business in order to pay the estate taxes due! Ask what happens to your IRA or 401K at your death! We are nearly always paying double taxation in this 'free' republic. Ask any CPA or Financial Planner.

  68. Anonymous  ::  1:58 am on December 16th, 2010:

    Wow, great to see such enthusiam against this tax. I must agree as it is money made and already taxed. Also, virtually all “wealthy” individuals will use tax avoidance, trusts, lawyers, etc to avoid serious taxation.

  69. Anonymous  ::  3:32 am on December 16th, 2010:

    How sad it is to see class warfare continued with “soak the rich” policies that are simply theft. Working hard and encouraging saving provided the basis for our nations development. Savings provided needed capital to create business, jobs and a stronger economy. Excessive taxation of those who are successful and provide the capital base is part of our problems today. I plan on sharing my savings with my children if I will not need all for my retired days. They will use it more wisely and better than if the government confiscates it. What happened to our Republic and protection of the individual?

  70. Anonymous  ::  5:44 am on December 16th, 2010:

    You are wrong. It is entirely possible to invest in something and never pay taxes on the gain. There are two kinds of capital gain – unrealized capital gain and realized capital gain. You only pay taxes when you “realize” tha capital gain – that is, when you sell the investment. In my example, the investment had a $99,000 unrealized capital gain, and then the owner died without ever “realizing” that gain. The person who inherits the investment gets to “step-up” the cost basis to $100K and could then sell it right away and would have no capital gain (therefore pay no capital gain taxes). I realize that having to sell the family farm to pay the estate tax is a bad thing – my point is that this is NOT double taxation.

  71. Anonymous  ::  8:26 am on December 16th, 2010:

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  72. Anonymous  ::  8:34 pm on December 16th, 2010:

    Why do the press and the TV talking heads (as well as a goodly portion of Congress) always refer to lowering taxes – ANY taxes – as 'giving the [insert group] a break'? They comment on how much money the Government will 'lose' by cutting taxes; not just in this cycle, but over the past decades also. Why?
    Does Government have first lien on every dollar in the taxpayers wallet? No. Government does not have ownership and right of possession to every dollar, and Citizens are not merely 'permitted' to hold and spend dollars because the Government is in a good mood. Dollars are earned and owned by Citizens and Government takes them by force.

  73. Anonymous  ::  8:51 pm on December 16th, 2010:

    Estate, capital gain, income, exceptions, exemptions, brackets, credits – enough. Most of our agony and animosity with taxation is the sheer complexity involved in compliance. Ask three tax lawyers and two IRS auditors the same question and get five different answers. Strip 90% of the tax code and simplify the rest!

  74. Anonymous  ::  1:00 am on December 17th, 2010:

    Agreed… It's funny how politicians look at as tax cuts on the wealthy is their money to lose….wake up.

  75. Anonymous  ::  1:22 pm on December 17th, 2010:

    Apparently the writer of this article believes there was no tax on inherited assets in 2010.
    “Though obviously a tax increase compared to what estates pay this year (i.e., nothing), that would be much less onerous for the wealthy than the $1 million exemption and 55 percent top tax rate that will take effect in January if Congress makes no changes.”
    The tax was merely shifted from the estate, to the beneficiary. The receiver of the assets no longer received stepped up basis but rather are stuck with pass through basis. On investment assets the receiver will only pay capital gains tax rates. Profits from the sale of collectables are always taxed at full marginal rates.
    I hope your grandfather keep good records and you are not stuck paying taxes on the entire sale price.

  76. Anonymous  ::  7:25 pm on December 17th, 2010:

    Unless a few thousand super-rich people die, the estate tax cut won't amount to much of a loss. I suspect that the number will be more like 10 or 15 (if you count the 5 who dies this year who could use these provisions rather than expiring law).
    The threshhold is meaningless when you are talking about the super-rich. Given the extent of asset inflation over the last generation, it is not inappropriate to separate mega-fortunes from simply having a nice nest egg and a McMansion.
    What is most important is the tax rate. If the top income tax rate is 35%, then it is appropriate for the estate tax rate to match.
    Finally, for some it may be much more advantageous to probate under the new rules rather than the zero tax, since doing so allows hiers to value assets at current value rather than purchase price. That is the other important part of the tax base to consider – much more than the estate value. Indeed, if the capital gains on an estate are big enough, it is much better for the hiers to pay a lower rate with a five million dollar exemption, rather than paying no estate tax but having to pay taxes on sale for an asset that increased in value by 90%.

  77. Anonymous  ::  8:00 pm on December 17th, 2010:

    Bob, it appears you have struck a nerve with the conservative spam brigade. Of course, this prevents any real discussion, as no one wants to wade through the ersatz libertarian BS to get to posts that actually say something.
    They also ignore the fact that much of the capital gains on inherited assets have never been taxed and that tracking the gains so that they could be is more arduous than any estate tax plan.
    One reason many support a consumption tax is that it will hit estates when people spend the money. Oddly, some of the same people who posted on killing the estate tax will tell you in the next breath that we really need a FAIR Tax – and we need to privatize Social Secuirty (which is harder to do if you end payroll taxes than if you keep them in place).
    They will also swear up and down that the VAT piles tax upon tax when it does nothing of the sort. Indeed, the Fair Tax in its current incarnation, with employers lowering wages rather than raising prices, is, in essence, a VAT.

  78. Anonymous  ::  8:07 pm on December 17th, 2010:

    Of course, the FAIR Tax proponents badly understand the standard rule that you must tax government services – however they misunderstand the fact that you must tax them when government provides the service commercially, not when they purchase it, which makes the resulting tax rate untenable without a separate income tax on the wealthy. While it may be that they are trying to cut all government budgets by the amount of the tax, I suspect that they simply don't understand enough about tax policy to know that they are wrong.

  79. Anonymous  ::  4:10 am on December 18th, 2010:

    The statement that the rich have already paid taxes, or that it is double taxation is totally untrue. These estates are made up with unrealized capital gains, on which taxes would be due of sold. They have never been taxed. When the property goes through the estate, it gets a new cost basis, so that the person who gets it does not have to pay the tax either. You people don't even begin to understand how taxes work.

  80. Anonymous  ::  9:40 pm on December 18th, 2010:

    Your chart is transparently false. Yes, the sunset of the 2010 repeal would have moved the rates and exemptions back to the 2001 levels. But this does not mean the percentage of estates subject to tax would return to the same 2% 2001 level. With the huge increases in asset values over the last 10 years, it is much more likely that 4-5% of estates would be higher than the $1 million exemption level. Given that you are incapable of noting such an obvious fact, one can hardly expect that the rest of your article is any more unbiased.

  81. Anonymous  ::  5:00 pm on December 19th, 2010:

    There is a hidden aspect to estate taxes that also applies to taxes on excessive wealth. Unfortunately, no one in the media thinks to mention this aspect even though it is critical: no wealth is possible without taxpayer funded investments in infrastructure. You can't enforce a legal contract, for example, without a court, judges, clerks, and all the rest. Taxpayers foot that bill.
    When an estate over say one million pays no estate tax, taxpayers are shafted. Because wealth is impossible without taxpayer funding, the estate tax and taxes on excessive wealth are the only way for taxpayers to get a return on their investment, the same as any private investor.
    When the wealthiest refuse to pay taxes, this also puts the wealthy in the position of saying, “I got mine thanks to your help but I'm too cheap, selfish, and arrogant to pay my fair share to help the next group that becomes wealthy and to help create jobs in the economy for my kids and grandkids.”
    I wish the media would cover this aspect of taxes on wealth. It's a vital aspect of this issue yet never gets covered. Do we really think taxes on plumbers, secretaries, and working people will ever generate enough money to fund the infrastructure critical to creating wealth and jobs in any economy?

  82. Anonymous  ::  6:11 pm on December 19th, 2010:

    THERE WAS AN ESTATE TAX THIS YEAR — A 15% capital gain tax (assets were re-valued, the gain was computed, and there was a one million dollar exemption)

  83. Anonymous  ::  8:45 pm on December 20th, 2010:

    Citizens are the government, last I checked.

  84. Anonymous  ::  8:47 pm on December 20th, 2010:

    So the employees of the enterprise passed on should pay the extra tax burden instead? Just wanted to be clear on what you want here.

  85. Anonymous  ::  8:49 pm on December 20th, 2010:

    How are the heirs entitled to one dime without the government existing to enforce that right?
    In the end, the estate tax debate is as much about power as it is about public finance. Why should the biological relatives of the founder of a business have any more entitlement to control its fate than the other employees, especially if that relative had never set foot in the business before? Will the idiot son make better decisions? Seriously?

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