Bill and Karin,
Thanks for responding. I don't disagree that the current exemption for the estate tax is too low, it hasn't been raised in years. No one pays anything on the first $650,000 or so, and that is to be raised in increments for several years. The Democrats have an alternative plan which will raised the exemption up to something $4.5 million, in order to take care of small business owners and people who would fall under Karin's example. A million dollars isn't that much of an estate anymore, especially for homeowners in certain areas (like Silly Valley or NYC, to take two outrageous examples). Also, Karin, you should learn a little about the tax: just because your estate is more than $650,000 doesn't mean that you will pay half of it to the government. It is a progressive tax. The first dollar over $650,000 is taxed at something like 25-30% (I forget what it is, actually). It scales up in increments, and doesn't get to the maximum rate until it gets much higher. Unfortunately, I haven't had that problem to deal with, so I don't know the exact number, but I think it is something like $7 million or so.
I don't disagree with that approach at all. What I disagree with is the notion that the estate tax should be done away altogether. At some point, estates should be taxed. Even Warren Buffet in some sense agrees with this. He has gone on record as saying that he doesn't think children should be left more than a few million dollars at most because it can too easily corrupt people to be given and to have too much money, and most of his wealth will go into a foundation.
Sorry if I may have come off too abrupt in the last message. I have found that the way this issue has been framed very annoying. I have to say that it has been a brilliant PR job by newspapers and a few politicians to convince a lot of people that somehow this issue which won't directly affect either them or anyone they know is something to get worked up by. Even some of the examples that the Republicans in Congress have come up with have later turned out to be fraudulent--either the people were just honestly mistaken about how they would have been affected, or they were out and out frauds (sorry, I don't have the examples handy, but I could probably dig them up if necessary, some were reported on by the NYT a 4-6 weeks ago or so). It is a little like the "marriage tax", which actually does NOT affect all married people, but only about a third of some pretty well heeled married people, but it is presented as though it affects everyone, and, according to one analysis of a recent Republican bill, the alleged fix would actually cost other married people more in taxes than they are already paying!
Anyway, I'm off the soapbox now.
Sam |
