Spin on Estate Tax bill that Clinton vetoed. I notice Clinton said that only 3000 families would benefit from the bill. Today our local newspaper had an editorial praising Clinton for the veto and stating only families with "four or five million or more" would have benefited from the bill.
Where do they get this stuff. Current law gives an exemption on the first $675,000, which will increase to exempt $1,000,000 in 2006. The current law taxes the first dollar in excess of the exemption at 37%. In 2006, if the law is not changed, the first dollar after the exemption will be taxed at 41%.
If a husband and wife are able to arrange their total assets so each will be able to use their full exemption, the tax will begin at $1,350,000. So, if they have accumulated $2,000,000, they will owe almost $176,000. That is a lot of money for a family that has worked hard, paid taxes, done without a lot of things, and saved to provide for their old age so they won't finish this life on welfare paid for by other peoples taxes. Inherited money would provide security for the children, educate grandchildren, help them start businesses, and otherwise become productive tax paying citizens. A larger percentage of families will prosper if they are allowed to begin to accumulate some capital. More prosperous families would pay more income tax, so the government would still do well.
Where did the newspaper get this four to five million dollar level before a benefit is received? Where did Clinton get his 3,000 family amount.
Maybe there is some justification for a death tax. But, the extremely wealthy families have enough excess capital that they can largely avoid most of the tax. For example, they can purchase large amounts of life insurance to be held by a trust that will not be taxed. Or they can use a charitable lead trust or charitable remainder trust or a family limited partnership to substantially reduce the taxes. The family with three million or less must hang on to most of what they have to provide for their own security in case they live a long time or have major medical or need care in old age.
We need reform in the death tax area. Maybe Clinton is right. Tax only the top 3,000 families. This would push the exemption to what - $10,000,000 or more? |
