gao, that's the BIG problem with the estate tax repeal. Why Gore hasn't zeroed in on this, who knows. There could be generations of super wealthy individuals paying zero Social Security Tax, zero Medicare Tax, Income tax at 20% max cap gain rate. The AMT wouldn't catch it, although more and more middle class taxpayers are being caught by the AMT (which was never intended). Now, the rich do get around the estate tax under current law, BUT, when they give appreciated assets as gifts, the basis is not stepped up. So, when Grandson sells his ABC stock, the entire tax is captured.
The alternative is to repeal the stepped up basis, but for many people calculating basis of an asset purchased by your deceased grandfather 50 years earlier with unknown additions to basis would be next to impossible. You would end up just declaring some de minimus number (possibly zero)as your basis under that scenario .That would make the living quite upset and only the living can vote, so it would just be matter of time before we had the old rules back again.
So, everyone has to go out and completely revamp their estate plan because all of it has language referring to old estate tax laws and none of them make sense any more. It would take billions of dollars and probably 10 years to do this. Then, we turn around and put the old laws back into effect because people are pissed that they paying these huge tax liabilities.
Bush's plan is absolutely idiotic. |
