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House votes to make current estate tax permanent

By Ben Pershing
The House approved Thursday a measure making the current estate tax rate permanent, overcoming the objections of an unusual coalition of liberal and conservative critics.

The bill passed, 225 to 200, with 26 Democrats joining all Republicans present to vote no. It would make permanent the current estate tax rate of 45 percent, with an exemption of $3.5 million per individual. If Congress does not act, the estate tax would disappear altogether in 2010, then return in 2011 under the higher rates -- 55 percent and a $1 million exemption -- that existed before President George W. Bush took office.

The Senate faces a Dec. 31 deadline to address the issue, but it's not clear when that chamber will find the time to do so in the midst of its marathon health-care debate. It's also unclear whether the House's approach on the estate tax could garner the 60 votes necessary to move forward in the Senate.

Some Democrats in both chambers would prefer to see higher estate tax rates, arguing that the pre-2001 levels were fair and provided the government with much-needed funds. Making the current rates permanent will take a bite out of the federal treasury, with the government estimated to lose $234 billion in revenue over the next 10 years.

Most Republicans, meanwhile, don't want any estate tax at all, opposing the concept on philosophical grounds.

"Death should not be a taxable event," said Rep. Dave Camp (Mich.), the top Republican on the tax-writing Ways and Means Committee. "Death should not force the sale of family farms or the dissolution of small businesses. The fear of death should not be a reason for Americans to hire a battery of accountants and lawyers to find legal ways to reduce the bite of the estate tax."

While Republicans often invoked the specter of distressed farmers and business owners Thursday, Democrats suggested the GOP was trying to mask their true desire to shield the wealthiest Americans from taxation.

"Abolishing the estate tax would add billions and billions to our deficit -- and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer," said House Majority Leader Steny Hoyer (D-Md.).

The current rates leave roughly 0.2 percent of all estates subject to taxation in 2009, according to the Tax Policy Center, a think tank. Since the $3.5 million per-person exemption is not indexed for inflation, that percentage will gradually increase over time.

Senate Majority Leader Harry Reid (D-Nev.) said Thursday that he had met with House leaders to figure out a way forward on the estate tax and other end-of-session priorities. Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.) are pushing a measure that would reduce the estate tax rate to 35 percent, with an exemption of $5 million per individual.

By Ben Pershing  |  December 3, 2009; 2:42 PM ET
Categories:  Agenda , House , Purse Strings  
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Comments

No doubt some nashing of teeth and pulling of hair over this one.

Tough to get re-elected raising taxes in a recession.

Posted by: LeftCoastRightBrain | December 3, 2009 3:11 PM | Report abuse

finally, some guidance. the question is, how soon before the obama administration revists this and upend the plans of people who thought they had financially planned for their loved ones and shoudlnt have to worry about these kind of concerns as they lives out the last few months of their life.

Posted by: dummypants | December 3, 2009 3:11 PM | Report abuse

That's OK, I oppose the 237 millionaire congressmen writing laws with which they have a vested interest "on philosophical grounds."

Posted by: buzzkill1 | December 3, 2009 3:14 PM | Report abuse

The most sensible statement I have seen in years.

"The fear of death should not be a reason for Americans to hire a battery of accountants and lawyers to find legal ways to reduce the bite of the estate tax."

Posted by: Makessense1 | December 3, 2009 3:14 PM | Report abuse

All this anguish over re-implementing a tax structure from the past that only effects people with estates over 3.5 million?

No wonder we don't have health care.

People don't get that we can't have our cake and eat it, too.

Posted by: postfan1 | December 3, 2009 3:16 PM | Report abuse

To dummypants:
Give it up. Stop blaming the present administration for the problems of the past.

Posted by: Makessense1 | December 3, 2009 3:16 PM | Report abuse

If the Democrats have their way they will tax everyone's earnings at least twice and maybe even three or four times to pay off their "special interest" groups so they can get re-elected.
What a group of incompetents.

Posted by: staterighter | December 3, 2009 3:20 PM | Report abuse

Just wondering how many members of Congress will ACTUALLY pay any taxes for anything- including estates!

Posted by: TheOldBroad | December 3, 2009 3:21 PM | Report abuse

The estate tax is to high even at this rate. Why does the government feel they have the right to steal this from those that earned it to give to those who did not? Of course in the end I am sure Obama will veto it because as one of his parties finest said it is not the peoples money and they have no right to it.

Posted by: Pilot1 | December 3, 2009 3:25 PM | Report abuse

After eight years of big fat tax cuts to the rich during the Bush years its about time the wealthy in this country pay their fair share. Cleverly called the "Death Tax" by the Republicans, when actually only those inheriting millions of dollars would have to pay a tax. The average working class American would not have to pay any inheritance tax at all. Once again the Republicans are looking after their consituents....the very wealthy.

Posted by: logcabin1836 | December 3, 2009 3:25 PM | Report abuse

Abolishing the estate tax would add billions and billions to our deficit -- and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer," said House Majority Leader Steny Hoyer (D-Md.).

You've got to be kidding me. Just spend less Mr. Government.

Posted by: robinhood2 | December 3, 2009 3:25 PM | Report abuse

Warren Buffett wins again. His whole business model is based on aquiring healthy businesses that couldn't pay the estate tax. No wonder that he does not want to leave too much to his children.

Posted by: idus1926 | December 3, 2009 3:28 PM | Report abuse

Someone has to explain to me why the act of dying is a taxable act.

Posted by: njacobs | December 3, 2009 3:30 PM | Report abuse

The estate tax is just one of many mehtods that our great-great grandfathers instituted to insure a society with a large middle class. They believed, and rightfully so, that a society with a large middle class is a happy society. The are numerous exmples of societies with little or no middle class. We call that the third world.

Some of the other things we do - a graduated income tax. The more you earn, the higher the percentage you pay. Why? Because the more you earn, the more you have to lose if society crumbles. Public eduation. Hard to believe, but it doesn't exist just anyhwere on the planet. Mostly it is in societies with a large middle class. Open University system. One of our greatest strengths is class mobility.

Frankly, I doubt if I will be able to leave my kids a million or so apiece. And personally, I don't care if the guy who does has to pay taxes on it. It's all part of living in a happy society!

Posted by: voldenuit123 | December 3, 2009 3:31 PM | Report abuse

It's a shame that so many get away without paying taxes or paying taxes at hugely discounted rates. Why should the rest of us subsidize the wealthy passing their wealth forward? Inheritances, dividends, and capital gains should be taxed at the same rates as wages and salaries.

Posted by: jbowen431 | December 3, 2009 3:31 PM | Report abuse

Tax and spend. It is what our country voted for. Be thankful if you don't own a farm or your own business.

Posted by: ronfurg | December 3, 2009 3:32 PM | Report abuse

45% is way too high a tax for anybody to pay. Who says the government gets to take nearlyhalf our estate when we ascend to the pearly gates? Try 25% and it might be acceptable to a lot of people.

Posted by: AdventurerVA | December 3, 2009 3:33 PM | Report abuse

I have a problem with those who keep telling the government to spend less. I agree WE spend too much BUT its sort of like NOT IN MY BACKYARD in reverse. If they live (example) in New Jersey they want the government to spend less in (example) Florida.

Its also OK for them to continue to want (example) PELL GRANTS or UNEMPLOYMENT BENEFITS as long as they get them.

Get the idea?

Posted by: Makessense1 | December 3, 2009 3:33 PM | Report abuse

The GOP has done as especially good job in framing this discussion. By calling the "death tax", they make it sound like the government is going to tax your dead body.

In fact, the estate tax is based on the very-GOP notion of a distaste for getting something for nothing.

Procedes from estates are not considered income on the part of the recipient. Thus, if someone dies and leaves you something, were it not for the estate tax, no tax would be paid on property or income you get.

There's hardly any other situation where you can get something, sometimes A LOT, for doing absolutely nothing.

When the estate tax was created, it was partly the result of a very old-fashioned idea that a person, as well as the society as a whole, is better off when wealth is earned, rather than by it simply dropping in one's lap.

Posted by: MichaelOwen04 | December 3, 2009 3:33 PM | Report abuse

Everyone wants to get rid of the deficit--this is how you do it.

Posted by: nm11928 | December 3, 2009 3:36 PM | Report abuse

"The most sensible statement I have seen in years.

"The fear of death should not be a reason for Americans to hire a battery of accountants and lawyers to find legal ways to reduce the bite of the estate tax."


Posted by: Makessense1 | December 3, 2009 3:14 PM | Report abuse"


I doubt most Americans ever have to think about hiring one lawyer or accountant in their lifetimes to handle their financial matters, let alone a battery.

Another alternative might be for those .2% of the people sunject to the estate tax to not pay lawyers and accountants and just pay their taxes.

Posted by: MichaelOwen04 | December 3, 2009 3:38 PM | Report abuse

Michael is correct.
If someone does not understand they should GOOGLE "stepped up basis for federal income tax" or somthing like it. One of the reforms that had been suggested was that if there was no estate tax that the stepped up basis for income tax should be abolished. Right now if you inherit property from you granfather that cost him $100.00 but was worth $1,000.00 when he died your cost basis (whether you pay an estate tax or not) is not $100.00, its $1,000.00.
So if you sell it for $1,000.00 NO ONE ever pays an income tax on it.

Posted by: Makessense1 | December 3, 2009 3:41 PM | Report abuse

Michael, there are also state inheritance/estate taxes. Specialized law firms make fortunes for tax estate planning. I speak from experience, I am a retired manager of a state revenue department.

Posted by: Makessense1 | December 3, 2009 3:43 PM | Report abuse

If this decision actually affects your family, it means your kids will only inherit $2 million instead of $4MM.

I think they'll survive.

Posted by: gettingdizzy1 | December 3, 2009 3:46 PM | Report abuse

>>>>>Rep. Dave Camp (Mich.), the top Republican on the tax-writing Ways and Means Committee. "Death should not force the sale of family farms or the dissolution of small businesses."

Another Republican myth!
Republicans use the "family farms" rhetoric, but can't cite any cases where families have lost farms because of estate taxes.
That's because 99% farmers aren't MILLIONAIRES!

Posted by: angie12106 | December 3, 2009 3:49 PM | Report abuse

Makessense -- yes there are law firms that specialize in this kind of work, but 98 percent of Americans (and that might be a conservative estimate) have no need for their services.

Sorry, but I'm shedding no tears for anyone whose inheritance might be reduced by the estate tax.

Posted by: koolkat_1960 | December 3, 2009 3:52 PM | Report abuse

I would also address the phoney "family farm issue". Most family farms have received federal funds/subsidies for years. (And don't forget local tax breaks).Without them they probably would have not survived.

If (you) inherit a family farm without having to pay estate taxes you should have to reimburse the government for the subsidies plus interest. After all its all the rest of us who keep the family farm going all these years.

Posted by: Makessense1 | December 3, 2009 3:53 PM | Report abuse

There's too many silly comments about "why the act of dying is a taxable act."

Dying IS NOT a taxable act. What IS taxable is the TRANSFER of money - essentially, PROVIDING INCOME to people who have no relationship to the actually earning of that income. Sure, you can argue that because Daddy and Mommy earned it you're entitled to it. Unfortunately, your argument just boils down to your entitled to something for nothing.

The prolonged accumulation of wealth into the hands of a few - particuarly a few who did not earn it - is not only aristocratic but fundamentally anti-democratic. Our founding fathers broke away from monarchy and aristocracy and created our republic because they believed priviledge should be earned, NOT inherited.

A disappointment to see how ignorant our society has become...

Posted by: hmfmcg | December 3, 2009 3:53 PM | Report abuse

MichaelOwen04 - You could not be more wrong. That money is taxed when the INCOME is earned. It is the taxed a second time when the person dies.

Posted by: SCDowns | December 3, 2009 3:55 PM | Report abuse

Kool, I am NOT knocking the estate tax. I am knocking the fact that it provides so mmuch income to law firms who specialze in beating it.

Posted by: Makessense1 | December 3, 2009 3:56 PM | Report abuse

A friend's father owns several small businesses. He works 12 hours a day. Combined his business are worth about $10 mil. He has 23 employees. If his Dad died tomorrow, my friend would have to come up with $4.5 mil to pay Uncle Sam just to keep the businesses, not to mention the 23 employees kept from unemployment. Leftist posters here haven't a clue.

Posted by: jimbevan | December 3, 2009 3:57 PM | Report abuse

Death should not be a taxable event," said Rep. Dave Camp (Mich.), the top Republican on the tax-writing Ways and Means Committee. "Death should not force the sale of family farms or the dissolution of small businesses. The fear of death should not be a reason for Americans to hire a battery of accountants and lawyers to find legal ways to reduce the bite of the estate tax."
_________________________________

Wait a second -- DEATH should not force the sale of family farms or the dissolution of small business.

BUT GETTING SICK SHOULD???? So it is okay to get sick and go bankrupt but GOD FORBID you die and have to pay a few taxes.

Posted by: kare1 | December 3, 2009 3:58 PM | Report abuse

SC...not always. Read my earlier comments on "stepped up basis".

Posted by: Makessense1 | December 3, 2009 3:59 PM | Report abuse

"Death should not be a taxable event," said Rep. Dave Camp (Mich.)

What a maroon. Death is not being taxed here, income is. Income certainly is a taxable event; it's the basis of our system.

This is exactly where taxes should be high, with a large exemption (larger than $3.6 million). The person who owns the money will never miss it. The people receiving it are getting a windfall anyway.

Posted by: beargulch | December 3, 2009 3:59 PM | Report abuse

This is definitely a sign that we have gotten positive change from the last few elections. Just adjust that 3.5 Million for inflation and keep the rate at 45%.

We don't need an aristocracy of the wealthy in this country passing wealth untaxed to their heirs forever. The founding fathers knew this and feared it, with Adams and Madison both fearing that 'an aristocracy of wealth' would hamper the will of the people here as much as the landed aristocracy had in Britain. And sure enough, the slave based aristocracy of the South destroyed that region, producing a leadership class that considered work beneath them.
Let's keep America the dynamic land of opportunity where everyone has to contribute to prosper.

Why should not be a taxable event it life is a taxable event?

Posted by: mgferrebee | December 3, 2009 4:00 PM | Report abuse

"If the Democrats have their way they will tax everyone's earnings at least twice and maybe even three or four times to pay off their 'special interest' groups so they can get re-elected."

--------------------

Another well informed and educated voter..... A true Darwin Award candidate.

First, both sides of the aisle are bought and paid for (with a few exceptions, like Sanders of Vermont). Second, additional taxes do not flow into a candidate's re-election fund.

I used to be against the Death Tax, but a good friend has changed my mind over the years. First off, the first $3.5M is exempt, and this amount rises progressively over the next few years. That should be enough to save any "family farm". Second, most folks who are worth more than $3.5M have not "earned" it, they've acquired it through the Big Casino we call Wall street. They've not made anything of value, except for themselves, and that on the backs of those who've lost their shirts in the Market.

Lastly, lots of folks hire lawyers & accountants to find tax loopholes every year.

I'd feel even better about the death tax if the money went to a charity, instead of the government who's just gonna p-ss it away on a private contractor in Iraq.

And the Obama-blamers? The man could cure all forms of cancer tomorrow and you'd condemn him for putting oncologists out of work.

Posted by: tjconnor | December 3, 2009 4:00 PM | Report abuse

I think the WaPo is barking at the wrong moon.

It doesn't really matter what the rate is, as long as failure to declare off-shore wealth is a crime of the heirs, with forfeiture and time at the gray bar hotel. They can call it rehab if the want. Full transparency once a generation is not too much to ask.

Posted by: gannon_dick | December 3, 2009 4:03 PM | Report abuse

How is it "raising" taxes when it simply fails to repeal an existing tax, LeftCoastRightBrain? And if this affects many people on these boards I would be surprised. The only time this thing comes into play is at inheritances over $3.5 million. People with less than that should find other things on which to focus their outrage.

Posted by: esmerelda123 | December 3, 2009 4:03 PM | Report abuse

We should let the Bush tax rebate die in 2011.

The US was founded on the premise that all men are created equal and the elimination of nobility (no 'inherited' person will rule you). People passing huge estates create the equivalent of a 'nobility' class as people with wealth have alot more power than those without.

Those who don't believe they owe anything to the country that allowed them to accrue huge wealth choose to ignore the tremendous sacrifice that the country does to those who are wealthy every day ... especially in times of war (how many rich kids to you think are in Afganistan or in Iran ...).

Posted by: fjt123 | December 3, 2009 4:03 PM | Report abuse

Jim, Proper estate planning calls for purchasing life insurance to cover THE EVENT.
AND, if the plan is set up correctly the premiums are TAX DEDUCTABLE as a business expense, so that WE are subsidizing it.

Posted by: Makessense1 | December 3, 2009 4:04 PM | Report abuse

The people who support repealing the estate tax are fools, just like the House members who voted to keep Bush's estate rates permanent. While the GOP is whining about record deficits (that were caused by Bush's three massive tax cuts for the rich) they oppose a measure that would restore $234 billion to the United States treasury. And for what? To protect the inheritance of rich kids who's parents have estates of over $1,000,000. I don't think that protects many farmers or small businesses. It protects the wealthiest 1% of all Americans. There's nothing like common fools, with no understanding of tax law, raging to protect the inheritance of the super-wealthy...all while they're trying to destroy unions and ship your jobs overseas. If half you people were intelligent enough to understand what this tax really is, and that it would never affect you, you wouldn't support it. It's not a "death tax." It's an inheritance tax for multimillionaires. Way to look out for the banking executives that Bush and Bernanke bailed out with TARP. I agree that the banks were too big to fail, that's why Obama needs to break them up....
But at least their kids (and Paris Hilton) will no be able to inherit the mansion, tax-free.

Sincerely,

Michael D'Onofrio
Memphis, TN

Posted by: mcls1442 | December 3, 2009 4:05 PM | Report abuse

Tax people for earning is one thing, but taxing people to keep the family money in the family is theft.

Posted by: info4 | December 3, 2009 4:06 PM | Report abuse

Here comes the avalanche of Democratic Tax hikes - this is the first of many that will be enacted in the midst of a very bad recession. This will extend the unemployment and squash economic recovery, just as it did when the Dems raised taxes in the middle of the Great Depression.

Apparently the Dems have no desire to keep their elected seats in the 2010 elections.

Posted by: Realist20 | December 3, 2009 4:06 PM | Report abuse

Just spare me. The purpose of the death tax is to prevent American royalty. That goal is correct.

Every American should be entitled to the wealth that they create, not the wealth that their parents or grandparents created. They already have the advantage of the network that has been created for them. Now let us see them prosper on their own. Warren Buffet has promised that he is not leaving his wealth to his children. He gets it.

99% of the morons involved in this discussion, including me, will never be hit with this tax, regardless of the rate.

Posted by: ducbil | December 3, 2009 4:07 PM | Report abuse

Yes, the estate tax and all other taxes are terrible. Problem is, no one has figured out how to have a society without them. Hard to pay for police, teachers, street lights, paved roads, etc etc. without those revenues. The divide and conquer tactic is effective. This tax in an abomination for this reason, that tax is awful for that reason. In the end, government needs to have revenue for the services that they provide us and yes, that means we need to pay taxes...even for some things we don't want or use personally. Time for everyone to settle down, but most of all grow up and deal with it.

Posted by: trk113 | December 3, 2009 4:08 PM | Report abuse

"Someone has to explain to me why the act of dying is a taxable act."

Well, it isn't. Let me explain.

Income in all its many forms is taxed. Income from a job, income from investments, income from gifts (over $10,000/year/person), and income from gifts from dead people (estates) are all taxed. The dead person isn't taxed; he or she is dead. It is the beneficiaries that are being taxed. If the dead person wanted to bequeath to charity, it wouldn't be taxed, just like you can deduct charitable giving from income taxes.

Let's turn this around: explain to me why children of the wealthy should have this one form of income exempted from being taxed? What makes it special?

The concept here is meritocracy.

And the bit about small business owners is almost entirely baloney. Between setting up trusts, bringing in the heirs as partners (if not incorporation outright), and the $3.5 million exemption, few small businesses will have to be sold in order for the heirs to pay the tax (really, only if someone dies early and is unmarried). And frankly, cry me a river for these millionaire children who might -- gasp -- have to build their own business and actually contribute to society instead of living off the work of someone else.

Posted by: goodstrategy | December 3, 2009 4:11 PM | Report abuse

Millionaires should know better than to will their estates to their heirs, they should bring them into the business before they die - then no inheritance taxes will be paid. They probably already set up trusts, so no taxes are paid. They probably also put their money in their heir's name before they die. This is probably just one more way for republiblamers & complainers to divert attention from the real issues - those millionaire business owners offshoring jobs putting American workers out of work, then making sure their heirs get to keep the money made on the sweat of underpaid laborers in India and China, or illegal Mexicans harvesting their crops.

Posted by: planetspinz | December 3, 2009 4:11 PM | Report abuse

Maybe I'm just a flaming populist, but I'm having a hard time getting fired up about the fact that there are kids out there who are going to receive $3.5 million tax-free dollars that they didn't even earn, but then have to pay taxes after that.

Am I supposed to cry tears for these people? I thought Republicans were supposed to be against entitlements, and pulling oneself up by your bootstraps. So now they want to make sure that people who receive money they didn't earn are protected?

I'm confused; please get your ideology straight.

Posted by: Buddydog | December 3, 2009 4:11 PM | Report abuse

Could somebody tell me what economics textbook that Steny Hoyer was reading when learned that a tax could grow the economy????

I'm neither a republican or a democrat. But if the democrats want this tax, they shouldn't use the economy as a reason for it.

Posted by: rabell01 | December 3, 2009 4:12 PM | Report abuse

Here comes the avalanche of Democratic Tax hikes - this is the first of many that will be enacted in the midst of a very bad recession. This will extend the unemployment and squash economic recovery, just as it did when the Dems raised taxes in the middle of the Great Depression.

Apparently the Dems have no desire to keep their elected seats in the 2010 elections.

Posted by: Realist20 | December 3, 2009 4:06 PM | Report abuse

##########################################

This isn't a "tax hike" - it is keeping the current tax rate in place. Read the article.

Posted by: maggots | December 3, 2009 4:12 PM | Report abuse

There is something inherently undemocratic in inheriting large wealth. That is how aristocracies developed in the past. The implicit assumption that one is entitled to a large sum of money just because some ancestor accumulated it is simply nonsense.
Besides much wealth was accumulated by speculation, luck or simply with the help
of friends on the board that set payments to corporate heads. Does anybody really believe that a CEO walking away with hundreds of millions of dollars from a company that goes belly up a year or two later deserved that money? I would be for repealing estate taxes if obscene incomes were taxed so that the money was obtained up front rather than at the time of death.
It is an American myth that great wealth is well deserved. I don't see what makes a hedge fund manager worth 1000 times as much as a Nobel winning scientist.

Posted by: serban1 | December 3, 2009 4:15 PM | Report abuse

"Here comes the avalanche of Democratic Tax hikes - this is the first of many that will be enacted in the midst of a very bad recession. This will extend the unemployment and squash economic recovery, just as it did when the Dems raised taxes in the middle of the Great Depression.

Apparently the Dems have no desire to keep their elected seats in the 2010 elections."

------------------------

Yeah, let's just keep borrowing from China, that sounds like a great idea.

@gannon_dick:
Very good idea, I thought about the offshore issue after I made my last post.

Posted by: tjconnor | December 3, 2009 4:16 PM | Report abuse

Someone has to explain to me why the act of dying is a taxable act.

Posted by: njacobs | December 3, 2009 3:30 PM
==================
Dying is not a taxable act; the transfer of wealth is. That's what is being taxed, not death.

Posted by: gce1356 | December 3, 2009 4:16 PM | Report abuse

Buddydog, Republicans are suppose to be for less government involvement in peoples lives. They are actually on the right side of their ideology on this one.

Where they get off track is when the neo-cons and Christian Right take over the party and want the government more involved as moral police.

Posted by: rabell01 | December 3, 2009 4:19 PM | Report abuse

Death needs to be a taxable act because it is immoral to allow someone to get rich by inheritance.

It is also immoral to allow someone to stay rich while they are alive.

We need an annual wealth tax of 15% of all assets over $10 million, liquid or otherwise.

Posted by: DrVelocity | December 3, 2009 4:20 PM | Report abuse

"To dummypants:
Give it up. Stop blaming the present administration for the problems of the past."

Give us all a big break and stop making excuses for this administration. There is plenty of blame to go around for everyone. It is time for Obama to stop blaming Bush and start doing the hard things to solve this problem. No more free lunch, bailouts, payoffs to unions, teachers and minorities who vote the right way. The other side props up their in crowd and so do the democrats. No more free tax cuts for the rich and propping up wall street. There are consequences to being broke and it is time for all of us to pay. The party has ended, it is after 12 and Cinderella has stayed too long at the ball.

Posted by: gvelanis | December 3, 2009 4:22 PM | Report abuse

To dummypants:

I'm so sick of people like you...because you really do live up to your userid.

This so-called "estate tax" is a travesty. It only benefits the ultra rich - it doesn't affect ANYONE who isn't a multimillionaire.

The federal government already has such a high deficit, thanks to G.W. Bush & friends. These monies could go to help build a road, fix a bridge, or maybe the potholes in the street where you live.

Or maybe to repair playground equipment that your kids play on.

You get my drift. Or maybe you don't, because after all, you are a "dummypants."

Posted by: kentuckywoman2 | December 3, 2009 4:28 PM | Report abuse

rabell01, I'll buy that, but the point of getting government out of people's lives, as I understand it, is to enable human's innate entreprenurial, can-do spirit without oppressive government disincentives. Transfers of wealth from those who have to those who don't are supposed to be antithetical to that idea, hence their opposition to welfare. What is inheritence but yet another transfer of wealth?

Posted by: Buddydog | December 3, 2009 4:28 PM | Report abuse

Bad news indeed for those who were keeping Grandmama on life support until the end of the month.

Posted by: AmericanLiberalElite | December 3, 2009 4:30 PM | Report abuse

The fear of death is not the reason why Americans hire a battery of lawyers and accountants to find to find legal ways to reduce the bite of the estate tax. The 1% of all Americans who actually ARE liable to pay the estate tax following their passing can reduce the bite of the estate tax legally with minimal help from a lawyer and three witnesses.

The battery of lawyers usually come in when Junior realizes that the gravy train is about to come off the rails and that he better get off his lazy a$$ and fight his siblings and the United Way over what is left.

Posted by: mabkhar | December 3, 2009 4:31 PM | Report abuse

a tax is a tax, and once you decide how much the government needs, it's just a question of what to tax, when, and how much. we could raise the same amount taxing income at a higher rate, but that discourages enterprise. That's why Reagan cut taxes. Taxing income less and taking a piece later does much less to discourage enterprise (very little at all, actually). so we aren't taxing twice, just some now, and some later, and of that, only a piece of what you made over and above a really large sum.

Posted by: JoeT1 | December 3, 2009 4:31 PM | Report abuse

The most sensible statement I have seen in years.

"The fear of death should not be a reason for Americans to hire a battery of accountants and lawyers to find legal ways to reduce the bite of the estate tax."

Posted by: Makessense1 | December 3, 2009 3:14 PM | Report abuse

#########################################

Oh, all these poor millionaires despairing over saving their fortunes. Maybe they should remember what Jesus said about it being very difficult for a rich man to enter heaven and just give the money away.

Posted by: maggots | December 3, 2009 4:33 PM | Report abuse

rabell01, I'll buy that, but the point of getting government out of people's lives, as I understand it, is to enable human's innate entreprenurial, can-do spirit without oppressive government disincentives. Transfers of wealth from those who have to those who don't are supposed to be antithetical to that idea, hence their opposition to welfare. What is inheritence but yet another transfer of wealth?

Posted by: Buddydog | December 3, 2009 4:28 PM | Report abuse

#########################################

Since when does inherited wealth spawn innate entrepreneurial, yada, yada, yada? The kids are simply going to spend the money that the old man was hoarding away his entire life.

We just finished eight years of conservatives preaching this crap while letting our nation disintegrate. If you want to live in a tax free, can do society, move to Somalia and become a pirate.

Posted by: maggots | December 3, 2009 4:38 PM | Report abuse

What else do you expect from these class envy as$ holes in the democrat party. Most of them have made their big money and they want to punish anyone who does it honestly.
By the way, I'm not affected, but I have nothng but contempt for these pandering moron leeches who want to take all of our money.
They need to be run out of Washington on a rail.

Posted by: LarryG62 | December 3, 2009 4:39 PM | Report abuse

There is nothing wrong with estate tax, except that it is far too low. tax inheritance over 10 milliion.

3.5 million, if you own a small business or say a house in Washington DC or San Francisco and have an IRA is well within reach. These are not millionaires with $50 mil in the bank and you are kidding yourself if you think you are going to inherit 1.5 M and live off that for the rest of your life. Just adjust the level to like 10M and let that be that.

Posted by: ballgame | December 3, 2009 4:39 PM | Report abuse

Remarkably, this seems like a fair compromise and should be endorsed by the president and passed by the Senate.

To those who rail against the "death" tax I would point out that no nation can afford to allow large blocks of wealth pass from one generation to the next without taxing it. Estate taxes have been much more punitive/redistributive than this elsewhere in CAPITALIST societies.

It is not good for democracies to allow large numbers of people to grow up never having to take care of themselves or work for what they have. It causes moral and societal decay. This is a conservative position. Anyone saying it is wrong to tax an estate at all is simply a plutocrat in disguise and not a true conservative.

Posted by: Clio1 | December 3, 2009 4:40 PM | Report abuse

Do you beleive you should be able to pass your job on to someone when you die? Of course not. Yet you "earned" that job, right? The problem - YOU earned it, not your heir.

Posted by: geebee1 | December 3, 2009 4:40 PM | Report abuse

Hey Gbvelanis....I (on purpose)never mentioned your boy Bush. The said PAST ADMINISTRATIONS (that would include Clinton, Reagen, Eisenhower, you name them.) I guess its your guilt complex showing thru the whitewash.

Posted by: Makessense1 | December 3, 2009 4:41 PM | Report abuse

maggots - you didn't read my post correctly, or at least all of the way to the end. Take a breath and read before you punch off an angry response.

Posted by: Buddydog | December 3, 2009 4:41 PM | Report abuse

Systamatic, calculated, ruination of America by distribution of the wealth from the people to the Government. Darn socialist rats.

Posted by: affirmativeactionpresident | December 3, 2009 4:43 PM | Report abuse

Everything a person has earned in his/her lifetime has been taxed already. I do not see why the Government is more deserving of honestly earned net income than a persons children or heirs.

It is another exapmple of Gov't greed.

Posted by: primegrop | December 3, 2009 4:46 PM | Report abuse

DOUBLE TAXATION should be illegal! The government already taxed those earnings while alive and should have absolutely NO right to tax them again upon death!!! The only reason this still stands is that they have no fear of a backlash from those taxed because they're DEAD!

Posted by: starpopper | December 3, 2009 4:47 PM | Report abuse

kentuckywoman2 wrote:

"The federal government already has such a high deficit, thanks to G.W. Bush & friends."

Bush certainly helped the deficit, but let's not forget changes to home lending policies going back as far as Carter, flipping houses by consumers (driving up housing prices), bad investments in the banking sector (combined with a change in reporting policies), living beyond ones means (i.e. most of us), and numerous other factors outside direct control of Bush or any other president. Bush added to the problem, but don't be so naive to think he (current or past presidents) was the sole cause of it. Most of us can look in the mirror to see someone responsible for the current financial situation.

Posted by: jim_maryland | December 3, 2009 4:50 PM | Report abuse

Obama and the Gov't are working as hard as they can to destroy the economy and the middle class in the little time that has been allotted to them.

Posted by: pgr88 | December 3, 2009 4:51 PM | Report abuse

Almost half is unacceptable, just more warfare on the rich. Which I would like to be someday but the current government doesn't want that to happen.

Posted by: JB71 | December 3, 2009 4:52 PM | Report abuse

If the estate tax is such a great idea, apply it to all citizens. Isn't that fair?

No doubt you would see a change in views then.

Posted by: dnara | December 3, 2009 4:53 PM | Report abuse

I find it very interesting how Liberals cannot actually read about how lowering taxes can HELP the economy. How many times must Liberals punish the working stiff?
I can hardly wait for 2010 and we can get sanity back into Washington D.C. But I hope this time the Republicans will remain strong and not go RINO..

Posted by: yokohlman | December 3, 2009 4:53 PM | Report abuse

The wealthy of this nation got there because:

1: They benefited from the bounty of this nation. They did not do it in a vacuum. (Natural resources.)

2: The workforce on who's backs their fortunes were built deserves to benefit to a degree from the value of what they produced. There's no way to equitably disperse it to individuals, so the money goes to benefit the whole nation.

3: Their children did nothing to deserve that money. Why should they get it all without being taxed? Talk about welfare.

Posted by: leicaman | December 3, 2009 4:53 PM | Report abuse

Doesn't ANYBODY understand the Estate Tax?? KEEPING it is actually a tax reduction!! How?? Because (1) Only a few thousand people per year are subject to the tax -- under 10K -- and being well-heeled, you can bet most of them use every legitimate approach to minimizing the tax; and (2) joined to the Estate Tax (at the hip, as it were) is the step-up in basis of non-cash assets when they are inherited. That means that MILLIONS of taxpayers who inherit businesses, stocks, and most commonly, the long-owned family homestead, pay no capital gains tax when these assets are sold. It's an ignored facet of the Estate Tax, and because it happens, literally, once in a lifetime, is not familiar to most of the body politic. Hence, there's not political points to be made on EITHER side of the "death" tax issue! But the tax revenue produced by ending this rule would far surpass the revenue lost in Estate Tax. So abolishing the Estate Tax is a boon to the very rich, at the expense -- not of the US Treasury --but of millions of folks all the way down to the lower portion of the economic ladder. Clearly, ignorance is no impediment to weighing in heatedly on the debate! Sigh. (And, BTW, I believe Mr. Buffett has indicated SUPPORT for keeping the Estate Tax! Must be a disappointment for the pea-brains who just LOVE to despise those they envy..)

Posted by: mcherri | December 3, 2009 4:53 PM | Report abuse

yokolhman: "How many times must Liberals punish the working stiff?"

You mean the "working stiffs" that will only get to inherit $3.5 million tax-free? Those poor working stiffs?

"I can hardly wait for 2010 and we can get sanity back into Washington D.C."

You mean the sanity of the GW Bush years? The years that led to fiscal ruin, economic collapse, net job losses, lower per-capita income, thousands dead from an unecessary war, and losses in home values for millions? Is that the sanity you're referring to?

What planet are you from?

Posted by: Buddydog | December 3, 2009 5:00 PM | Report abuse

Procedes from estates are not considered income on the part of the recipient. Thus, if someone dies and leaves you something, were it not for the estate tax, no tax would be paid on property or income you get.

There's hardly any other situation where you can get something, sometimes A LOT, for doing absolutely nothing.

---

You make the false assumption that ANY or EVERY transaction has to be taxed.

If that be the case, the government could pay the deficit off 3 times over by taxing the campaign contributions sent to representatives. Certainly if anyone gets something for nothing, it's these guys.

Posted by: dnara | December 3, 2009 5:00 PM | Report abuse

mcherri, you forget to mention one thing:
Warren Buffett ain't paying the estate tax. He gifted his entire fortune to the Bill and Melinda Gates Foundation.

leicaman:
1) In order to get rich, you must work for it. A land with bounty is meaningless if it cannot be cultivated.

2) This is Commie speak. The original investment is made by the person who came up with whatever idea that made them rich. The workers' investment into the firm is only the cost of their labor, i.e., their investment is zero. It is the entrepreneur who must come up with the means of being able to hire the worker.

3) Children SHOULD be able to enjoy the fruits of their parents' labor. This Socialist drivel is what is driving this country into the ground.

I hope that the Senate never gets around to doing this. This is such bad policy. It has failed at its intention: preventing the accumulation of wealth in the hands of a few elites and aristocrats.

And no, I am not rich, but I get sick and tired of sorry Progressive fools coming up with plans to take other peoples' money.

Posted by: cmb551 | December 3, 2009 5:00 PM | Report abuse

leicaman wrote:

"3: Their children did nothing to deserve that money. Why should they get it all without being taxed? Talk about welfare."

Just to carry the argument further, why should the government be any more deserving of the money? I'm not saying that I'm opposed to the tax but I just wanted to point out that there is a flaw in that argument. Theoretically, the money has already been taxed as income, should it really be taxed again? On a smaller scale, do you have children that get an allowance from you? If you give them $10 a week, should the government take $2 per week?

Posted by: jim_maryland | December 3, 2009 5:01 PM | Report abuse

The conservative argument is not made in the article, even in the comments section so far.

Only 0.2% of estates may actually PAY the estate tax, but many many more families subvert the tax through intricate estate planning strategies. The wealthiest familes can EVADE the tax entirely through sneaky but legal estate planning strategies.

For example, how much have the Kennedy clan paid in estate taxes through the decades? You'd think some figures would be readily available. (A quick Google search turned up nothing.)

To wit, we know that Ted Kennedy famously turned down his Social Security checks, totalling (a guess) $150 thousand over his life, but didn't he shield something on the order of $150 MILLION from taxation by passing it on to charities and his wife upon his death? I have not heard of a substantial estate tax payment by Ted Kennedy, and don't see how or why such a payment would be kept quiet.

The point is not to disparage Kennedy alone, or rich folks in general; it's to demonstrate the stupidity of a tax law that has nonsensical loopholes. Taxing the rich usually makes sense, but not when the even-richer are exempt.

"Democrats suggested the GOP was trying to mask their true desire to shield the wealthiest Americans from taxation."

The wealthiest are shielded FROM this law already; it's the well-off but not filthy rich that this tax hits, which it should not. This tax should be repealed.

Posted by: angrydoug1 | December 3, 2009 5:01 PM | Report abuse

The "death tax" was established to prevent an aristocracy in the US. This tax only effects .25% of the population. I for one won't be crying about taxing the rich. They have benefited the most from the capitalist system and they should pay. The right-wing offers nothing but ideology over reason.

Posted by: davidmweiss1 | December 3, 2009 5:03 PM | Report abuse

Granted, the capital gains tax on assets is avoided upon death through the "step-up" basis for those inheriting those assets; however, the cap gains is only 20%, not 50%! If you want this to be fair apply the estate tax to everybody regardless of estate size and reduce the estate tax rate to 20%!!!

Of course they won't do this because it would mean taking too much business away from accountants & lawyers!

Posted by: starpopper | December 3, 2009 5:04 PM | Report abuse

cmb551, you're contradicting yourself.

You start by saying "in order to get rich, you must work for it."

Then you say, "children SHOULD be able to enjoy the fruits of their parent's labor."

So which is it? Do you have to work to get rich, or can you just live off your parents' inheritance?

Posted by: Buddydog | December 3, 2009 5:05 PM | Report abuse

There is always misinformation spewed everywhere about the estate tax whenever it is brought up so I'd like to explain what it is and why it is necessary.

First of all, it only applies to the amount ABOVE $7 million in assets for the estate of a couple (or $3.5 million for an individual). So like the article says, 99.8% of Americans are not subject to this tax at all.

Second, this is not a double tax. Most of the assets in estates (especially large ones) are in stocks and real estate. Due to how these are valued when they are passed to an heir, capital gains taxes (that everyone normally has to pay on a gain on an investment) do not apply. So if there was no estate tax, the ultra wealthy would pay NO TAX on their stock and real estate gains.

You can see yet again where the Republicans' priorities are when they vote against a necessary tax adjustment like this--in favor of the ultra wealthy at the expense of everyone else.

Posted by: g99999 | December 3, 2009 5:06 PM | Report abuse

The prolonged accumulation of wealth into the hands of a few - particuarly a few who did not earn it - is not only aristocratic but fundamentally anti-democratic. Our founding fathers broke away from monarchy and aristocracy and created our republic because they believed priviledge should be earned, NOT inherited.

A disappointment to see how ignorant our society has become...

---
Arrogant. If your assumption is true, why was an estate tax not written into the Constitution?

The bottom line is that the money was already taxed, and to tax it again, regardless of the fact that it is being transferred to a new entity, results in double taxation of the same pool of earned money. According to the income tax, earned wealth through labor should be taxed, not transfers of the same earned and taxed wealth. To conflate the two reasons for taxation requires two separate justifications.

A more fundamental reason for the creation of this great country is excessive taxation.

How ignorant are the re-writers of history.

Posted by: dnara | December 3, 2009 5:08 PM | Report abuse

Keeping or getting rid of the estate tax is moot. The real issue is the same one plaguing the AMT. Indexing for inflation.

By the way, this isn't double taxation. In life, you are taxed on actual income; wages and salaries - money acquired for labor or services provided; or net profits & capital gains - the difference between what you sold inventory or an asset for over what you paid. The estate tax is levied on your net worth when it passes from the last surviving spouse (if you think about it, this does prove Mr. Hoyer's point with West Virginia's lack of economic development as exhibit A) to the children (or if you try and get smart and give straight to your grandkids).

If that is double taxation, then so is me paying payroll taxes when I earn income and sales taxes when I buy a pair of jeans.

Posted by: mabkhar | December 3, 2009 5:09 PM | Report abuse

A consumption tax would eliminate all of these problems but it would also largely eliminate accountants also!

g99999; how would you respond to my last post addressing the capital gains/step-up argument? Would you agree to apply the estate tax to all at the cap gains rate?!

Posted by: starpopper | December 3, 2009 5:12 PM | Report abuse

Democrat Stenney Hoyer said this: ""Abolishing the estate tax would add billions and billions to our deficit -- and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer," House Majority Leader Steny Hoyer (D-Md.).

No... cutting a tax does NOT add to the deficit .... over spending by congress endorsed by President Obama leads to a deficit.

STOP SPENDING AND BLAMING WORKING AMERICANS.

Posted by: markandbeth | December 3, 2009 5:12 PM | Report abuse

geebee1, If someone owns a sole proprietorship, then yes, I do believe they should be able to pass that job on to their Heir. Makes more sense that liquidating half of the business's assets to pay for a tax or worse, cut expenses (lay off employees)

Posted by: rabell01 | December 3, 2009 5:15 PM | Report abuse

Abolish the death tax entirely. The property one leaves has already been taxed over and over again. Why not put a huge tax on one's dead body and really raise money to dole out in boondoggle bureaucracies?
Lincoln freed the slaves and the democrats reversed the process. We are now all men created equal and tax slaves for the first quarter of every year.

Posted by: mharwick | December 3, 2009 5:16 PM | Report abuse

45% is way too high a tax for anybody to pay. Who says the government gets to take nearlyhalf our estate when we ascend to the pearly gates? Try 25% and it might be acceptable to a lot of people.

Posted by: AdventurerVA
-----------------------------------
"A lot of people" won't pay a dime in estate taxes..only .02% of Americans have more than $3.5M in assets at death and they will be exempt from paying any estate taxes. And those who are worth more than $3.5M at death will only pay 45% on the wealth above $3.5M. The majority of those who will pay a significant amount--the .02% wealthest have so many tax shelters that they won't pay much either--well no more than they would normally pay in taxes anyway. So this is no big deal...we pay more in subsidies to farm owners than their heirs will have to pay in estate taxes upon their death. a lot to do about nothing.

Posted by: Beingsensible | December 3, 2009 5:17 PM | Report abuse

It is double taxation. To try and argue otherwise is arguing for the legalization of taxation for all transfers of money - which is not the case in this country, but only in certain instances.

We have an income tax, not a transfer tax. If you believe that a transfer of wealth should be taxed under the premise that it is income, you have been duped by the tax and spend democrats that need more money to buy more votes.

Again, if you are a fan of the estate tax, apply it to all citizens. Also, advocate for the taxation of political contributions.

Posted by: dnara | December 3, 2009 5:18 PM | Report abuse

"The bottom line is that the money was already taxed,"

This is another right-wing myth/lie/canard about the estate tax.

Most of the money in question (one study put it at 97 percent) is in the form of appreciation in value of capital assets. Such money has NEVER been taxed. The United States does not have any sort of tax that would get at such appreciation until an asset is sold.

Posted by: koolkat_1960 | December 3, 2009 5:18 PM | Report abuse

Democrat Stenney Hoyer said this: ""Abolishing the estate tax would add billions and billions to our deficit -- and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer," House Majority Leader Steny Hoyer (D-Md.).

No... cutting a tax does NOT add to the deficit .... over spending by congress endorsed by President Obama leads to a deficit.

STOP SPENDING AND BLAMING WORKING AMERICANS.

Posted by: markandbeth | December 3, 2009 5:12 PM | Report abuse

#########################################

Cutting a tax does not increase deficits? Talk about living in the conservative bubble.

Posted by: maggots | December 3, 2009 5:18 PM | Report abuse

Markandbeth - that's just silly. Spending AND taxation both affect the deficit. It's not just one or the other. The deficit is just revenue minus spending.

If you cut taxes, you decrease revenue. Revenue goes down, deficit goes up. If you increase spending, deficit also goes -- wait; am I talking to a 2 year old here?!? You do understand how budgets work, dont you?!

Presuming you do, then you know that your comment is inane.

Posted by: Buddydog | December 3, 2009 5:19 PM | Report abuse

Abolish the death tax entirely. The property one leaves has already been taxed over and over again. Why not put a huge tax on one's dead body and really raise money to dole out in boondoggle bureaucracies?
Lincoln freed the slaves and the democrats reversed the process. We are now all men created equal and tax slaves for the first quarter of every year.

Posted by: mharwick | December 3, 2009 5:16 PM | Report abuse

#########################################

This from the guy who supported the wasting of hundreds of billions of taxpayer dollars in Iraq.

Posted by: maggots | December 3, 2009 5:21 PM | Report abuse

Awwwww. If this bill makes it through the Senate, the poor heirs of individuals with total assets exceeding three and half million bucks, or heirs of couples with total assets exceeding SEVEN MILLION bucks, will see 45% of the excess disappear.

I'm sure that all of you will be leaving estates worth at least three and a half million apiece, so your poor heirs will have to pay a few pennies of tax on their big inheritance FOR WHICH THEY DID NO WORK.

And I'm sure that, even though most of your assets are based on unrealized capital gains (i.e., stocks that grew in value over the years, but since you held on to them, you were never taxed on those profits), your heirs will complain about the "double taxation" on their inherited wealth.

Wow. Maybe you should change your will and leave everything in excess of that seven million bucks to legitimate charities -- in which case, of course, no estate taxes will apply at all.

Or maybe you should reconsider those whiney heirs of yours. Are you sure you want to eat at their house on Christmas? Just suggesting a reality check here.

Posted by: incredulousinBoyntonBeach | December 3, 2009 5:22 PM | Report abuse

have a problem with those who keep telling the government to spend less. I agree WE spend too much BUT its sort of like NOT IN MY BACKYARD in reverse. If they live (example) in New Jersey they want the government to spend less in (example) Florida.
Its also OK for them to continue to want (example) PELL GRANTS or UNEMPLOYMENT BENEFITS as long as they get them.

Get the idea?
Posted by: Makessense1
-----------------------------------
Got it!
Perhaps if a major catastrophe happened in their neighborhood or the primary bread winner in their household lost their job and the Government responded by saying we don't have the money to help because we're "spending less", they'd get it too...

Posted by: Beingsensible | December 3, 2009 5:22 PM | Report abuse

Taxation of property transfers at death can be traced back to ancient Egypt as early as 700 B.C. Nearly 2,000 years ago, Roman Emperor Caesar Augustus imposed the Vicesina Hereditatium, a tax on successions and legacies to all but close relatives. Taxes imposed at the death of a family member were quite common in feudal Europe, often amounting to a family’s annual property rent.

In 1898 the Legacy Tax was passed in the US and formerly this type tax was used in 1797 and 1862. The current version was enacted in 1916.

SOURCE: The Estate Tax: Ninety Years and Counting
by Darien B. Jacobson, Brian G. Raub, and Barry W. Johnson

How did these taxes quell the vast growth of this country???

Posted by: helpscoming012009 | December 3, 2009 5:23 PM | Report abuse

We can lose the "double taxation" bs anytime, IMHO. It is a commonplace and commendable event.

We tax (but not highly enough) dividends paid by companies that (usually) have already paid income tax. (Some idiotic companies that are losing $ and don't pay taxes, particularly those owned by hedge funds, borrow money to pay dividends in order to engorge shareholders.)

Almost all jurisdictions have property taxes, taxing items already bought and paid for with after tax $.

Some j.s tax assets that usually appreciate: Real Estate.

Others even tax those that almost always depreciate: Automobiles, Jewelry

Nothing wrong about any of these taxes.

Posted by: DrVelocity | December 3, 2009 5:23 PM | Report abuse

This will stimulate capital flight from the US to shield it from taxation.

It is a ridiculous amount of taxation on the successful. Better something on the order of 10% with an exemption up to $500,000.

BTW: Socialist-tax-u-2-death Canada has no estate tax.

Posted by: AlanBrowne | December 3, 2009 5:24 PM | Report abuse

Michael is correct.
If someone does not understand they should GOOGLE "stepped up basis for federal income tax" or somthing like it. One of the reforms that had been suggested was that if there was no estate tax that the stepped up basis for income tax should be abolished. Right now if you inherit property from you granfather that cost him $100.00 but was worth $1,000.00 when he died your cost basis (whether you pay an estate tax or not) is not $100.00, its $1,000.00.
So if you sell it for $1,000.00 NO ONE ever pays an income tax on it.
***********

you mean capital gains tax.

Posted by: dummypants | December 3, 2009 5:24 PM | Report abuse

Many proponents of the death/estate tax claim that the heirs didn't "earn" the wealth themselves and therefore are not entitled to it. But why is the government entitled to it?

If you earn income and generate wealth during your lifetime, should you not have the right to decide who receives that wealth when you die?

One of the beautiful things about America is that you can come here with nothing, work, and succeed so that your children and your grand-children can have a better life than you. It's called the American dream.

Millions work, earn, and save so that their descendants can afford to go to college, buy a home, or start a business. Does the government have more a right to their earnings and savings then their choice to invest in their heirs future?

Does this effect the family farm? Yes. A house plus the acreage and equipment (tractors, etc...) to be a sustainable farmer adds up quickly and have a lot of value even if it doesn't generate a lot of yearly income.

The idea that the estate tax is an effective measure to prevent an aristocracy is asinine. It would be true if the entirety of an inheritance always went to a single heir, but it doesn't. Estates are often divided to multiple heirs.

It isn't just cash that is taxed. It's all forms of wealth (savings, stocks, bonds, and property). Taxes have already been paid on the wealth when it was earned and heirs will continue to pay property taxes and capital gains taxes on what they inherit.

Why shouldn't the individual who earns the wealth get to decide where it goes when he/she passes?

Posted by: td0213 | December 3, 2009 5:24 PM | Report abuse

DEBT & DEFICIT...which is more fiscally conservative, paying for your expenses via tax revenue or debt? Dems prefer tax revenue and the gop prefers debt...our expenses aren't going to change that much so our policy needs to. Due to republican rhetoric we've convinced the American populace that almost any taxation is unjust.

Considering that 90% of our expenses are not negotiable and that no amount of rational cutting will solve our problems then the only other option is to consider how to pay for it. DEMOCRATS ARE MORE FISCALLY CONSERVATIVE THAN REPUBLICANS because they are more willing to pay upfront, through taxes, rather than put it on America's credit card and the backs of our kids!

Posted by: starpopper | December 3, 2009 5:24 PM | Report abuse

To dummypants:

I'm so sick of people like you...because you really do live up to your userid.

This so-called "estate tax" is a travesty. It only benefits the ultra rich - it doesn't affect ANYONE who isn't a multimillionaire.

The federal government already has such a high deficit, thanks to G.W. Bush & friends. These monies could go to help build a road, fix a bridge, or maybe the potholes in the street where you live.

Or maybe to repair playground equipment that your kids play on.

You get my drift. Or maybe you don't, because after all, you are a "dummypants."
**********

looks like your dummy, considering your fail at even basic reading comprehension.

my original post was HAPPY that they figured this out, whatever the rate was, because people need guidance in their planning activities, no matter what the tax rate/exemption are.

i tell, some people around here would benefit from 5th grade reading classes

Posted by: dummypants | December 3, 2009 5:27 PM | Report abuse

Dr. Velocity

Yes, there is something wrong with all of these taxes. Why should I be taxed for assuming all the risk in investing in any asset, be it a house or stock? Where is the government if a person's stock portfolio disappears (which is all too common these days), or if their house loses value? They protect the banks, and say a "contract is a contract."

Yet, when I work hard to make sure I invest in well valued assets, that eventually appreciate, the government is there, open handed, looking for their piece of flesh.

Sorry Mr. Government, but you only come knocking when I make money.

Posted by: dnara | December 3, 2009 5:28 PM | Report abuse

EXCELLENT POST - REPOSTING

After eight years of big fat tax cuts to the rich during the Bush years its about time the wealthy in this country pay their fair share. Cleverly called the "Death Tax" by the Republicans, when actually only those inheriting millions of dollars would have to pay a tax. The average working class American would not have to pay any inheritance tax at all. Once again the Republicans are looking after their consituents....the very wealthy.

Posted by: logcabin1836 |

May add that the Wealth want their spoiled bratts to inherit what they did not earn.

BUT wow what a head start and these super wealthy are crying they cannot have it all.


ISA

Posted by: Issa1 | December 3, 2009 5:29 PM | Report abuse

Supporters of this tax on the estates of the dead demonstrate that this is simply N.I.M.B.Y. in the world of taxpayers. "Any tax is fine, so long as it doesn't apply to me."

A low, $3.5 million threshold will place many small businesses at risk as heirs are forced to divest holdings to cover the IRS burdens.

Perhaps more importantly, however, is that this will also result in suburban sprawl and overdevelopment (as the previous estate tax did) as large tracts of undeveloped land across the country are forced to be re-zoned and sold off to cover tax burdens. Sprawl is one of the most measurable (yet ironically ignored) unintended consequences of the estate tax. I have seen hundreds of acres of farmland across the country sold off and developed into strip malls, townhomes, and "McMansions" so that landowner families can cover estate taxes.

The threshold should be far, far greater and indexed to inflation. At the federal government's current rate of borrowing, inflation in the coming years is a real risk. That $3.5 million floor will cover more and more properties, forests, farms, businesses and estates in the years to come.

Posted by: Jeff_in_DC | December 3, 2009 5:31 PM | Report abuse

Conservatives, please stop with the whole "you can't raise taxes in a recession" mantra. You guys never, never raise taxes. Taxes are a part of advanced civilization. The inheritors did not earn that money, it is a transfer of wealth, to which they have contributed zero to earning. Enough with your foolishness!

Posted by: nameit23 | December 3, 2009 5:33 PM | Report abuse

So, did these guys want to get re-elected? I guess not.

Posted by: bucinka8 | December 3, 2009 5:37 PM | Report abuse

HOw many of you imbeciles arguing that the Estate Tax (no, there is no such thing as a death tax) should be eliminated stand to ever inherit or leave 3.5 million or more? Didn't think so since it is less than 1% of the population. This was not bad, but it would have been better to graduate it up to 90 % for anything over 20mill.

Posted by: John1263 | December 3, 2009 5:42 PM | Report abuse

dummy.
It really doesn't matter but the last time I looked CAPITAL GAINS TAXES were part of the INCOME TAX CODE.

Posted by: Makessense1 | December 3, 2009 5:42 PM | Report abuse

Democrates and Congress at their best.......

......spend and then TAX !!!

Posted by: thgirbla | December 3, 2009 5:42 PM | Report abuse

Jim Bevan posted the following:
A friend's father owns several small businesses. He works 12 hours a day. Combined his business are worth about $10 mil. He has 23 employees. If his Dad died tomorrow, my friend would have to come up with $4.5 mil to pay Uncle Sam just to keep the businesses, not to mention the 23 employees kept from unemployment. Leftist posters here haven't a clue. Posted by: jimbevan | December 3, 2009 3:57 PM |

ALAS, it is Mr. Bevan who hasn't "a clue." If his friend's Dad died tomorrow, he might not owe ANY inheritance tax (depending on how those businesses are structured), and even if every cent of that $10M in value is considered his "inheritance," he would only owe inheritance tax on a fraction of it, because of the $3.5Million-per-person exemption. Assuming the friend's Mom is dead and his Dad, despite his business acumen, was dumb enough to retain sole title to every cent of the value of the businesses, his friend would only owe on six-and-a-half million, which comes out to less than three million in tax. If his Dad were smart enough to have his personal financial affairs in as good a shape as his businesses, then only half of his ten-mil would be in his own name, and Jim's friend would only owe tax on one and a half million (five minus three and a half), and that tax would come out to substantially less than a million bucks (it would be $675,000).

And, as several folks here have noted, Jim's friend did absolutely nothing to earn all those tax-free millions he'd be getting.

And if his math and tax acumen were as weak as Jim's, those businesses would go down the drain pretty fast once Jim's friend gets control of them. If they go down the drain fast enough (within 6 months), he wouldn't owe a penny of tax. Check the inheritance tax laws if you don't understand this last point.


Posted by: incredulousinBoyntonBeach | December 3, 2009 5:43 PM | Report abuse

Someone has to explain to me why the act of dying is a taxable act.

Posted by: njacobs | December 3, 2009 3:30 PM

===============

It's not. Passing money is a taxable event. If you want I'd be happy with the Republican plan to return to the 55% and $1M exemption. That's the bill they set up.

BTW, the American Farmer's Association was never able to find a single instance of a farm being sold because of estate taxes.

The estate tax came into being because the wealthy were passing on their wealth and avoiding taxes altogether.

Someone mentioned Warren Buffett. Using him to illustrate. Buffett buys and holds and amasses wealth through deferred capital gains. Without the estate tax, he would be able to pass on those capital gains tax free.

If those capital gains aren't taxed with an estate tax when would the be taxed. They wouldn't. That's why an estate tax exists. Wealth isn't amassed by working a 40 hour week at Chrysler. Wealth is generally amassed by taking advantage of the tax code by deferring capital gains.

Posted by: James10 | December 3, 2009 5:44 PM | Report abuse

Conservatives, please stop with the whole "you can't raise taxes in a recession" mantra. You guys never, never raise taxes. Taxes are a part of advanced civilization. The inheritors did not earn that money, it is a transfer of wealth, to which they have contributed zero to earning. Enough with your foolishness!

Typical Democrates MANTRA, SPEND and the TAX.
Bigger Govt. and Larger Spending by the Govt. is NOT the solution to the economic issues in this Country, although the Democrates believe this to be so!!!

Posted by: thgirbla | December 3, 2009 5:46 PM | Report abuse

Again, advocates arguing for a tax of any transfer of money are conflating that with an income tax.

If you want a tax on all transfers of money, show me what the government did for me to justify it?

Also, make sure for consistency that you email/call your reps and ask them to introduce the bill requiring members of congress to pay taxes on the campaign contributions that went into their accounts. According to you, all transfers of money should be taxed.

Sad you never ask what you get in return though to justify this universal transfer tax.

Posted by: dnara | December 3, 2009 5:49 PM | Report abuse

Also, if you are a fan of a universal transfer tax, extend the estate tax to all citizens.

Jeez, I can't even say taxpayers because there are so many people living in this country not paying taxes.

Glad they still get to vote and tell our reps how to spend my tax money.

Posted by: dnara | December 3, 2009 5:51 PM | Report abuse

If this decision actually affects your family, it means your kids will only inherit $2 million instead of $4MM.

I think they'll survive.

Posted by: gettingdizzy1
------------------------------------------
Actually it's not even that much, because the first $3.5M is exempt from the estate tax...so the kids will actually inherit $3.775 M. In short they will pay $225K in estate taxes. Not that much after all, huh?

Posted by: Beingsensible | December 3, 2009 5:52 PM | Report abuse

It makes a big difference to the taxation argument if the Family Farm is in Nebraska or the "Family Farm" is on the second floor of a storefront on Grand Cayman. Both "Noblesse Oblige" and "The American Dream" are all about doing the best with what you are given, or even what you get.

Make the failure to disclose off-shore assets once a generation a crime.

Kids who dare not set foot off the Caymans for fear of prosecution will still say "Thanks Mom & Dad!", but they will mean something a little different. There will probably be some rude hand gestures involved too.

Posted by: gannon_dick | December 3, 2009 5:54 PM | Report abuse

What's the big deal? The Estate Tax was paid by:

22800 - 2006 (.9% of estates)
17400 - 2007 (.7% of estates)
17100 - 2008 (.7% of estates)

My gut feel - you? qualify with the wealth to deal with this?

SOURCE: Citizens for Tax Justice

Posted by: helpscoming012009 | December 3, 2009 5:56 PM | Report abuse

One comment regarding the notion that it is not "fair" to tax an estate because that money was already taxed when it was earned. The poster who noted that the tax is on the transfer is correct. It is not a question of whether "that money" has been taxed once or one hundred times before. When my employer earns money, it is taxed. When my employer pays me, it is taxed. When I buy beer at the grocery store, my money is taxed. When the grocer pays the store employees, the money is taxed. It's the transfer of money, not the money itself. Transfers of estates greater than $3.5 million are taxed. (BTW, that's on an estate left to someone other than a spouse. Ergo, a husband and wife can each leave $3.5 million, so rich mom can leave $3.5 to hubby and 3.5 to the kids w/o tax. Then hubby can leave "his" $3.5 to the kids with zero tax. That's $7 million passed with no estate tax consequence. And it didn't take a battery of lawyers. Just one who doesn't even practice.

Posted by: lawyerwithachainsaw | December 3, 2009 5:58 PM | Report abuse

And this is why the US is becoming a second rate country. Rich people whom own businesses and employ people are leaving the US. You or I would do the same if we had money. Who in their right mind wouldn't and allow the US Gov. to take 45% of the money YOU EARNED. This will only make unemployment worse. Thank God this POS will be a one term President. Come 2010 these DIMS are going to take a beating. Just watch how little the wealthy donate to the DIMS. They'll give their donations to the Reps. The Reps will repeal this BS and get the US back on it's feet. I just hope all of those suffering can hold on.

Posted by: askgees | December 3, 2009 5:58 PM | Report abuse

House Republicans keep pretending to be staunch defenders of "family" values, farms and small businesses but their voting record speaks volumes. Their patterns since 1993 favored spending over saving; were pro-NAFTA & pro- most favored trading nation status for China (it killed us); for huge farm subsidies to Big Ag and huge tax and royalty rebates Big Oil; huge, huge giveaways we sorely miss (and need). Their votes did more to destroy family farms and small businesses than anything else. They're hypocrites. They talk the scripted talk, but don't walk the walk; sellouts to the highest bidder. Still, they keep doing it! Conscienceless liars .....

Posted by: hogsmile | December 3, 2009 5:59 PM | Report abuse

cmb551:

Thank you for bravely defending the property rights of Deoxyribonucleic acid chains.

Posted by: janowicki | December 3, 2009 6:01 PM | Report abuse

Makessense1 wrote: "It really doesn't matter but the last time I looked CAPITAL GAINS TAXES were part of the INCOME TAX CODE. Posted by: Makessense1 | December 3, 2009 5:42 PM | "

Duh, Mr. Makessense1. No, you're actually quite wrong. Taxes are paid on capital gains only if and when they are "realized." What that means is that if an asset such as stocks or real estate has grown in value since it was first acquired, there are absolutely no tax consequences to the owner for that growth in value unless and until the owner actually sells the asset. Then, and only then, are taxes due on the difference between the original acquisition price and the sales price.

Posted by: incredulousinBoyntonBeach | December 3, 2009 6:01 PM | Report abuse

Am I the only sane one here? Since when is the government taking 55% or 45% or 35% of anything considered "fair"? What kind of "fairness" is this? Apart from the rather stupid premise that someone dying is a reason for the government to celebrate and take anything, you have to remember that lot's of that estate has already been taxed, probably numerous times, so someone checking out shouldn't be another reason for the deceased to be taxed yet again. The House and Senate are disgusting - healthcare for all by taxing a few (to death), cap and trade for the world by destroying America (the Chinese and Indians are happy with our leaders) a huge and growing national debt that our leaders get to pass on to the next dozen generations or so. Disgusting, insane and immoral.

Posted by: calditz | December 3, 2009 6:01 PM | Report abuse

So wait, if they don't vote to keep this rate, then it goes away in 2010, only to come back with longer, sharper teeth in 2011.

So everyone who voted "no" today effectively voted to go back to the 55% rate with the $1 million exemption in 2011.

That is, unless they think they can get a new bill with a lower rate passed in 28 calendar days.

Posted by: JohninMpls | December 3, 2009 6:02 PM | Report abuse

Soak the rich. How trite--and what a collection of ninnies we're stuck with in the House. The mid-term elections ought to provide no end of amusement.

Posted by: LHS2 | December 3, 2009 6:04 PM | Report abuse

Also, if you are a fan of a universal transfer tax, extend the estate tax to all citizens.

Jeez, I can't even say taxpayers because there are so many people living in this country not paying taxes.

Glad they still get to vote and tell our reps how to spend my tax money.

Posted by: dnara | December 3, 2009 5:51 PM | Report abuse


I totally agree. You should be required to be a tax paying citizen to vote. No job, no voice.

Posted by: askgees | December 3, 2009 6:08 PM | Report abuse

OK, I get the transfer of money argument as opposed to my double taxation statement; but that makes me much more convinced that this tax needs to be universally applied to all at a much lower rate, 20%!

Posted by: starpopper | December 3, 2009 6:10 PM | Report abuse

Anyone who has a SUCCESSFUL business, not one that only exists because it takes advantage of various loopholes, should be able to figure out how to keep the business going.

"Death should not be a taxable event," said Rep. Dave Camp (Mich.)
Excuse me, why should we let the children of the successful entrepenuer live as "trust fund babies?" $3.5 MILLION DOLLAR EXEMPTION! That should protect most SMALL businesses.

Posted by: dotellen | December 3, 2009 6:12 PM | Report abuse

Soak the rich. How trite--and what a collection of ninnies we're stuck with in the House. The mid-term elections ought to provide no end of amusement.

Posted by: LHS2 | December 3, 2009 6:04 PM
=========================================
No, we're soaking the dead. According to the rules of Chicago Politics, the rich can only vote once, but the dead can vote as many times as they want (but often cross Party lines). How dare you be amused ;-)

Posted by: gannon_dick | December 3, 2009 6:15 PM | Report abuse

If this decision actually affects your family, it means your kids will only inherit $2 million instead of $4MM.

I think they'll survive.

Posted by: gettingdizzy1
-------------------------------------
I generally agree with this in principle and it seems ok to tax that way. However, the problem is if your dad owns, say, the Washington Redskins and then dies. Well, if the Redskins are worth $500 million you will owe $225 million. If you can't pay that then you can't own the team. Thus, it is very important to plan ahead. You can, also, see how this can have an adverse affect on farms, businesses and so on that families would like to keep in the family, but simply don't have the means.

Posted by: BigBubba1 | December 3, 2009 6:17 PM | Report abuse

One other thing. If you have a family member who is dying and has, say, $30 million in cash the best way to avoid the taxation is to divy it up to 10 family members. All the estate income will be less than $3 million and, thus, untaxable.

Posted by: BigBubba1 | December 3, 2009 6:21 PM | Report abuse

Lawyerwithachainsaw:
The question is not whether the transfer of wealth is taxable? The real question is why it should be?

What are you getting for your taxes? You've been manipulated by the tax and spend politicans to believe that all transfers of money should be taxed. That is not the case. Every tax should support a specific purpose. The Estate Tax serves no purpose, supports no germane system other than those chanrged with collecting the tax. At some point, you have to cut the politicians off the teet.

Again, if taxing all transfers of wealth are a good idea, tax all citizens, and demand taxation of all campaign contributions.

Posted by: dnara | December 3, 2009 6:33 PM | Report abuse

The Republicand cited family farms and small business owners...as if they are the ones primarily affected by the estate tax. LOL

Chalk up a win for the big rich and the smoke-and-mirrors crowd.

Posted by: js_edit | December 3, 2009 6:41 PM | Report abuse

>>>>> Posted by: SCDowns

MichaelOwen04 - You could not be more wrong. That money is taxed when the INCOME is earned. It is the taxed a second time when the person dies.

Actually, this is rarely the case. Very few people get rich by saving up their salary. Most people who owe estate tax get rich by (i) starting a business, or (ii) buying stock or real estate and holding it until death. Or with real estate, buying it and trading it (exchanges of real estate are generally tax-free) for more and more valuable pieces of property. Then they die owning the company or the stock or the real estate. Which has appreciated enormously during their lifetime. And that appreciation has NEVER BEEN TAXED. Because of the step up in basis at death, the children who inherit the property will also not pay any tax if they sell the property for its date of death value. So, if there is no estate tax, there is no tax EVER on that appreciation. The cases where there is truly double tax (income tax at ordinary rates during lifetime and then estate tax at death) are a tiny portion of taxable estates.

Posted by: taxguru | December 3, 2009 6:43 PM | Report abuse

Stupidest statement ever

"The fear of death should not be a reason for Americans to hire a battery of accountants and lawyers to find legal ways to reduce the bite of the estate tax."


As if those people didn't have a battery of accountants and lawyers already looking for ways to avoid paying their share of taxes.

Posted by: tru-indy | December 3, 2009 6:46 PM | Report abuse

"Actually, this is rarely the case. Very few people get rich by saving up their salary. "

true! most people get rich from inheriting it.

Posted by: tru-indy | December 3, 2009 6:47 PM | Report abuse

"Tough to get re-elected raising taxes in a recession."
Posted by: LeftCoastRightBrain
***

.2% of estates means roughly 3,300 estates , maybe 10,000 heirs across the nation. I don't think it is going to change many election outcomes.

how soon before the obama administration revists this and upend the plans of people who thought they had financially planned for their loved ones and shoudlnt have to worry about these kind of concerns as they lives out the last few months of their life.
"

Back of the envelope ciphering says the estate will need to top ~$7.8M before anyone owes a dollar of tax. A $10M estate would pay $1M in taxes, leaving $9M to pass on. It doesn't sound like any loved ones are going to suffer over this.

And tax bills originate in the House. The administration doesn't have the power to "revisit" it; they can only veto it.

You'd think the wealthy were suffering from some of these comments. In fact, their incomes have shot up while middle class incomes are stagnant and blue collar welfare is declining.

Posted by: j2hess | December 3, 2009 6:50 PM | Report abuse

taxguru,

Thanks for your expertise. But regardless of how people try and avoid the estate tax, it is still double taxation - just as any tax on appreciated assets is.

As I stated before, when investing, I assume all the risk. When I fail, I don't hear a peep from the government, nor are there any mitigating policies for my loss (the $3000 tax loss write off is minuscule when talking about the estate tax). Yet, if I invest wisely, and my assets appreciate, Mr. Government shows up, looking for his cut.

Policy makers, thirsty for an ever growing pot of receipts in order to buy more votes, want you to believe any time money is 1.) earned 2.) transferred 3.) created that it must be taxed.

You should only be taxed when you receive some benefit from it. That is truly the rare case for most taxpayers.

Posted by: dnara | December 3, 2009 6:51 PM | Report abuse

The estate tax is a complicated mess. Better to extend the existing level of exemption permanently and be done with it. My fear is that when the Senate starts messing with it we will get incidental revisions to capital gains treatment on death and a dog's breakfast of revisions to gifting exemptions. Congress couldn't run a two car funeral.

Posted by: roboturkey | December 3, 2009 6:55 PM | Report abuse

Jbowen431:
"It's a shame that so many get away without paying taxes or paying taxes at hugely discounted rates. Why should the rest of us subsidize the wealthy passing their wealth forward? "

MichaelOwen4:
"There's hardly any other situation where you can get something, sometimes A LOT, for doing absolutely nothing."

Ignorant statements from ignoramuses like these two make me wanna throw-up.

"...so many get away
without paying taxes....? YGBSM!!! The top 20% of wage earners already pay about 90% of the income taxes in this country. The bottom 40% pay NOTHING AT ALL except sales tax!!! Talk about "getting away." And don't tell me you don't already know that too JBowen...liar.

And Michael...hardly any other situation where you can get ALOT for nothing? See above comment on how many people in this country pay NOTHING AT ALL for getting to live in this country and have birth rights to the protections provided by the US Constitution. Now the people who pay most of the income taxes on the money they earn for the heirs have to pay taxes on it a second time just to provide services for people who pay NOTHING AT ALL to provide those services. Doesn't sound fair to me. And the Pelooney and her fellow dimowits are trying to squeeze the last ounce of gold out of the asphixiating golden goose because she, and they, have not the slightest clue what keeps a nation prosperous.

Posted by: PanhandleWilly | December 3, 2009 7:00 PM | Report abuse

This country is being run the crooks and the criminal who do not care about the public and are running this into the ground. Thanks to these crooks, the middle class is disappearing in this country. The rich are getting richer and poor and poorer. These morons in the U.S. Congress and the Senate are on the take so they can get re-elected again. The Supreme Court has legalized the taking over of the government by the corporate crooks though the public pays the salary. No wonder, these crooks like this system so much.

Posted by: kevin1231 | December 3, 2009 7:03 PM | Report abuse

Posted by: MichaelOwen04 | December 3, 2009 3:33 PM

The GOP has done as especially good job in framing this discussion. By calling the "death tax", they make it sound like the government is going to tax your dead body.

In fact, the estate tax is based on the very-GOP notion of a distaste for getting something for nothing.

Procedes from estates are not considered income on the part of the recipient. Thus, if someone dies and leaves you something, were it not for the estate tax, no tax would be paid on property or income you get.

There's hardly any other situation where you can get something, sometimes A LOT, for doing absolutely nothing.

----------------

C'mon man... you conveniently fail to mention the fact that as folks accumulate their wealth, they are paying taxes. The small business owner pays his/her fair share of taxes as he grows his business. Sure, the inheritor does not pay tax on an inheritance. Of course, the basis for the inheritance is wealth that has been taxed as it was earned and again as it compunded.

Again, why is death a taxable event? Taxing money that has already been taxed - Robin Hood would surely be proud!

Posted by: lingering_lead | December 3, 2009 7:06 PM | Report abuse

Someone has to explain to me why the act of dying is a taxable act.

Posted by: njacobs | December 3, 2009 3:30 PM | Report abuse

========
Its not the act of dying that is taxed. Its the act of inheriting assets that is taxed.

Posted by: Frazil | December 3, 2009 7:19 PM | Report abuse

Pilot1: "The estate tax is to high even at this rate. Why does the government feel they have the right to steal this from those that earned it to give to those who did not?"

Are you saying that scumbags like george bush earned their millions?

C'mon, you're not saying that are you?

Posted by: rcubedkc | December 3, 2009 7:21 PM | Report abuse

The reason we have an estate tax is so we don't have dynasties like they had in Europe for hundreds of years. How many small farmers really own a farm worth more than 3.5 million? Perhaps a winery in California. Once you are dead the money isn't yours anymore anyway... it's the recipients of your estate that pay the tax. Isn't 3.5 million enough?

Posted by: stswork | December 3, 2009 7:21 PM | Report abuse

Yes, the dead do pay, sort of. Estate taxes are assessed upon an paid by the estate of the deceased. Individual inheritors do not pay estate taxes. They are not paid by people receiving inheritance "income". The taxes come out of the estate and should be paid before anyone receives any inheritance. (This is part of what can be a long delay in disbursing funds from an inheritance.)

The idea that estate tax doesn't affect many people is ridiculous. The statistics on who pays this tax are limited in their usefulness. The estimates of this affecting an extremely small population are based only on estates that have filed and owed tax. They do not address the wealth of all deceased persons (or even the wealth of the living) that might fall above a certain threshold. The numbers are so small precisely because there is a large incentive to (legally) avoid taxation. There is an entire industry of financial and legal advisors that exists to be sure that only a very few estates subject to taxation. All of this effort and cost is created by the tax, but not represented in the extremely small number or percentage of estates eventually subject to taxes.

So who is potentially affected by estate tax? According to the Capgemini and Merrill Lynch World Wealth Report estimate, "There were 2.5 million millionaires in the U.S. at the end of 2008, down from 3 million in 2007." (http://blogs.wsj.com/wealth/2009/06/24/millionaire-population-drops-15/) The survey defines millionaires as those with investable assets of $1 million or more, so it doesn't even consider homes or businesses. It would clarify the debate if we could examine relevant estimates of the impact of this legislation.

Posted by: EconGirl2 | December 3, 2009 7:25 PM | Report abuse

Isn't 3.5 million enough?

---

Ah, there it is, the key socialist/liberal word: enough.

I believe you've made enough money! Therefore, you will be taxed.

Forget principle, integrity, reason, logic, etc.

It's when I say you've had enough.

Can't wait til they decide when they've spent "enough" health care on your husband or wife.

Posted by: dnara | December 3, 2009 7:26 PM | Report abuse

Sorry dnara, you didn't read or can't comprehend a thing that taxgura said.

BTW: You complain about "receiving benefits", as if you don't receive any.
benefits? In the middle of Somalia? Its the same old story, give me but I don't want to pay for it.

Don't misunderstand I agree that tax money is wasted but that's a whole different discussion.

Posted by: Makessense1 | December 3, 2009 7:34 PM | Report abuse

Imagine two thirty year old men.

One works his way through college and then medical school, and has average middle class parents. He was in school until his late 20s, then residency, and has big student loans. Finally, at 30, he's making $200,000 as a doctor while paying back his student loans and a big chunk of his income to payroll and income taxes. His parents die, leaving him nothing, and he continues to pay taxes every two weeks on his income.

The second thirty year old mooches off his parents. He has never had a job. His parents are rich, and when they die they leave him $10 million. Thanks to Republican efforts to repeal the "death tax" he doesn't have to pay a dime in taxes.

God bless America.

Posted by: epsilon | December 3, 2009 7:40 PM | Report abuse

Isn't the headline on the homepage "Estate Tax is made permanent" kind of misleading since the Senate has yet to weigh in?

I know that the botox babe would love to be queen of all, but that isn't quite true yet.

Posted by: bandmom22 | December 3, 2009 7:45 PM | Report abuse

Consider a wealthy couple with two children. Each child could inherit a trust fund of $3.5 million tax free when the couple dies. This is more money than a middle-class family making $70,000 a year would make in a lifetime, and the middle-class family would pay taxes on that income every year. Furthermore, the wealthy couple can give additional sums to its children as tax-free gifts each year while the couple is still alive.

SOURCE: Center on Budget and Policy Priorities

Posted by: helpscoming012009 | December 3, 2009 7:48 PM | Report abuse

kentuckywoman2 wrote:

"The federal government already has such a high deficit, thanks to G.W. Bush & friends."


Where have you been since January of THIS year?

How much of "Obama and friends" spending since January do you think you're going to get back, and how well off do you think you're going to be because of it?

I can wait a long time...how 'bout you?

Posted by: Veritas-9 | December 3, 2009 7:48 PM | Report abuse

I can't believe that they brought back the estate tax. This really hurts people who save alot of money for their retirement and expect their families to benefit from their foresight. Why shouldn't their families inherit this money instead of paying the federal government's debt? How does that encourage saving!? Instead of increasing taxes, why doesn't Congress decrease spending?

Posted by: datagirl2002 | December 3, 2009 7:53 PM | Report abuse

I love how Salahi-style millionaire-wannabees all think their "massive" estates are going to be taxed at their deaths. Hahahhahaha. Most of you oh so bright minds will never, ever, ever have any chance of having a taxable estate. But, it's sure nice to have a dream . . . hey, maybe you'll win the lottery tomorrow (you probably have a better chance of that).

As for those who like to call it the "death" tax and think it's such a new, horrible thing . . . put down the Republican Koolaid and read a little American history. Have you actually read any of George Washington's probate records? How about those of many of the Founding Fathers? Did you know spoons could be taxed back in those days? LOL

I actually kind of wish the estate tax would be permanently repealed for the average moron who wants it. Then, the vast majority of middle income Americans who've bought into conservative stupidity (legislation paid for by a bunch of uber rich guys) would be introduced to what happens when there is no more "step-up" in basis at death. You want to hear about taxes? You "Joe sixpacks" haven't looked at the big picture and are in for a very rude awakening. And, frankly, you deserve it for being so damn gullible. It would be a shame for so many other hard-working Americans to have to suffer as well.

P.S. Do any of you geniuses actually understand the difference between step-up and carryover basis? Look back at what Congress has proposed in lieu of the estate tax. Bwahaha!

Posted by: sshopper | December 3, 2009 8:08 PM | Report abuse

What people are forgetting is that some "millionaires" are hard working people who saved money, bought farms, orange groves, or businesses and are leaving estates to their hard working sons or daughters. Not every beneficiary of an estate is a spoiled rich "kid"who hasn't worked a day in his/her life! Get real.

If our forefathers thought that aristocracy was the same as being rich, why would the country have promoted capitalism? It sounds like those who are against wealth of any level are those who may not have what it takes to get to that point themselves. America was built on a strong work ethic and the right to succeed and make money providing services or goods for the country. Being jealous of that is really small.

I would resent losing the orange groves that my parents physically worked so hard to sustain. Why should I be denied the right to continue that tradition so that taxes can be paid to help those who want something for nothing? This is America, not Sweden or Norway.

Selling farms increases our country's dependence on other countries. Taxes are paid when money is made, when money is earned and interest is made. Estate taxing is an unnecessary tax. Spending less in a recession would make a lot more sense. But then, nothing the government does has any common sense or logic about it! 180 degrees from sick is still sick. So many government policies exemplify that phrase.

Posted by: charlottedesigns | December 3, 2009 8:11 PM | Report abuse

they paid taxes when they made money why do we have to pay taxes to give it away?

Posted by: infantry11b4faus | December 3, 2009 8:21 PM | Report abuse

The GOP could have permanently repealed the estate tax when they controlled both houses of Congress and the White House in 2001. Instead, they attached estate tax legislation to a much larger tax cut. Unless that large tax cut -- including the estate tax provisions -- expired within 10 years, the Senate's "Byrd Rule" would have allowed 40 Senators to block the legislation. The GOP made a cynical bet that the Dems wouldn't be in power or would be too chicken to continue the estate tax in 2011. The GOP lost that gamble.

I have a few more observations. First, IMHO, it would be simpler if we treated inheritances (beyond a threshold amount) as windfall income to the recipient instead of taxing the gross estate of the deceased. We could abolish the gift and estate tax and instead tax large gifts and bequests as part of the income tax.

Second, I am amazed at the amount of people who emotionally oppose the estate tax, given that only 0.2% of estates will ever pay it. Do you all think you're going to win the lottery or market your next brilliant idea? We're in debt up to our eyeballs, and there are many worse places to collect revenue than from old dead people who don't have use for the money anymore. When the GOP is in power, they spend tons of money, but they can't seem to name one "worthy" source of revenue. Pander much?

Posted by: terminator_x | December 3, 2009 8:25 PM | Report abuse

Unless Jon Huntsman kicks the can next year- for most of us this is just pecking at spilled seeds.

Still, if you live on the coast, it's sad that you can hardly pass on your home.

The bill ought to distinguish between family assets and business assets.

One should be exempt and the other should allow ample room for a family to continue on.

Posted by: thealaskan | December 3, 2009 8:28 PM | Report abuse

I'm with charlottedesigns.

In places on the east or west coast, a house - bought affordably over 30 years ago - can be valued in the millions without even trying hard. If parents die in the middle of a well-planned retirement, their heirs could be left with an estate that isn't cash-rich enough to pay estate taxes. It's happened to a few friends of our family - late in their lives they've had to take out six-figure loans just to pay taxes on money and properties that had been bought, paid for and taxed for decades.

Parts of the estate tax simply don't take into account regional real-estate issues or how the final dollar-value of an estate is distributed.

Posted by: Chasmosaur1 | December 3, 2009 8:31 PM | Report abuse

Math skills are sorely lacking. A business worth $10,000,000 would not incur a $4,500,000 tax. The first $3,500,000 is tax free. The tax would be just under $3,000,000. If this is a farm or small business, the heirs get (i believe) 10 years to pay the tax. Most businesses are sold because siblings want to cash out.

Posted by: david314159 | December 3, 2009 8:39 PM | Report abuse

If the $1 million exemption goes into effect in 2011, this will impact more people than you think. Remember...."estate" includes not only money in the bank, but your house, car, boat, i.e., your entire net worth. Additionally, since it's not pegged to inflation, this will follow the course of the AMT tax which was innocuous when it was first implemented but now affects a significant number of middle class folks. So, don't close your eyes on this. Our illustrious leaders are hungry for bucks, and they depend on the mass of us middle class people to fuel their spending.

Posted by: leralph | December 3, 2009 8:46 PM | Report abuse

Many of you posting miss the point that the wealthy really don't pay estate taxes. It's fairly simple to set up Trusts to ensure that your chuldren (or whomever) will not have to pay taxes to the Government when you die. The people that are the most affected are the small to medium sized farms and small business owners who have their assets tied up in real estate, which has to be sold, barring trusts or the like, to satisfy the government. In the case of farmers, that tends to take away the agricultural benefit to the local area and the country as a whole. For the small businessman, it usually requires the sale of the business with obvious employee angst and other unintended consequences. My suggestion is an exemption for such circumstances.

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Posted by: nisnsd | December 3, 2009 9:09 PM | Report abuse

Reading blog entries from foolish people who feel that everyone who inherits money from a family member is not entitled to it is just what the politicians want us to do... ATTACK ONE ANOTHER!!.

Who really cares what someone does with their money before or after they die. What if someone tells you what to spend your money on. If someone choses to save their money rather than blow it on cars, televisions and dinners out, than that is their choice, why should they be taxed on it. An inheritance tax is just another form of redistribution of wealth taken by the government and to those who don't want to work as hard or save their money.....

We know what this government does with our tax money.. they spend on foolish causes or even spending $3,000 on flowers and over priced Gulf Stream Air planes (Pelosi) they are just politicians, and crappy ones at that. They are good at taking from all of us who pay taxes and give nothing back, they take and take. Our government is constantly taking from anyone who does not live within poverty levels (and those levels get lower every year so more people can be taxed).. Stop pandering to our politicians who are stealing our children's future.

I am far from being wealthy, but if I want to save my money in a pickle jar and leave it to my children when I die, then that is my right. No one should take from my children because I chose to save rather than spend all my money while I was alive... Stop with the attacks on the rich. This is socialist and anti-capitalist behavior it steals from a segment of the population and gives it to the government. And we see how the government spends our money. They waste and they abuse us all. Stop buying into their thinking, it is only fueling them to find more ways to stick it to all of us.

Posted by: marksx4 | December 3, 2009 9:19 PM | Report abuse

Makessense,

You're not making any sense. Somalia? Stay on topic here.

Posted by: dnara | December 3, 2009 9:26 PM | Report abuse

This is the one of the very few bills passed by the House of Representatives this year that makes sense and is entirely justified.
Republicans are united in being obsessed with helping the rich. Some Democrats, as usual, want to tax just about anything, so they can spend the money on their favorite programs.

A majority in the House of Representatives passed a fair bill, but I do not expect the Senate to follow their example. But maybe I will be wrong.

Posted by: Aprogressiveindependent | December 3, 2009 9:30 PM | Report abuse

I don't get how most of you think that an estate's value is pre tax? If the deceased earned or inherited his/her wealth, it was already taxed via our progressive income tax scale, capital gains or inheritance. Any interest, dividends, winnings, capital gains, etc. have been taxed. If he/she was wealthy, it was probably taxed at a high rate. And since the wealth was either earned or inherited, it is theirs and heirs to do with it what they wish. And why shouldn't a decedent will his/her money to their family or loved ones? Won't you prior to your demise? We don't live in a communist state where all should be equal. Hard work and good luck should pay off. I am far from rich and play the lottery. If I should win large the winnings will be taxed. I will leave all of my assets to my offspring who should not be taxed because my assets have already been taxed. Their future earnings should be taxed but their inheritance shouldn't. Again, this money/wealth has been already taxed regardless of the amount.

Posted by: neil64 | December 4, 2009 2:19 AM | Report abuse

To add to my early comment:

Democrat Stenney Hoyer said this: ""Abolishing the estate tax would add billions and billions to our deficit -- and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer," House Majority Leader Steny Hoyer (D-Md.).

_____________________________________________

Do you really think the tax collected on estates is going to lower our deficit? How about we stop all foreign aid until the deficit is gone and a surplus equal to our deficit is created? Also, let's fund building new schools in the US rather than abroad. How about we build a new school to replace one that is 15 years or older. Further, what if we turned our attention to properly funding social security and Medicare. The remaining amount could be used to help fund a public insurance policy. All of this building and activity caused by a surplus puts unemployed and maybe underemployed Americans back to work.

What exactly is foreign aid? Are we buying a country's friendship? Are we improving our trade/exports? I doubt this because America doesn't manufacture much other than food. And buying friendship has never been successful.

And as for the death tax, if my family earned it, we should keep it. It doesn't matter how many generations ago.

Posted by: neil64 | December 4, 2009 2:42 AM | Report abuse

Tax and spend Democrats.

Posted by: johnhiggins1990 | December 4, 2009 8:19 AM | Report abuse

Tax, tax, tax, spend, spend, and spend some more Democrats.

Posted by: johnhiggins1990 | December 4, 2009 8:21 AM | Report abuse

Spend, spend, spend, spend, and when the interest on the national debt is 100% GDP, spend some more Democrats. Then tax, tax, tax whatever remains, and kill the economy Democrats.

Posted by: johnhiggins1990 | December 4, 2009 8:23 AM | Report abuse

One day when we are standing in breadlines, wondering how our once prosperous country fell to the level of the Soviet Union, we will thank the Democrats.

Posted by: johnhiggins1990 | December 4, 2009 8:24 AM | Report abuse

If the people of the United States want the nation of their children and grandchildren to be dominated, unto eternity, by a privileged, obscenely wealthy, hereditary elite, by all means abolish the estate tax, which now nips only those inheriting MORE than three and a half MILLION dollars (and thats after the lawyers and accountants have shuffled everything around to skew the calculations, and only applies to the amounts over that substantial sum).

By all means, why shouldn't the children, grandchildren, great, and great-great grandchildren of J. Paul Getty be able to live off the ever-growing proceeds of fortunes they didn't earn, or be entitled as a birthright to attend the best schools, and take employment as executives on Wall Street? Why shouldn't the offspring of the rest of us... lesser persons... be expected to serve them and work for them until the end of days?

Who has ever truly EARNED four million dollars, anyway, to bequeath to a single heir? Nobody ever built such a fortune by himself, alone... others worked, the society itself contributed with every road, public utility, with a military, courts and police to provide security. There is some justice in the society claiming a share of vast fortunes, when their legal owners pass away, especially considering the exemptions in place.

Who cannot subsist, comfortably, on $3.5 million?

Posted by: Iconoblaster | December 4, 2009 12:07 PM | Report abuse

Tell me why inheriting money you didn't earn is NOT a taxable event?

Posted by: afgail | December 7, 2009 9:45 AM | Report abuse

why should we pay any taxes? What do we need government for anyhow? Of the ten most"advanced countries in the world we rank at the bottom with an average tax level of 26%. We have a 650+ billion war machine, almost 50 million people without medical insurance and an equal number undernourished. College education is now for the well off. Leaders of the world for sure!

Posted by: leonhaller | December 7, 2009 10:38 AM | Report abuse

Repeat after me--(Not one incubment gets reelected) The system is broke and we must replace it with a new direction. It can not be done with the present individuals. Do more than send a message next November, send an eviction notice and tell the ones that come up in two more years THEIR NEXT!

Posted by: dbhartnett | December 7, 2009 2:02 PM | Report abuse

As a progressive tax, the estate tax serves an important purpose in our economy. The preservation of the estate tax is essential to the government's ability to finance important policies and projects, as well as promote the democratic ideals that serve as the foundation of our government. Some believe that an extension of the 2009 estate tax policy serves as a tax break for the ultra-wealthy, and is ultimately inadequate for the needs of the American people. For more information visit:http://www.faireconomy.org/news/estate_tax_action_alert_12-7-09

Posted by: etaxintern | December 9, 2009 3:49 PM | Report abuse

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