Estate Taxes are a Nice Problem to Have

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One quote from the article above gives a real indication of how little Mr. Moeller understands this issue, namely " The current estate tax applies to only 0.2% of all taxpayers - - a group estimated to total only 6,000 estates a year. Everyone else -- all 99.75% or so -- pay zero estate taxes." Now, assuming his numbers are correct.....why do you think that is?
Well, the truly rich have many, many legal (but very expensive) ways to avoid estate taxes. Others who are likely to be susceptible to this tax wind up having to hire pretty expensive estate attornies, financial advisors, and accountants to take advantage of other legal ways to avoid paying or minimizing the tax, e.g. GRATs, last-to-die insurance, by-pass trusts, real-estate trusts, etc. A fairly large industry has grown up around avoiding/minimizing estate taxes.........not a very productive use of this brain-power. But of course, this "industry" forms its own lobby whenever the notion of killing this unfair tax arises. They sure want this tax to stay in place. The more complicated the tax code, the better for them. Small businesses are pretty much forced down this path lest the business be liquidated at the principals' deaths..........and the employees of that business get sent packing. That is why so few wind up paying this tax.......it doesn't happen naturally or without great recurring expense.
There's so much ineptness and anti-productivity in the tax code it is criminal. As we sit here today, the House, just days ago, passed its own version of a permanent bill................the exclusions contained in that bill are NOT indexed for inflation. Indexing tax break-points is pretty standard practice, but this time these same exclusions would be set in place forever. More and more people/businesses will get inflated above these exclusions as time goes by......as happened with the ugly and out-of-control AMT. And more and more will get to know these estate attornies, financial advisors, and accountants.
Why don't we want the government running anything? Because of this ineptness and anti-productivity and plain sloppiness every day. Take a walk through any federal office in any city............it's not an uplifting experience.

M.S. Williams of FL 5:01PM December 07, 2009

They tax it when you earn it, they tax it when you save it, they tax it when you spend it, and they tax it when you die.
I can remember a time, years ago, when policy was not to tax the same dollars twice. The theory was that a dollar spent on mandatory taxes was not income, and so would not be taxed as such. Dollars spent on state income *and* sales taxes, among others, were exempt from federal income tax.
Now, all dollars are subject to multiple taxes just because the government is greedy.
I also find it hard to believe that only 0.2% of taxpayers are subject to the estate tax. $3.5M is a middle-class estate these days. Can the number of qualifying estates really be that low?

Rocket J Squirrel of CA 12:41PM November 27, 2009

Estate taxes are immoral. The idea that Uncle Sam should benefit from your demise is immoral. It is sickening that Uncle Sam thinks it is entitled to anything upon your demise.

Dutch 11:33AM November 27, 2009

My husband just passed away last year. My 4 children and I paid $900,000.00 in
Estate Taxes. We lived conservatively and saved for our old days worrying about inflation, sickness and providing for our old age. In retrospect I think we should have lived much more freely and given a lot of that money to our children during his lifetime and let the system provide for us once we ran out of the cash just like the rest of society is enjoying.
When my turn comes, there wont be any Estate Taxes for my heirs.

L. Boulard of MO 10:36AM November 27, 2009

So, you work hard all your life, you're relatively sucessful, and you want to leave
your money to your kids. What's so wrong with that. This money has already been taxed
at least once if not more. The income from estate taxes is a pittance compared to
the money our government wastes on a daily basis. This is regressive social
engineering at it's worst, plain and simple. Where does the incentive go to
innovate and work hard -- not to mention create jobs by investing in new
business activity -- when you know that at the end of your life half, if not more,
of what you've made will be soaked up by the money sponge that is Washington.
Everyone in America wants to get rich but nobady wants to see anybody else get
rich. The sourest of sour grapes.

Liam Halloran of CO 10:17AM July 24, 2009

I have been in the financial services / Estate planning business for over 33 years. My group of 25 planners only deals with very high net worth clients, all subject to the Estate Tax. All clients can afford the insurance premiums to indemnify the tax. Look around .. the rich are getting richer / the poor are getting poorer. 40 million unuinsured / 20 million underinsured / 2.5 million (mostly poor) in prison. An estimated 30 million hooked on illegal drugs. Our elderly are eating cat food, and are country's infrastrucure is in bad shape. We are fighting 2 wars costing 100 billion annually. The Estate tax was meant to equalize wealth. Let's start thinking more about helping all citizen's instead of trying to help the wealthy pass on more wealth to their spoiled kids, who will be the first to throw them into a nursing home anyway..

Bryn of NJ 2:08PM July 22, 2009

As an attorney and licensed insurance agent, I rather look forward to the LOWERING of the estate tax exemption and elimination of the stepped-up basis. Back the wealthier clients against the wall, tax-wise, and purchasing life insurance to pay unavoidable taxes may be their best solution, especially if they choose to leave their estates to family, not charity.

Michael R. Loveridge, J.D. of UT 12:28AM July 22, 2009

The $800,000,000 is a mythical number. There is no support for it. The estate tax takes in, currently, about $25b per year. 25 X 10 = $250,000,000. The $800,000,000 must assume we return to a 55% rate for estates valued above $1,000,000. The $800 million clearly does not include revenues from the carryover basis provision that will also be enacted as part of the law that eliminates the estate tax in 2010. This provision will tax appreciation that accretes during the decedents life when inheritors sell such assets. This will be a very big revenue source that has never been properly "scored" by the Joint Tax Committee. Then consider this: without an estate tax, the $25 billion dollar a year tax subsidy given to the life insurance industry will fall significantly as those exposed to the estate now will not have a need for the product if the tax goes away. This will save the government at least $20 billion per year.
As the article points out, only 6,000 people pay estate tax each year, out of what, 3.5 million who die? Hence, this is THE most progressive tax on the planet earth. Since the Democrats like the tax so much, I think more of them should get the opportunity to pay it. The rate should be lowered and the base should be broadened.

SAH of MN 12:11AM July 22, 2009

Sorry to inform you of this. But ever since America has had an estate tax (a long time), there is no "earned right" in this country to pass assets to children---except as defined by law. The notion that whatever you get in life is all yours to keep WENT OUT WITH HIGH-BUTTON SHOES. The same is true of making your little kids into titans from inheritance. It's not just the government's need for money. The tax laws are the foundation of American exceptionalism. It's how we prevent ourselves from morphing into a land of lords and serfs over a few generations.
As for me, I have owned and operated my own small business and I also served for 20 years as the accountant for a larger small business than mine. I'm not speaking out of a vacuum, as you imagine.

Muser of NM 3:29PM July 21, 2009

Cindy McCain's family have already paid taxes on the beer distributorship. The same applies to countless small business owners and their families. They paid taxes, they played by the rules, and they earned the right to pass their assets on to their children. You should try it sometime; and then maybe you would wake up and not feel that you have the right to decide a better use for THEIR money.

S Alton of NC 1:04PM July 21, 2009