Estate Tax Hike

[jiminnm]

"The Code says, when an estate is subject to estate taxes, the cost basis of inherited assets is the date of death value [[there is a "step up" in basis). However, in 2010 there is no estate tax, and therefore no step-up in basis. Now, because the government took no action at the end of 2009, the estate tax was replaced Jan. 1 with a capital gains tax that requires heirs pay rates of between 15 percent and 28 percent on any bequeathed assets they sell. The tax is complicated because it applies to all profit since the assets were acquired by their original owners. Now do you see how no estate tax is not necessarily a good thing?! "

Technically, the estate tax wasn't replaced by capital gains tax. Since there is no estate tax in 2010, the tax basis for inherited assets is the tax basis held the decedent [[as you point out). That means that gains on assets sold in 2010 will be taxed at 15% [[for long term), at 28% [[for collectables) and at the heir's ordinary income rate, up to 35% for short term. When the estate tax is reinstated, as I assume some tax will be, then the stepped up basis should reappear. If the stepped up basis is eliminated or reduced, then I presume that the capital gains tax will also continue [[although that could truly be double taxation).

Personally, I don't think that one's death should trigger any type of taxation event. For that reason, I think that the better approach is the situation we have in 2010. Let heirs take the estate with no immediate taxes due, but any capital assets transfer with the decedent's tax basis. That way, no taxes are due until the asset is sold.

[laurin]

Whether against or for estate taxes, the way the article was written was unbelievably unprofessional. He cherry-picked facts to suit his case and injectedhis own emotional, self-interested tripe. I don't know if it was just plain lazy or a lazy attempt to mislead his audience, but I was irritated enough to write a letter the editor in complaint.

[Stosh]

Whether against or for estate taxes, the way the article was written was unbelievably unprofessional. He cherry-picked facts to suit his case and injectedhis own emotional, self-interested tripe. I don't know if it was just plain lazy or a lazy attempt to mislead his audience, but I was irritated enough to write a letter the editor in complaint.

What editor? They are probably afraid to say anything to his ass.

[Papasito]

Recently, news of 3 Democrats who suggested extending the Bush tax cuts caused the market to rally. Possibly the administration should investigate why such news would stimulate the economy, while plans of increased taxation, regulation, energy costs, and health care takeovers cause it to go stagnant...
http://online.wsj.com/article/SB1000...862552246.html

[Stosh]

Recently, news of 3 Democrats who suggested extending the Bush tax cuts caused the market to rally. Possibly the administration should investigate why such news would stimulate the economy, while plans of increased taxation, regulation, energy costs, and health care takeovers cause it to go stagnant...
http://online.wsj.com/article/SB1000...862552246.html

Which, of course, illustrates the abject supidity of your average investor.

[Papasito]

Because knowing companies may pay less in taxes which frees up money they can reinvest into thier companies and hire more employees makes them stupid. People are just looking for solid guidelines of what the taxes and regulations are and are going to be. Right now everyone is dealing with uncertainties and unkowns, so companies and small businesses are holding on to what they have and are functioning in survival mode. Every time something goes wrong, the administration lashes out in a kneejerk reaction, so for businesses to take big risks on expanding it would seem they would be putting themselves in an incredibly vulnerable position.

[Stosh]

Because knowing companies may pay less in taxes which frees up money they can reinvest into thier companies and hire more employees makes them stupid. People are just looking for solid guidelines of what the taxes and regulations are and are going to be. Right now everyone is dealing with uncertainties and unkowns, so companies and small businesses are holding on to what they have and are functioning in survival mode. Every time something goes wrong, the administration lashes out in a kneejerk reaction, so for businesses to take big risks on expanding it would seem they would be putting themselves in an incredibly vulnerable position.

Glad you agree with me.

[maxx]

Yes, every cent, if that is the father's wishes.

And let's just overlook all the tax loopholes the rich and businesses enjoy that someone else pays for. Businesses provide such great-paying jobs today.

[Jimaz]

No To Oligarchy

The American people are hurting. As a result of the greed, recklessness and illegal behavior on Wall Street, millions of Americans have lost their jobs, homes, life savings and their ability to get a higher education. Today, some 22 percent of our children live in poverty, and millions more have become dependent on food stamps for their food.

And while the Great Wall Street Recession has devastated the middle class, the truth is that working families have been experiencing a decline for decades. During the Bush years alone, from 2000-2008, median family income dropped by nearly $2,200 and millions lost their health insurance. Today, because of stagnating wages and higher costs for basic necessities, the average two-wage-earner family has less disposable income than a one-wage-earner family did a generation ago. The average American today is underpaid, overworked and stressed out as to what the future will bring for his or her children. For many, the American dream has become a nightmare.

But, not everybody is hurting. While the middle class disappears and poverty increases the wealthiest people in our country are not only doing extremely well, they are using their wealth and political power to protect and expand their very privileged status at the expense of everyone else. This upper-crust of extremely wealthy families are hell-bent on destroying the democratic vision of a strong middle-class which has made the United States the envy of the world. In its place they are determined to create an oligarchy in which a small number of families control the economic and political life of our country.

The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. Four hundred families! During the last fifteen years, while these enormously rich people became much richer their effective tax rates were slashed almost in half. While the highest-paid 400 Americans had an average income of $345 million in 2007, as a result of Bush tax policy they now pay an effective tax rate of 16.6 percent, the lowest on record.

Last year, the top twenty-five hedge fund managers made a combined $25 billion but because of tax policy their lobbyists helped write, they pay a lower effective tax rate than many teachers, nurses and police officers. As a result of tax havens in the Cayman Islands, Bermuda and elsewhere, the wealthy and large corporations are evading some $100 billion a year in U.S. taxes. Warren Buffett, one of the richest people on earth, has often commented that he pays a lower effective tax rate than his secretary.

But it's not just wealthy individuals who grotesquely manipulate the system for their benefit. It's the multinational corporations they own and control. In 2009, Exxon Mobil, the most profitable corporation in history made $19 billion in profits and not only paid no federal income tax—they actually received a $156 million refund from the government. In 2005, one out of every four large corporations in the United States paid no federal income taxes while earning $1.1 trillion in revenue.

But, perhaps the most outrageous tax break given to multi-millionaires and billionaires happened this January when the estate tax, established in 1916, was repealed for one year as a result of President Bush's 2001 tax legislation. This tax applies only to the wealthiest three-tenths of 1 percent of our population. This is what Teddy Roosevelt, a leading proponent of the estate tax, said in 1910. "The absence of effective state, and, especially, national restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which is not for the general welfare that they should hold or exercise.… Therefore, I believe in a…graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate." And that's what we've had for the last ninety-five years—until 2010.

Today, not content with huge tax breaks on their income; not content with massive corporate tax loopholes; not content with trade laws enabling them to outsource the jobs of millions of American workers to low-wage countries and not content with tax havens around the world, the ruling elite and their lobbyists are working feverishly to either eliminate the estate tax or substantially lower it. If they are successful at wiping out the estate tax, as they came close to doing in 2006 with every Republican but two voting to do, it would increase the national debt by over $1 trillion during a ten-year period. At a time when we already have a $13 trillion debt, enormous unmet needs and the highest level of wealth inequality in the industrialized world, it is simply obscene to provide more tax breaks to multi-millionaires and billionaires.

That is why I have introduced the Responsible Estate Tax Act [[S.3533)....

[Stosh]

No To Oligarchy

You did, or who's speech is that?

[Jimaz]

You did, or who's speech is that?

Not I. Bernie Sanders, as cited in the link.

[oladub]

Not I. Bernie Sanders, as cited in the link.

What a phoney. Bernie Sanders just totally caved to the oligarchs recently. He had been the principle sponsor of S 604 which would have required some transparancy of the mega-bank owned Federal Reserve. This bill had made it's way through the House. Bernie Sanders betrayed the cause and gave corporatist frontman Chis Dodd everything he wanted to gut S 604. As the author notes, "When it comes to halting corporatism; never trust a socialist to do a libertarian’s job."

[rb336]

Because knowing companies may pay less in taxes which frees up money they can reinvest into thier companies and hire more employees makes them stupid.

no, believing the retoric of the money-grubs that such is the case -- lowering the federal taxes has NEVER been followed by an increase in US hiring. Not after ronnie, not after W, not after Kennedy. it HAS resulted in the opposite as companies off-shored work to take advantage of various tax credits, or to maximize profits for their CEOs at the expense of the employees.

[maxx]

Which, of course, illustrates the abject supidity of your average investor.

And who is the average investor today?

[maxx]

Bernie Sanders probably ran up against the reality of politics today, namely campaign financing. He is still right more often than he is wrong.
http://sandersunfiltered.com/blog/?p=41

And here's what Sen. Bill Nelson said about it: "...In response to the credit crisis, the Federal Reserve lent an unprecedented amount of funds to financial institutions deemed "too big to fail." The agency believes it must maintain confidentiality in its lending programs to avoid panic within the financial system.."
{Daily Paul}

I suppose the stock market could be even more of a rollercoaster ride if everyone knew who was getting money loaned.