maycocksean said:
Irvine (or anyone else who supports the estate tax). How do you respond to this? This sounds like what happens to Martha, and it sounds like something that could totally happen to me. I've got this property but I don't have any cash with which to pay the taxes on that property.
firstly, the property would have to be worth over a million dollars, and soon over $1.5 million. and, the tax would be paid by the estate, not by you. while you might have to sell a house, you would not have to cough up the cash to pay the taxes on the house.
anyway, simply because there are certain parts of the estate tax that appear to be unfair doesn't create a good case for it's entire removal. reform, perhaps, but that's *never* been the goal of those who oppose the estate tax. it's argued against on vague notions of "fairness" (that it's unfair for rich people to be taxed) and not about specific situations like what happened to Martha. reform is one thing, repeal is something else. and besides, most Democrats support raising the threshold for eligibility to $3.5 million for an individual and $7 million for a couple
let's reiterate, again, the benefits of the estate tax -- over a trillion in revenue, a safeguard against the creation of a nation of landed gentry, an affirmation of the value of work over wealth, and let's keep in mind that the estate tax is the *only* significant federal tax on accumulated wealth in the United States. the estate tax reduces teh concentration of wealth in the hands of only a very few, it creates incentives for charitable giving supporting the delivery of vital services by nonprofits throughout the nation, and very, very few people pay an estate tax -- less than 3% of the population. it's also unaffordable right now.
notions of "double taxation" is only partly accurate. while some portion of a taxable estate might be made up of cash that was taxed before, many estates are made up of stocks, bonds, real estate or other holdings that have appreciated greatly in value and taxes were never paid because they weren't sold and the profits weren't turned into cash. heirs who inherit these assets won't have to pay tax on that unrealized profit either. the estate tax is the only tax that applies to such unrealized capital gains. and the more expensive the estate, the higher the percentage of that wealth is made up of unrealized capital gains.
in fact, the only merit i have seen in any of these arguments for the repeal of the estate tax was the situation presented by Martha.
and to get some perspective, let's take a look at who really benefits from the repeal of the estate tax:
[q]an estate tax repeal would save the estate of Vice President Cheney between $13 million and $61 million, according to the publicly available data on his net worth. It would save the estate of Defense Secretary Donald Rumsfeld between $32 million and $101 million. The estate of retired Exxon Mobil chairman Lee Raymond would pocket a cozy $164 million. As for the late Sam Walton's kids, whose company already makes taxpayers foot the bill for the medical expenses of thousands of its employees, the cost to the government for not taxing their estates would run into the multiple billions.
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/30/AR2006053001182.html
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