If you could reform the estate tax, how would you do it?

Question

there are several reform proposals on the table for the estate tax, what do you propose and why?

Answer 1

i'd get rid of it. this is clearly an attack on hard working people who have become successful. they get taxed as they make their money, and then they get taxed again for dying? if removing it completely is not possible, then raise the taxable value of an estate to something significant like 5 or 10 million

Answer 2

It seems that very few people understand this tax. Currently, it only affects people who have estates in excess of $2,000,000. For a married couple with a total estate of $4,000,000 there would be no tax with some very simple planning. These numbers are scheduled to go up to $3,500,000 and $7,000,000 in 2009.
The argument that this monsy has already been tax doesn't wash unless the individual has made really bad investment choices over their lifetime and have lost money on every investment they ever made. I hae prepared 100's of estate tax returns and my experience is that most of the value in an estate is gain on investments which is never tax during life until the asset is sold. If sold, the income tac is on the gain not on the money invested. Also in my experience, the only small estates that have ever paid tax are the ones where the individual never did any kind of planning. This is the most easily avoided tax with some planning. This tax only affects the top 2% of individuals in the population.
The hard working average citizen never pays an estate tax because they would have to have been lucky with investments to accumulate great wealth. The average citizen in this country only has about $150,000 to $200,000 of assets when they die.
The people who don't understand these facts are the people who have bought into the argumants out forth by the wealthy in order to eliminate this tax and same themselves significant taxes.
The other argument you hear is that it forces small businesses to sell to pay the tax. Without planning properly that result woud be because of their being stupid when it comes to planning to avoid the tax.
I say keep it and let the millionaire heirs suffer because they only get $10,000,000 instead of $20,000,000. There were only 48,000 estate tax returns filed in 2000 and not all of them had any tax due.

Answer 3

The other respondents are misinformed. The lifetime exemption from the estate tax will be $2 million in 2007 and is scheduled to go to $3.25 million in 2009. That means a husband and wife can shelter $6.5 million in assets. That is a lot. The estate tax is intended to be a transfer tax on the very wealthy. Making the $3.25 million lifetime exemption permanent would be a good change.

Answer 4

Dump the estate tax. People work their butts off all their lives and some manage to do pretty well. The estate tax only dilutes what they can pass on to family members. Now picture this. Your are 40 years old. A millionaire grandparent dies. The estate is taxed at about 40%. leaving $600,000. Your father inherits the $600,000. But he is 65 years old, not really healthy, and dies a two years after your grandparent. Guess what, estate taxes MAY be owed again ( if the Democrats have their way ) at 40% of the $600,000. So two years ago, an estate that was worth one million dollars has now been taxed down to about $350,000. And what did the government do to deserve the $650,000 paid to them as estate tax? That one million dollars was already subject to property taxes, , business taxes, income taxes, sales taxes ( all these taxes are for the government ) so now they get one last shot at taxing it again a fifth time? By the way, $350,000 may sound like a lot of money to you. You can't buy a house in California with that. You can't retire on that. You may be able to fund a good university education for ONE of your children with that. So what is it exactly that the government has done to earn to deserve it? They didn't create the business that allowed the money to be earned. They didn't work at a job or that business for 30 years to create that estate amount, they didn't take risks with it, they didn't invest it, they didn't create other jobs with it, they didn't educate their kids with it, they didn't buy a house with it? What did they do to deserve it? You know why we have an estate tax? Because there are a lot of people that think "rich" people don't deserve to have a million dollars, so non-. millionaires think it is okay to (again ) tax the rich as punishment for being better off. And all the politicians like to be able to say they are going to "tax" the rich and make them pay their "fair share". If you have any clue about economics, the rich have already paid their fair share, several times over.

Answer 5

Eliminate it. It is disgusting to tax "estates" due to the fact that the money in the estate has been taxed a minimum of three times. I mean if taxing on income, sales tax etc isn't bad enough for the government to take advantage of a tragic family event to steal money from the wife and kids is an embarrassment.

Answer 6

I would raise the limit that is being to anything worth less than $500,000 total is not taxed.
Give the people with little money a break.