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The year 2010 is a great year for rich people to die. As cynical as that sounds, it is the year in which estate taxes have been completely eliminated on wealth that passes on to heirs.
Four estates so far this year, including that of George Steinbrenner, have wielded absolutely nothing to the country that made the environment that produced their wealth.
Motivated by the billion-dollar estates passing to heirs tax-free, Sen. Bernard Sanders (I-VT) and four co-sponsors have introduced a bill that would return the estate tax to the 2009 exemption level of $3.5 million but add a progressive tax rate structure that would start at 45 percent, rise to a top level of 55 percent, and add a 10 percent surtax on billionaires. The proposal would be retroactive to the start of 2010.
(snip)
The year without an estate tax is a creature of the Bush tax cuts. Under the provisions of a tax-cut bill enacted in 2001, the value of estates exempt from the tax gradually went up over the past eight years while the tax rate on estates was reduced. During 2010, according to the 2001 law, the estate tax disappears entirely, only to be restored in 2011 at a rate of 55 percent on estates of $1 million or more, which is where things stood before the 2001 change.
One of the founders’ great fears was that the country would be dominated by a class of those who inherited wealth. That would seem to have been the great wish of the administration from Hell, that was so full of the inheritors of others’ earnings.
True to form, the elimination of taxes on vast wealth is not available to those of more modest means. The right wing has made few more blatant grabs of the best government welfare available for the very wealthy, passing the burden of that welfare on to those less able to afford it.
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Sen. Sanders on Thom T.’s show stated he will introduce a bill to make the estate tax retroactive for ’10.
Hopefully, that will be passed, but in the meantime, a huge hole is in place in high earners’ financial responsibility.
the estate tax was requested by the rich before WW2 – in the beginning the income tax was to tax capital gains on transfer – and on death assets transfer so there would be a capital gains tax
but the rich did not want a capital gains tax to be paid at death – and pushed for an estate tax.
If the capital gains rate is go to pre-2001 levels, so should the estate tax.
Yes, and at death the decedent’s assets get a stepped-up basis. This allows the sale of the assets immediately post-death without there being any capital gains.
Not only our founding fathers like President Thomas Jefferson but also our wonderful market economy proponents like Mr. Adam Smith did not prefer inherited nobility for the strength of our society. It is nice to see that some like Mr. Buffett, Mr. Gates etc. are trying to do the right thing in this context.
President Theodore Roosevelt btw a republican president and one of the great presidents we had last century brought in estate taxes which is a huge progressive change found only in first world countries right now and I am quoting his quote here which is apt for this topic.
Thanks to Sen. Sanders for proposing this tax which is necessary for the vibrancy of our Democracy and the fact that we have no estate taxes this year shows how regressive our taxation has become this decade. It is good to see some of our senators are trying to correct the mistakes made this past decade.
And to add even more insult to injury, we get this:
Changing Stance, Administration Now Defends Insurance Mandate as a Tax
WASHINGTON — When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”
http://www.nytimes.com/2010/07/18/health/policy/18health.html?fta=y
And in the world’s “progressive” blogs? Very little said, as with Afghanistan and the “good war”…
They have no choice but to call it a tax in court.
Otherwise the constitutionality of it isn’t even close. (IANAL)
Their only hope of passing consitutional muster is to claim it’s a tax in court.
How can they tax you for not receiving an employment benefit.
It seems Sanders’ bill should be filibuster proof since it’s clearly a budget item.
I believe to qualify for reconciliation it has to be part of the House’s budget resolution.
I don’t think the House has included reconciliation language in a budget resolution for the 2011 fiscal year (have they even passed a budget resolution?).
I can already see the flames and wreckage on Capitol Hill from Sen. Sanders bill crashing and burning. There is not one Republican or very many democrats that will support this. The rich and really rich are the very people who have bought them their seats.
Hard not to think of a former vice president with an aquarium pump keeping him among us. And hard not to think about certain offspring of the dick who just might be motivated to get things moving along for the betterment of the donut hole.
If they make it retroactive, there is going to be one hell of a legal fight. It should have been done last fall.
Yeah, it would be stupid to try that.
Just live with this year’s donut hole and fix it moving forward.
Sorry, no matter how “unfair” it seems to us little people, I am totally against making this retroactive. I worry that would open up a whole can of worms and it would end up biting us in the end. It’s the law this year, live with it and move on.
making this retroactive”
they can’t make it “retroactive” ….. BUT retroactive has a court approach that means not anticipated so as to allow Congress to date laws from the first of the calendar year – so if someone dropped anything into the hopper of any committee that dealt with the estate tax from the first of the year, those planning to die had fair warning that there might be changes! at least that is my understanding.
I love the law – at least my understanding of what is the law! :-)
Book Salon up at the Mothership with Heather Rogers’ Green Gone Wrong: How Our Economy Is Undermining the Environmental Revolution hosted by Josh Nelson
Crap! Even the Socialist in Congress doesn’t want to go back to 2001 levels?
For an administration so “concerned” about the deficit that it appointed a commission to
gutreform Social Security, it doesn’t seem too concerned about the wealthy paying their fair share of estate taxes. Guess that’s just tooradical/liberalnot centrist enough for Obama/Rahm/Axelrod.Thanks to Republicans and wealth-beholden “Democrats” like Blanche “Walton” Lincoln (D-Walmart), 2010 is throw-momma-from-the-train year. A good year to watch the obituary columns for the timely and untimely deaths of the mothers, brothers, fathers, aunts and uncles of the ueber-wealthy. Their heirs will pay no tax. But in twenty-eleventy, the estate tax resurrects itself, an event a few hundred wealthy detractors treat like the arrival of the antichrist, when it really represents a modest revival of representative government.
There is, of course, no inherent logic for and much argument against taxing “capital gains” at a lower rate than “ordinary” income. Rationally, it would all be taxed at the same rate. Making money with only money, which one has to have to start with, instead of creativity, hard work and the sweat of one’s brow, arguably deserves a higher tax rate. But I’d settle for the same, rather than being taxed at about half the ordinary income rate.
David Dayen is upstairs!
Kabuki Activism: Obama, Axelrod Engage on Unemployment Extension After Outcome Decided
I know of a ten year old boy who pays 23% on money he has inherited from his dead father”s estate. Stick it to a ten year old child but allow all of those billionaires to catch a break.
I believe that tax laws are frequently applied retroactively. Therefore unless the Supreme Court decides not to follow stare decisus the estate and gift and generation skipping transfer tax could become law again in pretty much 2009 form. The generation skipping transfer tax is the key provision preventing the super wealthy from establishing 1000 year trusts for their wealth and generations of heirs. Here is a link to an article on the history of the estate tax suggested by Professor Linda Beale over at ataxingmatter.blogs.com
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1438181
Should be ataxingmatter.blogs.com — in case that does not show up.
I could be wrong, but I thought Clinton’s first budget included a retroactive tax. And oh how the GOP screeched about that. I’m not sure if it stayed in there or not, but it was proposed.
Given how we are governed by a plutocracy, I assume any inheritance tax, if it passes, will be much lower than it was in 2001 and the loss of revenue made up with either lower social security/medicare benefits or higher SS witholding. That’s basically what Greenspan proposed (and passed by Congress) to pay for Reagan’s tax cuts – higher SS witholding.
In the absence of progressive taxes. In the absence of estate taxes. And especially in the absence of anti trust action. Capitalism creates vast pools of stagnant personal wealth. That’s why we call it neo-feudalism. When .1% have everything, 99.9% have nothing. That is the goal of the banking cartel. To own the earth in fee simple.
There is absolutely no hope that any combination of Democrats and Republicans will save us from our fate. Boycott the legacy parties!