The issues #1: The inheritance tax

[hugo]

Obama is proposing an inheritance tax of 45% for individual estates over $5 million and couples over $7 million. What this will do is destroy, force to incorporate or place in heavy debt many small businesses which Obama claims are the engine of our economy. What say you?

[ImWithStupid]

Obama is proposing an inheritance tax of 45% for individual estates over $5 million and couples over $7 million. What this will do is destroy, force to incorporate or place in heavy debt many small businesses which Obama claims are the engine of our economy. What say you?

 

One of my problems with the inheritance tax that he proposes is the impact it would have on family farms. With productive farmland at the price it's at, along with equipment like tractors and combines that cost anywhere from $100,000 to $250,000 a piece, it doesn't take long to hit the $5 million mark in value. The problem is, much of this value is owed to the bank.

 

Who could anyone afford to take over a farm from their parents, that is likely heavily mortgaged and have to come up with over $2 million to give to the government?

[wez]

One of my problems with the inheritance tax that he proposes is the impact it would have on family farms. With productive farmland at the price it's at, along with equipment like tractors and combines that cost anywhere from $100,000 to $250,000 a piece, it doesn't take long to hit the $5 million mark in value. The problem is, much of this value is owed to the bank.

 

Who could anyone afford to take over a farm from their parents, that is likely heavily mortgaged and have to come up with over $2 million to give to the government?

 

Yeah.. big problem.. If they even wanna consider this crap they need to make damn sure no family business/farm needs to be sold to pay the taxes and bankrupt people. Bad idea..

 

 

I know Warren Buffet has spoke in favor of an inheritence tax increase in the past.. easy for him.

[snafu]

Obama is proposing an inheritance tax of 45% for individual estates over $5 million and couples over $7 million. What this will do is destroy, force to incorporate or place in heavy debt many small businesses which Obama claims are the engine of our economy. What say you?

 

It sounds like Eddie Murphy's ex.. " I want half Eddie...Eddie I want half!"

[snafu]

Holy crap! We are gonna be in a world of hurt in the next four years if these ing polls are right.

[snafu]

One of my problems with the inheritance tax that he proposes is the impact it would have on family farms. With productive farmland at the price it's at, along with equipment like tractors and combines that cost anywhere from $100,000 to $250,000 a piece, it doesn't take long to hit the $5 million mark in value. The problem is, much of this value is owed to the bank.

 

Who could anyone afford to take over a farm from their parents, that is likely heavily mortgaged and have to come up with over $2 million to give to the government?

 

I was thinking about farmers the other day watching Palin speaking in Iowa. She did mention "Joe the farmer" too but she should have elaborated on that I think. Don't' they all fall under the $250,000 a year small businesses?

[ImWithStupid]

I was thinking about farmers the other day watching Palin speaking in Iowa. She did mention "Joe the farmer" too but she should have elaborated on that I think. Don't' they all fall under the $250,000 a year small businesses?

 

To bring it closer to home, take a moderate sized construction company, trucking company, shipping company or fishing company. I doubt it would take very long to aquire the magic $5 million for the inheritance tax and no time at all to hit the $250,000 income to meet the increases in income tax. Problem is much of that income has to be used for salery, technology, equipment, debt repayment and only a small percentage is profit.

 

There's a local coffee shop that hits the $250,000 mark for income, but the owner ends up with less than $30,000 after all is said and done.

[snafu]

To bring it closer to home, take a moderate sized construction company, trucking company, shipping company or fishing company. I doubt it would take very long to aquire the magic $5 million for the inheritance tax and no time at all to hit the $250,000 income to meet the increases in income tax. Problem is much of that income has to be used for salery, technology, equipment, debt repayment and only a small percentage is profit.

 

There's a local coffee shop that hits the $250,000 mark for income, but the owner ends up with less than $30,000 after all is said and done.

 

Your right. I think just about all the commercial fisherman fall under that category. Salmon and crab is gonna get a whole lot more expensive!

[Old Salt]

Yeah.. big problem.. If they even wanna consider this crap they need to make damn sure no family business/farm needs to be sold to pay the taxes and bankrupt people. Bad idea..

 

 

I know Warren Buffet has spoke in favor of an inheritence tax increase in the past.. easy for him.

And Warren Buffet is trying to give all of his money way before he dies. He's already got his kids well-off financially.

[ImWithStupid]

And Warren Buffet is trying to give all of his money way before he dies. He's already got his kids well-off financially.

 

Warren Buffet is an investor. He makes his money off of investing his money in companies that make profits and can move his money to any company that still can make a profit. Companies will always make profits. They will just cut jobs or benefits to the employees to do so.

 

None of this will affect him or his firm much.

[Old Salt]

Warren Buffet is an investor. He makes his money off of investing his money in companies that make profits and can move his money to any company that still can make a profit. Companies will always make profits. They will just cut jobs or benefits to the employees to do so.

 

None of this will affect him or his firm much.

I guess what I meant to say was that he's trying to give away the bulk of his personal fortune. This was mentioned when he partnered with Bill Gates and wife. Of course, his companies will continue to make money. That's why he'll never succeed in giving everything away.

 

His kids are independently wealthy. If Buffet's estate were taxed at 95%, there'd still be a major fortune left to inherit.

[ImWithStupid]

I guess what I meant to say was that he's trying to give away the bulk of his personal fortune. This was mentioned when he partnered with Bill Gates and wife. Of course, his companies will continue to make money. That's why he'll never succeed in giving everything away.

 

His kids are independently wealthy. If Buffet's estate were taxed at 95%, there'd still be a major fortune left to inherit.

 

I understood what you meant. I was just answering Obama's question as to why someone line Warren Buffet would support him if he had socialist tendancies in his tax policy. Warren Buffet isn't responsible for trying to produce a good or take care of workers. All he cares about is the bottom line of the profit of a company, regardless of how many workers suffer or are laid off.

[Old Salt]

I guess we're talking at cross purposes here. I was just commenting on wez' statement that Buffet supported an increase in inheritance tax.

[hugo]

Warren Buffet is an investor. He makes his money off of investing his money in companies that make profits and can move his money to any company that still can make a profit. Companies will always make profits. They will just cut jobs or benefits to the employees to do so.

 

None of this will affect him or his firm much.

 

45% tax on estates over a billion would not hurt the economy much.

[snafu]

45% tax on estates over a billion would not hurt the economy much.

 

45% tax sounds so ludicrous! Up it a nickel and get "half eddie!"

I'm so glad to hear Palin call it for what it is. Socialism!

[ImWithStupid]

45% tax on estates over a billion would not hurt the economy much.

 

But the government won't get the inheritance from Buffet. He plans on giving it away to charitable organizations, which is where I believe charity and handouts should come from, not the Federal Government. They've never shown they can efficiently manage anything, especially social programs and business. Charities are better and more efficient with their money than government because they know there is an end to what they can do. The Federal government seems to think it can borrow and print money forever and Obama and the Dems in Congress will take it to an extreme we have never seen before.

 

Just listen to what Barney Frank is now saying. We need to ignore "deficit fear" and spend more Federal money and worry about where to get it later.

[Anna Perenna]

Obama is proposing an inheritance tax of 45% for individual estates over $5 million and couples over $7 million. What this will do is destroy, force to incorporate or place in heavy debt many small businesses which Obama claims are the engine of our economy. What say you?

 

Isn't estate/inheritance tax already in place?

 

The 2001 tax legislation put in place the current estate tax table, which is as follows:

 

2002 and 2003: exempt to $1 million, then:

50% in 2002;

49% in 2003

 

2004 and 2005: exempt to $1.5 million, then:

48% in 2004;

47% in 2005

 

2006, 2007 and 2008: exempt to $2 million, then:

46% in 2006;

45% in 2007 and 2008

 

The official wording in the Obama tax plan is:

 

Estate Tax: The estate tax would be effectively repealed for 99.7 percent of estates. For the remaining 0.3% of estates over $7 million per couple, Obama will retain a rate of 45%. This policy would cut the number of estates covered by the tax by 84 percent (relative to 2000)

 

What say you, again?

[ImWithStupid]

Isn't estate/inheritance tax already in place?

 

The 2001 tax legislation put in place the current estate tax table, which is as follows:

 

2002 and 2003: exempt to $1 million, then:

50% in 2002;

49% in 2003

 

2004 and 2005: exempt to $1.5 million, then:

48% in 2004;

47% in 2005

 

2006, 2007 and 2008: exempt to $2 million, then:

46% in 2006;

45% in 2007 and 2008

 

The official wording in the Obama tax plan is:

 

Estate Tax: The estate tax would be effectively repealed for 99.7 percent of estates. For the remaining 0.3% of estates over $7 million per couple, Obama will retain a rate of 45%. This policy would cut the number of estates covered by the tax by 84 percent (relative to 2000)

 

What say you, again?

 

Under the current plan the Estate tax is supposed to go to 0% in 2010 but this will expire come 2011 sending it back to 55%. McCain wants to make this permanent, Obama wants to let it expire and claims to want to keep it at 45%. That's the difference.

 

http://money.cnn.com/2008/08/06/smallbusiness/estate_tax.fsb/

[Anna Perenna]

Under the current plan the Estate tax is supposed to go to 0% in 2010 but this will expire come 2011 sending it back to 55%. McCain wants to make this permanent, Obama wants to let it expire and claims to want to keep it at 45%. That's the difference.

 

The estate tax: McCain vs. Obama - Aug. 6, 2008

 

Hugo's initial wording was fairly misleading, then ....

 

The article you linked seems to refute what you said:

 

Obama proposes freezing the estate tax at 2009 levels: a 45% tax rate on estates valued at more than $3.5 million. Married couples can combine their exemptions for a total of $7 million.

 

"By exempting all estates under $7 million, Obama's plan will shield all but about 100 estates with small business income from any estate taxation," .....

 

McCain's plan would be a more dramatic departure from current policy. The Arizona Senator favors a 15% tax rate, equal to the capital-gains tax rate, and an individual exemption of $5 million ($10 million for married couples).

[hugo]

She got me. I was not aware the current tax rate was that high. It seems outrageous to me and I believe it has to be killing small businesses. A liittle info:

 

In 2001, Congress passed a law that phases out and ultimately eliminates estate taxes.[8] The new law reduces the top marginal rate to 50 percent in 2002, and decreases the tax by one point annually to 45 percent by 2007. It also eliminates the 5 percent surtax. The amount of an estate that is exempt from taxation rises from $1 million in 2002, to $1.5 million in 2004, $2 million in 2006, and $3.5 million in 2009. In 2010, the estate tax is completely repealed. To partially offset the loss in income from these changes, Congress required that in 2010, the basis for calculating capital gains on inherited assets change from stepped-up to carryover. [9]

 

A quirk in the law, done in part so that the loss of revenue after 2010 would not have to be taken into account in the 2001 evaluation of 10 year budgetary impact of the original tax change, the law expires on December 31, 2010. In 2011 the situation returns to that in 2000 with an exemption of $1 million, and a top marginal rate of 55 percent.

 

From 1935 through 1998, the percentage of estates in a given year that pay estate tax has generally been less than two percent.[10] The Congressional Budget Office estimates that 16,700 estates will be subject to the tax in 2005, compared with 30,400 that would have been subject to the tax without the 2001 changes.[11]

 

I belive the national budget should be balanced over the business cycle. The Republicans have shown a great interest in cutting taxes but not in cutting spending. You can't have your cake and eat it too, forever. Or, to quote Goldwater "Where is the politician who has not promised to fight to the death for lower taxes- and who has not proceeded to vote for the very spending projects that make tax cuts impossible?" I believe it is more conservative to tax and spend then borrow and spend. True conservatives reduce taxes and spending. Spending grew under the GW administration at nearly twice the rate of the Clinton administration. Barry is rolling in his grave and the Republicans have reaped what they have sowed.

 

A Democratic Representative:

 

Inheritance tax should go

Honolulu Advertiser Editorial

Thursday, July 27, 2000

By U.S. Rep. Neil Abercrombie

 

Not long ago, the owner of a Honolulu auto body repair shop told me of the long hours and years of hard work she and her family had devoted to building a successful business. Working nights and weekends was the rule, leisure time was the exception. Their commitment paid off, and even though the family is far from wealthy, they have achieved a level of modest prosperity.

 

The owner's worry now is that when she dies, her children may have to sell the shop to pay the inheritance tax on the estate, a tax that runs as high as a whopping 55 percent.

 

I hear similar stories from other small-business owners. Even people who won't be affected by the inheritance tax think it's unfair. Why should assets be taxed a second time when they've already been taxed as income during the owner's lifetime? And why should a family be hit with a tax bill when they're still in grief and shock from the loss of a loved one?

 

Defenders of the inheritance tax claim that it applies only to the rich. This is a fallacy. First, more than half of estates subject to the tax are valued at less than $5 million. That's not manini, but it's a long way from the Microsoft category. Inventory, equipment and real estate assets (especially here in Hawai'i) can easily boost the value of a small business well beyond the $5 million mark.

 

Second, the truly rich - the Rockefellers, Gateses, etc. - can hire legions of lawyers, accountants, and estate planners to avoid the inheritance tax. Small-business owners can rarely afford the luxury of advice from these high-priced experts.

 

Too often the result is that when the owner of a family business dies, the heirs have to sell the firm or liquidate the assets to pay the inheritance tax.

 

Usually it's not just the family who suffers: employees face pay cuts, shorter hours or even the unemployment line. No wonder 70 percent of family business don't survive into the second generation, and nearly 90 percent don't make it to the third.

 

When I hosted a June 20 video teleconference with leaders of Hawai'i's small-business community, they made these points emphatically:

 

Small businesses are often forced to divert resources from business operations in order to pay premiums for life insurance to pay anticipated taxes.

Hawai'i's high real estate values often escalate estate valuations to the point where they are subject to disproportionately high inheritance taxes.

Small-business valuations frequently reflect high concentrations of noncash assets (such as equipment), leaving heirs short of cash to meet inheritance tax obligations.

The death of an owner often throws a small business into turmoil, compounding the difficulties of heirs trying to deal with inheritance tax obligations.

Inheritance tax planning frequently compels small-business owners to structure their firms in ways that reduce tax liability but also reduce profits.

 

That's why I became a sponsor of H.R. 8, a bill to eliminate this unfair and counterproductive levy. My colleagues in the House of Representatives, including a large number of Democrats, agreed with me. The measure passed the House June 9 on an overwhelming bipartisan vote.

 

Some have asked why a Democrat would vote for, let alone sponsor, a bill like this one. My answer is fairness, small-business survival and job preservation.

 

Eliminating the inheritance tax is not only the right thing to do, it's something we can afford to do. With the projected federal budget surplus now in the $2 trillion range, the great debates in Congress resolve around the question of how to utilize that surplus. From my perspective, the most important priorities are saving Social Security, strengthening Medicare with a prescription drug benefit and paying down the national debt.

 

Still, the surplus is large enough to address these most pressing issues and, at the same time, provide targeted tax cuts that meet the standards of fairness, economic stimulus or social utility.

 

Congressman Neil Abercrombie, a Democrat, and a self-described liberal, represents Hawaii's First District.

 

Abercrombie's arguments against the death tax apply, besides we ain't got a surplus no more. Point of info: McCain favors a 15% estate tax.

[snafu]

She got me. I was not aware the current tax rate was that high. It seems outrageous to me and I believe it has to be killing small businesses. A liittle info:

 

 

 

I belive the national budget should be balanced over the business cycle. The Republicans have shown a great interest in cutting taxes but not in cutting spending. You can't have your cake and eat it too, forever. Or, to quote Goldwater "Where is the politician who has not promised to fight to the death for lower taxes- and who has not proceeded to vote for the very spending projects that make tax cuts impossible?" I believe it is more conservative to tax and spend then borrow and spend. True conservatives reduce taxes and spending. Spending grew under the GW administration at nearly twice the rate of the Clinton administration. Barry is rolling in his grave and the Republicans have reaped what they have sowed.

 

A Democratic Representative:

 

 

 

Abercrombie's arguments against the death tax apply, besides we ain't got a surplus no more. Point of info: McCain favors a 15% estate tax.

 

FactCheck.org: Would Obama tax my profits if I sell my home? Would he tax my IRA? Would he tax my water?

 

 

INHERITANCE TAX

 

MCCAIN 0% (No change, Bush repealed this tax)

 

OBAMA Restore the inheritance tax

How does this affect you? Many families

have lost businesses,

farms and ranches, and homes

that have

been in their families

for generations because they could not

afford the inheritance tax.

Those willing their assets to loved

ones will not only lose them to

these taxes.

 

I believe McCain is the only one promoty less goverment spending. So you can have your cake and eat it too. You just need to tighten up your belt.