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  • Max Baucus Clears Way for Death Tax Repeal

    The federal estate tax , better known as the death tax, was eliminated this year after a decade-long phase-out. Nothing in Washington is permanent, however, and due to a quirk in budget law, it comes roaring back to life in 2011 (less than four months from now) at a 55 percent rate and only $1 million exemption—its levels prior to the phase-out—unless Congress acts before the end of the year.

    There have been sporadic efforts in the Senate this year to address this impending massive tax hike that will threaten the existence of family-owned businesses if it takes effect. None have succeeded. The failures are in some part due to pay-as-you-go (or PAYGO) budget rules that require Senators to “offset” the foregone revenue of keeping the death tax at any rate below 55 percent with spending cuts or tax hikes. This includes permanently continuing the death tax at its levels in 2009 prior to its expiration (45 percent and a $3.5 million exemption), which is President Obama’s plan.

    This stubborn sticking point has stood in the way of an agreement all year and increased the likelihood that the death tax will return at a devastating rate and minimal exemption. Senator Max Baucus (D–MT), chairman of the Senate Finance Committee, has finally removed the stumbling block by saying that any death tax fix should be permanent and that the Senate should not worry about offsetting the cost. In addition to finally opening the door to an agreement in the Senate, Baucus’s reasoning is correct, because Congress should not have to pay for keeping in place long-held tax policy like the elimination of the death tax.

    Now that Baucus has made it possible, is the time for the Senate to do the right thing and repeal the death tax completely and permanently. Anything but full repeal is a tax increase, since under current policy the death tax is 0 percent.

    The death tax is an enormous drag on the economy. Repealing it would help businesses create badly needed jobs and aid economic recovery. There has never been a better time for Congress to rid American families of the burden of the death tax.

    Posted in Economics [slideshow_deploy]

    24 Responses to Max Baucus Clears Way for Death Tax Repeal

    1. Billie says:

      "Nothing in Washington is permanent…"

      and ethically, morally speaking, "somethings in Washington aren't expected to ever exist," like government denial of ones own earned wealth behind the backs of the deceased and the present complication and burdens because of…

      it is time government pay for it's own incompetence without suckling from the private sector teat. Whatever government can't afford for the general public, remove the special interests costs as they are of "special" interest and not of the general public.

    2. Roger Baxter. Batavi says:

      I continue to be amazed at this discussion. What right does the Federal (or any other) Government have to tax the money that I have already paid multiple levels of tax on, just because I happened to die?

      I think that we are asking all of the wrong questions. I could care less about the rate of additional confiscation of my assets. I care that we are even talking about it. The money, and other assets, are paid for – including a myriad of taxes at the Federal, State, and local levels. Where in the Constitution (Federal and State (Ohio) is it written that the government somehow has a right to tax you for a second (third, fourth) time just by the fact that you have passed on?

    3. Doug says:

      "A quirk in budget law" is a funny way to describe a tax increase that was deliberately passed by Bush and a Republican House and Senate.

    4. LALaw, CA says:

      "due to a quirk in budget law, it comes roaring back to life in 2011"

      Quirk? The "quirk" is the budget reconcillation rules that conservatives screamed was totalitarianism when Democrats used it for health care. Republicans couldn't pass it the regular way (with 60 votes) and could not show that it would decrease the deficit after 10 years (i.e., tax cuts don't pay for themselves) so it had an expiration date.

      I would have thought you would have said "because the 2001 tax cuts were passed via reconcilliation budget rules" if you wanted this blog to have a "think tank" level of analysis, not a talk radio level of analysis.

      And by the way, your "economic arguments" for eliminating the "death tax" are not convincing anyone outside of the conservative think tank world. I'm sure someone who thinks about launching a start-up in Silicon Valley decides not too because of that horrible death tax that kicks it after you bequeath over $1 million – then again, that person launching a start-up in Silicon Valley is probably a liberal anyway (I know – I used to live there) so they believe the manure you guys are cranking out as "research" anyway.

    5. Dennis, Fennville, M says:

      Amen to Roger. This tax is on money that has already been taxed. We are drowning in a system that over regulates and confiscates the money of producers. The choice is freedom and liberty, versus an omnipotent, monolithic government leading down the path of tyranny.

    6. Hugh Goodman, South says:

      LA LAW. The main point of this discussion which seems to be overlooked by you is why should Congress be able to tax the estate of someone who has died. Based on your post it seems apparent that you don't understand what the founders were trying to do. This craven grasp of power by so many representatives in Congress is appalling. It is unfortunate that so many "leaders" are so ignorant of the Constitution

    7. Rick says:

      You state: "The death tax is an enormous drag on the economy. Repealing it would help businesses create badly needed jobs and aid economic recovery. There has never been a better time for Congress to rid American families of the burden of the death tax."

      The 'death tax' cannot presently be an enormous drag, since it does not presently exist. Maintaining it at zero will therefore not 'improve' anything either, since maintaining it at zero does not push new money into the economy.

      I would trust your economic analysis more if it would recognize that maintaining present tax levels (whether the death tax or the Bush-era tax cuts of 2001) will not 'improve' things, but allowing these present tax levels to revert to previously extant higher levels will be a detriment to economic recovery and to the recovery of jobs.

    8. Kevin Habibe, Colleg says:

      Roger and Dennis – you are both wrong, this money has not been taxed already. Research shows the vast amount of the estates in top 2% (only ones who will be protected by full repeal) is in unrealized capital gains.

      The fact is, most of the estate has never been taxed. The person bought stock, or property, or homes, and they do not get taxed until they sell them. If they never sell them, they never get taxed. FACT: Of all estates in US worth over 10million, on average over 55% of the estate is unrealized capital gains – so roughly 60% has never been taxed.

      And shame on heritage and the right to complain and moan for 18 months straight about deficits and debts when it comes to slowing the growth rate of health costs – but when it comes to giving the top 2% huge tax cuts, deficits and debts don't matter.

      For those who think this money has already been taxed – do your research!

    9. Dennis Georgia says:

      It is amazing that a dem woke up to this fact. I have already paid taxes on my estate, my family should not have to give any part to the "guvment". If pelosi, reid and obama worry about how much money they do not get, then cut spending to balance the budget. Cut the entitlements to those they bribe for votes.

      I am all for help when people need it, but not for their lifetime as well as their children grandchildren. This is just wrong. The so called "paygo" is just something they came up with to futher brain wash the citizens. I pray for this country to return to the basic beliefs of the founding fathers, return to GOD and ask for His Forgivness and to lead us out of this mess.

    10. Dinah Garrison Fairb says:

      I may be naive or just plain dense, but what is the justification for having to pay "death taxes" on money that has been taxed before? I don't mean today, but when they were first started. I can't see why this was allowed to happen originally. This is meant as a serious question, although I can see it looks a bit sarcastic. To me that is because the idea is so ridiculous in the first place, never mind who caused the "break" to have an expiration date.

    11. Pingback: Must Know Headlines 9.17.2010 — ExposeTheMedia.com

    12. Allen L. Smith says:

      This bunch of dumb people on both sides of the aisle will soon be looking for another way to steal. Selling Snake-Oil etc. I really hope the youth will start to pay attention, They have to watch and vote for the way the Founding Fathers wrote down on that piece of paper and start putting this huge Gov into a box and keep it there or they will become wards of this monster. Think about this, how many of them are Lawerys? This will give you the answer why the gov. is so large and demanding……..

    13. Leon Lundquist, Dura says:

      The Death Tax has put innumerable Small Businesses out of business, and when that happens wholesale, millions of Americans become unemployed. Every single cotton pickin' thing that can be done, has been done by the Obama Administration to destroy American Jobs. LA Law's response reminds me of the Russian Jokes, like "Mass Murder is wrong for two reasons: It creates enemies and you lose the tax revenue!" The laugh is because it makes no mention of the human suffering involved. The dizzying heights of your analysis, pardon my nose bleed, has failed to mention there are living Americans crushed twice by Death. The Death Tax does not create Revenues equal to those created by letting those Small Businesses live. It is nothing but kicking you when you are down, and for no good Economic reason but hopless tyranny.

    14. Ion Frescata, Chicag says:

      Roger Baxter: I don't want to quibble with your philosophy (taxes are a drain on productivity,) but just your factual assertion that the estate tax is somehow incurred because of you death.

      Taxes in this country are largely incurred on the transfer of wealth (e.g. you pay income taxes when wealth is transerred to you, sales tax when you transfer it to a business, gift taxes when you transfer it to family or friends, and estate tax when you transfer it to your heirs after death). I believe that all of these taxes should be decreased, but I am not sure that any one is inherently more unjust than the others.

    15. LALaw, CA says:

      What about the deficit? Republicans, Heritage, Fox News and talk radio have been screaming about the deficit all year, but now they don't want to offset tax cuts for DEAD people worth over $1 million after the numerous deductions available to avoid it.

      Yes, the death tax hits "small business" just like tax cuts for those that make over $250K a year hits "small business" – it hits "small businesses" like law firm associates and partners, investment bankers, private equity fund managers, etc. I know who makes over $250K a year because I'm one of them and I know a bunch of people who do. And newsflash – none of us are hurting and none of our spending will be affected by a 4% marginal increase for income over $250K.

      Leon Lundquist, you talk about the "dizzying heights of [my] analysis" and then state this gem from the Sarah Palin School of Analysis "The Death Tax does not create Revenues equal to those created by letting those Small Businesses live." Please show me a "small business" worth over $1 million that will be crushed by this tax – I'd love you or Heritage to show me one. For years, people said family farmers lost their farms from it, but the Farm Bureau and numerous other organizations could never produce 1 farm that had been affected.

    16. LALaw, CA says:

      Hugh Goodman, you're making a fairness argument for why there should be no estate tax because it's already been taxed. However, someone who buys a product with their post-tax income has to pay sales tax for the product and the store that makes the profit on the sale of the item then pays taxes on such profit. What if you invest in real estate? You use your post-tax income to purchase property, then you have to pay property taxes on that property (which is essentially your post-tax income transferred into another form) every year.

      I have a fairness argument on keeping the estate tax – I don't think we should increase the deficit in order to help out dead people with $10 million plus estates.

    17. Heirless says:

      I had a parent die this year who left me with a partial amount of an estate that falls under estate tax laws. I know for a fact that was taxed at a 35% rate when it was initially earned. As to my portion now it will be taxed as income at 25% to as much as 40% depending on rate of disbursement and future tax law. This is on top of state taxes. Supporters of the estate tax wish to take out an additional 35-55% and hand it over to such things as a bloated defense budget because they find heirs like myself 'undeserving', and the person who originally earned it is now gone. It reminds me of those trailer parks where an owner dies and the other park denizens rush in to grab his TV and other possessions because 'he can't use them anymore.' Theft is theft, unless of course you rationalize your thieving by making it law. Such is the estate tax. As for it not stimulating the economy, I can hardly wait to buy a home and a car which would both stimulate the local economy, once the current state of uncertainty in the law, that keeps me from seeing a penny, is resolved. I lost a loved one, now someone wants to steal the money legitimately bequeathed to me. This is more than just being overtaxed, it's being pillaged. I believe I am deserving of receiving this inheritance, since it was given to me by the will of the person who once held it, and more so than LALaw and his friends, who obviously feel they deserve their half by the right of their 'noble progressive ideals', which really amounts to little more than 'honor among thieves.'

    18. kt borland,NC says:

      The "DEATH TAX",Taxes people TWICE! While they we're living,they were taxed on their earnings and profit! So after they DIE their progeny should be TAXED again????? I don't think so! Show me that in the CONSTITUTION!!!!

    19. David F. Murray, Bel says:

      The Death Tax is forcing events that we don't want. The long time family farm is assessed based on its potential for development, not as its use as a farm. The heirs have to sell it to pay the tax. This often results in development of a parcel society would rather see remain as open space, or a working farm.

      The idea that this may not have been taxed is irrelevant. This concept is based on whatever we own or acquire somehow belongs to the government. If we insist on the concept of "From each according to his ability, and to each according to his need" we will soon have no one with the ability (or will) and everyone with needs. We are on our way already.

    20. maryanne Bell says:

      thank GOD for good people who really care about the U>S>A and cutting the taxes!!!!!!!!!!

    21. Pingback: » Daily Dose – September 19, 2010

    22. Billie says:

      Kevin Habib what country are you from? YOU ARE WRONG! Estate tax is property tax paid every year. Once a person is deceased their property is inherited by the choice of the deceased in the form of a will written out before they've past. How is it fair that throughout their lives they paid the taxes obligated them but now that they past it's taken from the greed of government and not 100% to those of the choice of the deceased? Shame on Kevin Habib who chooses to remain ignorant.

    23. Billie says:

      Oh, Mr. Habib, in case you have immigrated here and may not know, "property" consists of more than land and the building that sits on it…

      correction on the third line, last word of a sentence, "past" I meant ;"pass."

    24. Billie says:

      Oh, in case, "property" consists of more than land and the building that sits on it…

      Corrections on the third line, last word of a sentence, "past" I meant "pass."

      Line before the last: and not given 100% to those whom the will is granted?

      …distractions! Thank you!

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