Tuesday, December 14, 2010

Can "we" afford to pamper "inherited wealth" in drafting the tax bill? The GOP still thinks so

The “tax bill” compromise has several provisions that some people think are not good for long term fiscal stability. Part of the provision would knock off 2% from the payroll FICA tax that employees pay into social security. Apparently this would not apply to employers or to self-employed people. (Hint: not so good for small business, a GOP pressure point).

According to “conservative” Fox News, House Dems were still balking at extending the estate tax “exemption” into 2011, according to a major story Dec. 13, link here. The bill would set the (incremental) estate tax at 35% for estates of $5 million or more, rather than 45% at a $3.5 million cutoff. Estates between $1 million and $3.5 million apparently stay as they are now (after successive reductions during the Bush years). And it seems that the GOP will block other legislation (even repealing "don't ask don't tell") until it gets its way with this.

In the late 60s and early 70s, as I came of age as an adult, there was a lot of indignation from the far Left about “inherited wealth”, which many thought should be outlawed (sounds Maoist now, doesn’t it). For many seniors today, too old to have been able to buy long term care insurance, inherited wealth pays for long term care, and many seniors haven’t gotten around to spending on themselves before they needed care.

Update: Dec. 19

Ali Velshi hosted a discussion on CNN today. Conservatives said that the inheritance tax interferes with passing on businesses down in families (a measure that Phillip Longman and the population demographics crowd considers critical), since businesses may not have the cash to pay the tax. Liberals called it a "silver spoon tax" (remember Texas governor Anne Richards and the first George Bush?), and said that family businesses can survive the tax with careful family planning.

Comments welcome.  

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