 Today's Estate
Tax
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| Current Estate Tax Rate
Structure | |
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| Amount
Over |
|
Marginal
Rate |
| $0 |
--------------------------------------------- |
18% |
| $10,000 |
--------------------------------------------- |
20% |
| $20,000 |
--------------------------------------------- |
22% |
| $40,000 |
--------------------------------------------- |
24% |
| $60,000 |
--------------------------------------------- |
26% |
| $80,000 |
--------------------------------------------- |
28% |
| $100,000 |
--------------------------------------------- |
30% |
| $150,000 |
--------------------------------------------- |
32% |
| $250,000 |
--------------------------------------------- |
34% |
| $500,000 |
--------------------------------------------- |
37% |
| $750,000 |
--------------------------------------------- |
39% |
| $1,000,000 |
--------------------------------------------- |
41% |
| $1,250,000 |
--------------------------------------------- |
43% |
| $1,500,000 |
--------------------------------------------- |
45% |
| $2,000,000 |
--------------------------------------------- |
49% |
| $2,500,000 |
--------------------------------------------- |
53% |
| $3,000,000 |
--------------------------------------------- |
55% |
| $10,000,000 |
--------------------------------------------- |
60% |
| $21,040,000 |
--------------------------------------------- |
55% | |
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Generation-Skipping Tax (GST) is
assessed on all gifts or estates above the first $1 million on gifts
to grandchildren at a rate of 80%. |
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ISSUE - Only 2% of Americans pay the estate
tax. |
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CONSIDERATION - Many families sell their business
early to avoid a 55% tax on the market value of all their
assets which eliminates the livelihood of the family
business and each year a new 2% of taxpayer pays the
tax. With the growth of small business, this number is
expected to grow substantially. |
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ISSUE - Charitable donations will decrease without
the estate tax. |
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CONSIDERATION - Less than 20% of donations come
from estates and bequests, and charitable giving has been on a
constant rise, after inflation, for the last 40 years even
though tax laws have changed substantially. This is
because families give first because they have the ability to
give and a passion to give, than use the tax laws to
structure. |
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ISSUE - The tax is needed to eliminate
concentrations of wealth. |
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CONSIDERATION - As the economy has moved to the
"new economy" - the income distribution between the wealthy
and the poor has widened because skilled labor, who are paid
more, are in greater demand than the unskilled labor in this
country. Greater growth has occurred at higher levels of
employment not concentrations of wealth. |
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ISSUE - 1) Raising the lifetime exemption or 2)
expanding the family business definition is the solution to
the problem. |
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CONSIDERATION - 1) Small businesses are opposed to
raising the exemption because that has not solved the problem
in the past. With profit and inflation, eventually it
will not be high enough and they will soon be faced with the
same problem they have today.
2) To take advantage
of the "family business carve-out", families must spend
thousands of $'s in attorneys and accounting fees only to
discover that it will not work for their business because
family businesses are unique and difficult to define.
That is why few can take advantage of the current
benefit. And, many family businesses do not take
advantage of the current exemptions and allowances because
they are unaware of the need to plan for the estate tax before
their death. |
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ISSUE - Eliminating the estate tax will cost $350
billion over ten years. |
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CONSIDERATION - This revenue estimate does not
consider the increase in revenue from the elimination of the
"step-up in basis" of the asset once the tax is repealed,
which could, over time, be as much as the tax currently
generates. |
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ISSUE - The estate tax only effects the
wealthy. |
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CONSIDERATION - When a family business sells out
early or after death to pay the tax, many times to a larger
corporation whose not faced with the estate tax, the employees
positions are eliminated or consolidated, the community looses
and jobs are lost. |
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