Death''taxe''Con Refuse To Die

 

Tuesday, Apr 14,2009, 11:00:48 AM   Click:

Copyright 2009 Los Angeles TimesAll Rights Reserved Los Angeles Times

13 April 2009 Monday Home Edition

SECTION: BUSINESS, Business Desk, Part B, Pg 1

LENGTH: 1136 words


TITLE: "Death tax" con refuses to die

Signature: Michael Hiltzik



Everyone is familiar with the old Ben Franklin saw about nothing is certain but death and taxes. But how about the "death tax"?

This is the term used by opponents charge the tax, which is part of the federal tax code for over 90 years and is the subject of furious Repeal campaigns almost as long.

Thank you for lobbyists and legislators in search of well-being of the richest Americans, tax currently affects less than 3 of 1000 estates each year and exemptions and deferrals bristles for the rest. His contribution to the federal treasury is about 1% of all revenue.

However, it consumes huge mind share in Washington. This month, a new tax cut proposal by Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.) won Senate approval. The resolution raises the exemption on taxable estates of $ 10 million from the current 7 million (after the death of both spouses). It would reduce the rate charged on the nonexempt portion to 35% of the current 45%.

The tax is currently set to fall to zero for 2010 and return with a $ 1 million exemption and a 55% rate in 2011, President Obama proposes simply to today and the rate of exemption permanent.

Arguments against the classification of the tax as the most special of special pleading, arguing that more than 99.7% of all estates are exempt. Maybe 3000 Americans who died in 2007 left estates worth $ 7 million to 10 million dollars, Lincoln and Kyl would have extended the exemption for them. For those who are left to the load, the number of taxpayers who died in 2007, leaving estates over $ 10 million was 1700. Their average real estate was $ 31.6 million. Lincoln, Kyl and their colleagues have actually lost time in the Senate to give people like that, a new tax break.


But then, Kyl is a state with a lot of rich retirees sinus patients and Lincoln state is full of billionaires chance with the same name as the founder of Wal-Mart.

Even financial planners for the richest acknowledge that too many taxpayers are concerned about the rights of succession.

"Many people fear they will be affected by it are completely out of the system" because of the exemption, said Mary Ann Mancini, head of private client group at law firm Bryan Cave in Washington. "It resonates with more people on an emotional than logical."

No kidding. On the website of the Policy and Taxation, a group founded by anti-tax required by a management company of Orange County, you will find comments from taxpayers like this: "If I died today I pay about $ 200,000 in death tax. "

I am not here too metaphysical, but if I could be able to pay taxes even after the Undertaker made his magic on my frame, I would be happy to write the record.

You expect fiscal conservatives in both parties to embrace the tax field. After all, it generates income today to avoid sticking to future generations of our spending, which is a conservative mantra.

The fee also upholds the principle expensive national self-sufficiency. As the authors of the 2002 book "Wealth and Our Commonwealth," said: "There is something fundamentally American about the idea that what people do in their lives is more important than the station of birth .... We must strengthen the tax, not eliminate it. "

Lest anyone think that the book is the product of nature in the eyes of the left socialist types, it is my duty to emphasize that the main author is a Seattle lawyer named William H. Gates Sr., whose son is the founder of Microsoft.

The repeal of water pressure has carried for years for the largest taxpayers of the tax, including rich families Gallo wine and sweets March clans. But their strategy is to alter the inheritance as something broader.

One clue is the word "death tax." According to "perfectly legal", David Cay Johnston book of 2003 on the tax code, he was seized in the 1990s by the Republican political consultant Frank Luntz, a master of black art of political Newspeak, to the working class, he thought that Americans could apply for them.

Among the main opponents talking points is that the tax is unfair double taxation, because the federal government has already taken a cut of the assets being left to his heirs.

But it is a red herring. Most assets in taxable estates (85%, according to the IRS) are private equity funds such as stocks, bonds and other property whose owner has not paid any federal income tax. In any event, so that if it was taxed twice? It is not uncommon for earnings in the United States to be taxed several times - do not pay all income and sales taxes on some of the same dollars?

But the real heart of the attack on the estate tax is the claim that it burdens small family businesses and farms with a bill, unaffordable, the founders to pass. An editorial in the Wall Street Journal this chestnut retoasted last week, indicating that the repeal would avoid the "too common and tragic fire sale of businesses and farms of a family member dies."

The truth is that real-life examples are not too frequent. The domain experts I talked to can not point to one.

Among other things, family farms can be valued for tax purposes as farms, and not as real estate, which significantly reduces their tax burden. The tax on most farms and businesses, moreover, may be paid more, as much as 15 years.

And there are tools to cover any tax, such as taking the life insurance policies on the founders. It is not uncommon to hear yelling business owners on the cost of such insurance, but it is far from forcing them to sell the farm to pay taxes.


"Often, after the death of one of the founders, there are a number of reasons to sell a business", Craig Janes, national director of real estate, gift and trust services at consulting firm Deloitte, m 'said. "But taxes are not generally the most important element." Other factors, experts say, the heirs are the lack of interest or ability to manage the business.

The parents supposed divine right to take care of their children, financial planners say the prospect of making their heirs wastrel slob and leaving too much money is a major concern of their rich clients. To hear of these advisors, you think that every time Paris Hilton surfaced in the tabloids, thousands of family wants a rewrite reduce the kids' trust funds and bequests essential to save the whales and feed the poor.

So consider this a way for Congress to abandon the subject of the tax already. After all, one indisputable fact is that it is a tax for which taxpayers are beyond the sensation of pain.

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Michael Hiltzik column appears Mondays and Thursdays. Reach him michael.hiltzik @ latimes.com and read his previous columns at www.latimes.com / Hiltzik.

LOAD-DATE: April 13, 2009