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Don’t Die in 2013:
Confiscatory 55% Death Tax Set to Take Effect
This content is provided by the Americans for Tax Reform Foundation.
Current Law
The 2001 tax relief bill (EGTRRA), drastically reduced the impact of the death tax over the course of a decade, so that it was eliminated entirely for one year in 2010 — a good year to die, joked a number of pundits. The bill lowered marginal rates and increased the applicable exclusion amount, but it also included a provision allowing individuals to carry over exclusion dollars that were unused by their spouse at the time of his or her death. This “portability” measure effectively increased the applicable exclusion for many households, in some instances putting millions of dollars beyond the reach of the federal government.
The death tax rose from the grave at the end of 2010, with a Bush-era top rate of 35% and an applicable exclusion amount of $5 million ($5.12 million in 2012).
Scheduled Changes
In 2013, the death tax will revert to its antiquated, pre-2001 form. The applicable exclusion amount will plummet to $1,000,000, and the top marginal rate will leap twenty points to 55%. A 5% surtax will also return, to be levied on estates between $10 million and $17 million. This raises the top effective rate of the death tax to 60%.
ATRF Analysis
According to research by the Tax Policy Center, if the current death tax expires, then the resulting, stricter exemption threshold will force 114,600 estates to file for the tax in 2013 — this represents a 13-fold increase from the previous year’s 8,800 estates, and countless wasted hours filling out tax paperwork. Of that cohort, an unfortunate 52,500 will be liable for the tax, way up from 3,300.
While those 52,500 taxpayers only represent 2% of those who die each year, no one should be fooled into thinking that the effects of this tax fall only on the proverbial “one percent.” The economic incidence of the death tax is far broader, because it causes many wealthy individuals to save less, choosing instead to retire early or, as Milton Friedman put it, “dissipate their wealth on high living.” This reduction in savings means a concomitant reduction in investment, lessening the flow of capital to businesses and organizations where countless ordinary Americans are employed.
Two Legged Blue Eyed Cracker
July 20th, 2012
What if you die in Kenya or Indonesia?
“Quick – get Grandpa a passport and start working on changing his citizenship!”
Unneutral
July 20th, 2012
It’s always the tax-payer that has to eat shit, it’s never the crooked bastards that love to reign supreme.
scr_north
July 20th, 2012
Confiscatory estate taxes are a major reason for the demise of the family farm. All too often a farmer is land rich and cash poor and when he or she passes the children have to sell of the land (usually to either another farmer or too often to an agri-corp) to pay the taxes.
Another problem with this is that it prevents Blacks from building generational wealth. I’m amazed that the middle and upper class (and lower class that are working their way up) don’t demonstrate against this. It is very effective in making sure that hard workers within the black population don’t build the influencial wealth base that some white’s have.
Oh, taxing stuff twice hardly seems fair.
Stranded in Sonoma
July 20th, 2012
Why are you all worried? ObamaTax will provide such great medical care, no one will ever die! I’m pretty sure that’s what can be inferred from reading the platitudes for ObamaTax on the internet. So it must be the truth.
Menderman
July 20th, 2012
So. If Obama gets reelected, I’ll be bankrupt and uninsured…what is 55% of bankrupt?
Roscoe P. Soultrane
July 20th, 2012
@Unneutral: “It’s always the tax-payer that has to eat shit, it’s never the crooked bastards that love to reign supreme.”
Uh, not to put too fine a point on it, but that’s sort of the whole reason for being an elite – you get to stick it to the insects beneath you. As a bonus, you get to revel while you rub their faces in it.
MaryfromMarin
July 20th, 2012
@Menderman–
55% of bankrupt is “indentured servant”. Welcome to your new career.
Otto Mrowka
July 20th, 2012
Sweet blog! I found it while browsing on Yahoo News. Do you have any tips on how to get listed in Yahoo News? I’ve been trying for a while but I never seem to get there! Thank you