As Americans, we are all trained from birth to despise taxes (especially the income tax). How we expect anything like a society to exist without them in incomprehensible to me, but what can be done? No one likes to surrender their money. The most common complaint is that taxes are too high. Another common complaint is that the tax code is too complex. Another problem arises because the first complaint often causes a worsening of the second complaint. Here's a good example.
A recent Republican initiative was aimed at the elimination of the Estate Tax. Most Americans were led to believe that the elimination of this tax would provide a direct benefit to everyone. This would have been true, except that there was a $1 million exemption amount. This meant that the first $1 million of the deceased's gross estate was exempt from taxation. Most people have a gross estate of a far lesser amount, meaning the tax elimination initiative was geared towards aiding the wealthy.
Democrats disagreed with another handout to the rich, so Congress struck a bargain, and boy was it a doozy. The "compromise" calls for a phaseout of the estate tax. Over a five year period the exemption amount is slated to increase (currently $2 million is exempted this year), until in 2010 there is no estate tax at all. Here's the beauty of it: The $1 million exemption limit kicks in again in 2011. That's right: as the law now stands, the will be exactly one year with no estate tax. To me this sounds ridiculous, and leads to less public faith in our tax system.
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2 comments:
For me, it's a philosophical issue--why should the government be able to tax ANYONE'S estate? If I make a million bucks despite paying taxes on income, sales, property, schools, capital gains, investment dividends, etc. (and for fun, let's suppose I was also tithing the whole time), why should Uncle Sam get even more? He's had his chance--let my family wholly inherit what's left.
Truthfully, I'd feel the same whether I was worth $20,000 or $20,000,000 (and I'm much closer to the former than the latter!).
This is a key issue here. It is a perfectly reasonable argument in my mind as well. The money in your estate has laready been taxed (or exempted from tax) at one or several levels. Double taxation is a rather troubling reality in some cases (the other being that corporate earnings and dividends paid are both taxed). Perhaps my tone was too harsh for our Republican Congressmen, but I still find the compromise solution a bit preposterous. Why phase out a tax only to reinstate it at previous levels?
Obviously the government is in a bind. They can't very well do away with the estate tax entirely since our budget deficit is so large, but what elected official wouldn't love to be in office when taxes were decreased (an almost guaranteed re-election)?
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