Does the US aspire to be an egalitarian society? (Bush tax cut proposals)

[Spoke]

(Let me correct myself. The estate tax is still there but scheduled to be phased out by 2010.)

[Diogenes_the_Cynic]

Even then it might still only be gone for one year. It will come back in 2011 unless congress votes to extend it.

[jshore]

At the time that the estate tax was being discussed in Congress, there was general bipartisan agreement that the exemption should at least be raised. And, raising the exemption does not chop into revenues from it that significantly because the tax is paid in large part by the richest folks even within the group of those subject to it:

In 2001, over half of all estate taxes were paid by 3,502 people with estates larger than $5 million — representing the top 0.14% of all Americans.

(And, I believe that 2001 was before the exemption started rising.) Here, by the way, are some myths and facts about the estate tax.

@spoke-

(In point of fact, the “Bush tax cuts” of the first term were just a Trojan Horse used to slip the elimination of the estate tax past the American people without too much debate.)

Well, I don’t really buy this statement. The gift and estate tax, raising an estimated $20 billion in 2003, is a smaller player than the income tax. Even the top 1% see most of their tax cuts via the cuts in the income tax and not the gift and estate tax.

[John_Mace]

@Diogenes the Cynic

I could live with an exemption of 10 mill.

Oh, and the rate should be 50% (right now it’s 48%)

$10M should take care of grandma’s heirlooms. I’m not sure why you would quibble over a 2% difference, other than that 50 is a round number. As long as the exemption is high (and $10M is high), I’d be less concerned with the rate is, since the effective rate for most people would be pretty low.

[bup]

@John Mace

Firstly, it’s not just me, since we treat inhereted wealth differently than wealth obtained thru work (ie, there is a large exemption already in place).

Good point, although I think capital gains shouldn’t be taxed differently than other income. Somebody has to be actually adding to the GDP, not just investing in it…

@John Mace

Property tax is based on the idea that property owners are paying for government services to protect that property. (I don’t fully buy that argument, but it’s a legitimate argument that can be made). If you inherent property, you still have to pay property tax just like everyone else.

And inheritance tax is based on the idea that people shouldn’t die - that’s why lifespans are increasing.

Oh, never mind. That is a good point.

@John Mace

As I said earlier, I’d like to see all income treated exactly the same so that people don’t make decisions about how to get income based on how it is taxed. And for capital gains to be treated the same, it needs to be indexed for inflation.

Yep.

[Spoke]

@jshore

Well, I don’t really buy this statement. [That the Bush tax cut was a Trojan Horse for the elimination of estate tax.] The gift and estate tax, raising an estimated $20 billion in 2003, is a smaller player than the income tax. Even the top 1% see most of their tax cuts via the cuts in the income tax and not the gift and estate tax.

Of course the income tax is a larger slice. Otherwise it wouldn’t make an effective Trojan Horse.

Republicans had been trying for years to do away with the estate tax separately. Only by packaging the repeal with income tax cuts were they able to get it done. As a separate bill the repeal of estate tax would have been subject to more scrutiny than it could have survived.

And now the income tax reductions that bush was so kind to give us are going to be eaten up by elimination of deductions (such as the state and local tax deduction) all in the name of “simplifying the tax code.”

As for the revenues generated by the estate tax, they were expected to rise dramatically over the coming decades as baby boomers begin to shuffle off this mortal coil.