Solution+-+Returning+to+Higher+Taxes+on+Estates

Dan, Chelsy

As of now, estate taxes seem only to affect the small amount of "rich" American, consisting only of a few thousand. However, there are many tools, such as a living trust, that can be used to help wealthy families avoid estate taxes. A living trust allows family members to transfer property easily and quickly without probate, the process by which the legal title of property is transferred from the decedent's estate to his/her beneficiaries. Taxes are set to increase in 2011, ending the Bush Tax Cuts. Taxes are likely to return to 55%, what they were prior to the cuts, on estates over $1 million. However, this threshold may be set higher.

http://www.nolo.com/legal-encyclopedia/article-29848.html http://law.freeadvice.com/estate_planning/estate_planning/what_is_probate.htm

Negatives: Returning to higher taxes on estates acts as a double tax since the sum of money was already taxed when earned and taxed yet again once transferred. It also in a way acts as a deterrent to those who would have liked to leave money to their children and grandchildren since the amount left is sure to decrease drastically after taxes are taken into account.

Supporters of estate tax see it as the ultimate tool of wealth redistribution. Many wealthy Americans and first-generation entrepreneurs feel that it is important to give something back to the majority of the population who allowed them to generate their wealth in the first place. (http://www.suite101.com/content/will-there-be-an-estate-tax-for-2011-a308942)

Supporters against higher estate taxes consist of the Republican Party why wish to elimination and or lowering of estate taxes. Estate tax, they argue, affects first-generation wealth the most because the largest estates that are filed each year with the IRS are often created by successful entrepreneurs who built a business empire from scratch. Estate tax is thus penalizing the most successful and productive citizens. (http://www.suite101.com/content/will-there-be-an-estate-tax-for-2011-a308942)

One article the talks about tax deduction and contributions to charity form the rich. It talks about returning to higher taxes would be good because of people working together and becoming a stronger community. so it is bias about increasing the estate tax. (http://prudentbear.com/index.php/thebearslairview?art_id=10482)

"This analysis examines the arguments for and against the federal estate tax and concludes that the estate tax generates costs to taxpayers, the economy and the environment that far exceed any potential benefits that it might arguably produce". but it seems more bias for against it because the points are more stronger and it talks more about against. These are the arguments that are made: >> (http://www.house.gov/jec/fiscal/tx-grwth/estattax/estattax.htm)
 * **"**The existence of the estate tax this century has reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent.
 * The distortionary incentives in the estate tax result in the inefficient allocation of resources, discouraging saving and investment and lowering the after-tax return on investments.
 * The estate tax is extremely punitive, with marginal tax rates ranging from 37 percent to nearly 80 percent in some instances.
 * The estate tax is a leading cause of dissolution for thousands of family-run businesses. Estate tax planning further diverts resources available for investment and employment.
 * The estate tax obstructs environmental conservation. The need to pay large estate tax bills often forces families to develop environmentally sensitive land.
 * The estate tax violates the basic principles of a good tax system: it is complicated, unfair and inefficient.**"**