Republican candidate for U.S. House Kristi Noem tells South Dakotans she wholeheartedly supports balancing the federal budget. Noem also says she wants to get rid of the estate tax, a tax that impacts maybe 50 South Dakota families a year.
The woman whose job Noem wants, Congresswoman Stephanie Herseth Sandlin, has already helped House Dems pass estate tax relief for 99.75% of Americans. (That bill remains idle in the Senate.) Herseth Sandlin claims, like Noem, to be a big deficit hawk.
WaPo's Dylan Matthews breaks down the budget impact of various estate tax proposals and compares them with the extension of unemployment benefits. Writing checks to keep jobless folks' heads above water for another year—something Republicans keep sandbagging for political gain—adds a one-time $33-billion spike to the deficit. The chintziest estate tax reform, the House bill the SHS and President Obama support, increases the deficit every year and racks up around $300 billion in new debt through 2018. Ending the "death tax" completely (that's what Noem wants) adds more than $600 billion in deficit spending through 2018.
I look forward to hearing how much of Medicare, Social Security, and defense Noem plans to cut to offset her massive and irresponsible tax cuts... because she's not going to find $600 billion anywhere else.
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Update 2010.07.17: The Displaced Plainsman finds his place in this debate by pointing out that America's aristocracy doesn't need repeal of the estate tax: they already use trusts to evade it.
If I recall correctly, Hillary Clinton suggested that the estate tax return in 2011 at the 2009 level, and remain at the 2009 level thereafter. That seems fair enough to me.
ReplyDeleteYes Stan, some reasonable amount (someone has to decide) so money-minded families can pass on their dividends. Not create nobility, but tax enough to allow mobility.
ReplyDeleteHoping Cory corrects that link to the SD 50 families. Only 50? You gotta be kidding me. Shows how poor this state really is. Someone told me the average SD pretax income is lower than the average MN after tax income.
I don't understand how conservatives can be against the estate tax. Since they are all about self reliance, they should just be planning to give away any inheritance they could receive away. They didn't earn it, they just happened to be related to people that did earn it. That doesn't mean they should get it, right? (is this post boostrappy enough?)
ReplyDeleteThe estate tax can cause immense problems for people who inherit large estates that they didn't work for.
ReplyDeleteOne big glitch arises out of the fact that much of an estate may exist in the form of real property, whilst (if I understand it right) the IRS demands payment of the tax immediately and in cash.
Heirs may find themselves desperately trying to unload real property at "fire sale" prices to pay the tax before interest kicks in.
Things would be simple if an estate consisted entirely of liquid assets such as stocks, gold, savings account, et cetera -- but that's rarely the case.
We must also take care to educate ourselves concerning the difference between an "estate tax" and an "inheritance tax," and also on which states have which type of tax. (South Dakota has neither.)
I've heard of siblings who've been hurled into bitter battles because they inherited large estates they did not work for and in fact have no real use for. The feuds can go on for years, for decades, for generations.
Have we any estate planning lawyers "lurking" here who can elaborate on how immensely complicated this business actually is?
I might also question whether we really have to choose between a balanced budget with an estate tax, and a bankrupt nation without an estate tax.
Congress needs to get on this issue and resolve it soon -- but I won't hold my breath. It'll be interesting to see if any people commit suicide near the end of 2010, thinking that they'll be doing their heirs a favor ...
Just read: Democrat Blanche Lincoln of Arkansas and Republican Jon Kyl of Arizona hope to attach the new estate tax to a small business lending bill pending in the Senate. Their bill would set the top estate tax rate at 35 percent, with a per-person exemption of $5 million, indexed to inflation.
ReplyDeletehttp://www.huffingtonpost.com/2010/07/17/senators-move-to-revive-e_n_650059.html