Reply to Vox article on inheritance

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]So just to be clear, specifically what estate tax are we proposing here?

Bernie has the most extreme proposal out that’s out there at the moment — 45% on estates between $3.5M and $10M and 77% for anything above $1 billion.

https://www.bloomberg.com/quicktake/the-estate-tax

Now, you may say that $3.5M is unequivocally a rich person’s estate (and on many metrics, it is), but it isn’t hard to imagine a lot of people in this area hitting that. If someone has a fully paid off home, and has invested relatively well over a 30-year career, it isn’t at all hard to imagine all of that coming out to at least $3.5M.

So people need to be ok with their kids paying 45% in taxes off of the sale proceeds from a home they inherited + any investments. [/quote]

I’m trying to figure out what they want too.  The current estate tax exempts everyone except the very rich.  I thought that’s what liberals wanted.  Progressive taxation that hits the very rich the hardest.  But I seem to be hearing a lot of complaints that the estate tax doesn’t hit people who inherit small estates.[/quote]

If you think $3.5m is s "small estate," I really don't know what to say to you.  [/quote]

The reason for step up basis and estate tax exemptions are small family owned businesses, particularly farms. The heir may receive land and buildings worth millions of dollars, none of which is liquid. You can't pay the tax bill without selling the business assets, but you can't continue to run the business without the assets.

This obviously doesn't apply to everyone receiving a large inheritance, but you can't write the law to let people inherit $3mil with no tax if it's a farm but pay tax if it's in securities. I mean, you could, but that would lead to all kinds of unintended consequences. [/quote]

Right. I’m thinking about my neighbor, whose parents run a home renovation business in our neighborhood. They are both immigrants and clearly have worked hard for their business. It’s very successful and they have a very large house.

I don’t think it’s fair to put her and her husband in an impossible situation, tax-wise, should they inherit that business when her parents die. [/quote]

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