Reply to Vox article on inheritance

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]How is it fair to heavily tax an estate but not life insurance proceeds?

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I'm open to taxing life insurance appropriately. But as it stands now, most life insurance pay outs are WELL below the $11 million dollar estate tax exemption. There is no point in taxing life insurance without changing the estate tax exemption. [/quote]

That may be true but if you're looking to tax all estates, and we know most estates are well below $11 million AND many people have life insurance coverage even with small estates, it seems to make sense that you'll likely get far more in taxes if you tax life insurance proceeds.

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The purchase of life insurance is a gamble--and unlike wealth that is accumulated in real estate or other assets (and notwithstanding the vicissitudes of the stock market), term life is an all or nothing proposition. But it's a gamble the government wants to incentivize (which is also why you or your employer can probably buy life insurance with pre-tax dollars in your workplace). [/quote]

Whole life is not a gamble though.  And it’s special tax status is why it’s used in many estate tax strategies. 
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That's true but see above re: what the government wants to incentivize.

To be fair, some of this is because of the lobbying power of the life insurance industry--it's not that the govt thinks life insurance is good for us, it's that the people who want to sell it have their ears. [/quote]

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