Sunday, October 26, 2008
Earlier on this blog, I briefly compared the positions of Sens. Barack Obama and John McCain on federal transfer taxation.
Here is some additional information from Floyd Norris, New Life for the Death Tax, NY Times, Oct. 23, 2008:
Mr. McCain would exempt far more estates from the tax and would slash the tax bill for those who still must pay. Mr. Obama proposes to basically extend the tax as it will be in 2009.
The issue concerns more than dollars, although the dollars are substantial. A new study by the Tax Policy Center estimates that the estate tax backed by Senator Obama would bring in $116 billion from 2010 to 2014, while the McCain plan would bring in $27 billion.
To those who support an estate tax that bites the very rich, it is an issue of sharing the burdens of a free society by imposing a progressive tax that brings in money from those who have most benefited from the society. It encourages charitable giving, because such donations are one way to avoid or reduce the estate tax.
The tax also encourages work, they argue, by limiting the creation of an idle rich class that became wealthy by inheriting cash, not earning it. * * *
To opponents, the estate tax smacks of double taxation, as money that was taxed when it was earned is taxed again at death. They say it discourages work, saving and entrepreneurship. * * *
If Congress takes no action in 2009, the estate tax will fall to zero in 2010, and then bounce back to 2001 levels in 2011. That would create what the Tax Policy Center report * * * delicately calls “grotesque tax planning initiatives.” What they mean is that there would be a great temptation to do in dear old (very rich) dad before midnight on Dec. 31, 2010.