February 6, 2010
Heritage Foundation Estate Tax Videos
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This small family buisiness that they want you to feel so sorry must be worth 20-40 million dollars. They want to be able to pass it from generation to generation and not EVER have to pay tax on these assets. Most Americans have bank accounts and retirement accounts that they must pay tax on when they utilize those assets to live.
This is the situation where the real every day middle class farmer gets screwed if there is no estate tax. And these rich families will get richer.
Posted by: Drew | Feb 7, 2010 9:13:27 AM
Drew's comment (Feb 7 9:13:27am) is dripping with class envy but contains many typical redistributionist fallacies.
Just as "most Americans have bank accounts and retirement accounts that they must pay tax on when they utilize those assets to live", when the business owners convert business assets into cash in order to "utilize those assets to live", they must pay tax. Which tax and at what rate depends on whether the conversion to cash for personal use takes the form of salary, dividends, or capital gains on the sale of stock.
Furthermore, as most TaxProf readers will know, most small businesses are now organized as passthrough entities (partnerships, LLCs, etc) so the owners have already paid tax on any accumulated earnings reinvested in the business.
Drew also repeats another common class-envy fallacy, assuming "the rich" are always the same people. "The rich" is not a static class - longtitudinal studies prove that there's still plenty of upward *and downward* mobility in our society.
Rich families don't always get richer - most of them either blow their money or at least dilute it (on a purchasing-power-per-supported-household basis) by not growing wealth fast enough to keep pace with their expanding family.
Paying for the necessary costs of government by imposing differential tax rates based on ability to pay is one thing. Imposing punitive taxes on wealth and income for reasons of class envy and redistribution as an end in itself is quite another.
Posted by: WhittyMike | Feb 8, 2010 11:43:33 AM