I didn't read the mj article, but the Tax Policy study does several different models with different assumptions. That's just one of them. It's technically very complex and most people will roll their eyes if they look at it, but the tax code is also complex and it's easy for politicians to throw stuff out without considering the full consequences of what they are saying.

You study and work hard to be successful and to provide for your family. My father died at the young age of 58 and left a widow and 6 minor children that he had hoped to provide for in the event of his dreath. The government got 55% of his appraised wealth. My mother died 7 years later and again the government got 55% of her wealth. There were 4 remaining minor children when she died. By the time the taxes, lawyers, appraisers and accountants were paid their inheritance they got about 25 cents on the dollar of my dad's net worth.

Lesson learned. If you want to provide for your family after your death, buy insurance. That is tax free.

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If you don't stand for something, you'll probably fall for anything.

I am fairly sure that spouses do not get hit with a federal inheritance tax. Not knowing the law in Florida, I suppose it's possible that FLORIDA took 55% of her wealth, but there's nothing Congress could do about that.

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"Stop thinking about art works as objects, and start thinking about them as triggers for experiences." ~ Brian Eno

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$tevie
I am fairly sure that spouses do not get hit with a federal inheritance tax. Not knowing the law in Florida, I suppose it's possible that FLORIDA took 55% of her wealth, but there's nothing Congress could do about that.

There's no state income tax in FL.

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$tevie
I am fairly sure that spouses do not get hit with a federal inheritance tax.

what? swampy is making something up???

further...your parents had millions?

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Lemon Drop
I didn't read the mj article, but the Tax Policy study does several different models with different assumptions. That's just one of them. It's technically very complex and most people will roll their eyes if they look at it, but the tax code is also complex and it's easy for politicians to throw stuff out without considering the full consequences of what they are saying.

The thing about the one I cited is that it takes the very best assumptions one could make to put as much of the burden on the wealthy by getting rid of their deductions first and it still comes out with the result that 95% of people will pay more taxes to keep his plan revenue neutral. The only way out of it is for Romney to claim that those 95% won't have to pay more income taxes to keep his plan revenue neutral because his plan will lead to so much more increased economic activity that that will make up for the revenue that otherwise would have to come from increased taxes on 95% of people. It's the same old canard that Bush used to justify his tax reduction plan in 2000, so that hypothesis has already been tested and shown to be false. Job growth and revenue growth during Bush's presidency didn't come anywhere close to Clinton's even though Clinton had done just the opposite and raised taxes on the wealthiest.

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Ted King
It's the same old canard .

Yep.
Not to mention that his plan has zero chance of passing Congress, or either party.

I can't wait for Romney to debate the man who passed the largest middle class tax cut in US history. It'll be good.

There are two parts to Mitt Romney's tax plan. Here they are:

Part 1: Romney wants to lower tax rates. This part of his plan is extremely detailed. Tax rates would be cut by a fifth across the board. Taxation of investment income would be eliminated for families with incomes under $200,000. The estate tax would be eliminated. The Alternative Minimum Tax would be eliminated. Obamacare's payroll tax increase on the wealthy would be repealed. The corporate tax rate would be cut to 25%.

Part 2: Romney wants to eliminate or reduce various tax credits and deductions in order to increase revenue. This would make up for the lost revenue from Part 1. However, he has provided zero detail about this part of his plan.



[www.motherjones.com]

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Lemon Drop

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Ted King
It's the same old canard .

Yep.
Not to mention that his plan has zero chance of passing Congress, or either party.

I can't wait for Romney to debate the man who passed the largest middle class tax cut in US history. It'll be good.

He's going to debate JFK and GWB ?

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swampy
You study and work hard to be successful and to provide for your family.

The first $1 million of inheritance is deductible (income tax free). That should be sufficient to provide for your children (there is no tax for your surviving spouse if they inherit your wealth). If the children invest $1 million inheritance for which they paid no tax and got 5% return on that investment that would give them an income of about $50,000 a year. Even with paying full capital gains taxes on that they would be making about the same as the medium household income in the U.S. Of course, Romney and most Republicans also want to do away with capital gains taxes, too, so in that case if someone inherited $1 million tax free and made 5% return and didn't have to pay capital gains on that return, they would have more useable income than the median household income and wouldn't have to pay any federal taxes at all. IOW, they could live better than the median household and pay no taxes in perpetuity.



Edited 2 time(s). Last edit at 08/02/2012 11:31AM by Ted King.

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billb

He's going to debate JFK and GWB ?

Given how Romney's staff has operated so far, they are probably setting up those debates now.

You don't inherit tax free. If so, I want my 80K back that I paid in capital Gaines taxes _after_ federal estate taxes were paid on my mother's estate.

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If you don't stand for something, you'll probably fall for anything.

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swampy
You don't inherit tax free.

Wrong. No taxes are due on any estate worth less than $5,000,000. For larger estates, taxes are due only on amounts over $5,000,000. Why do you continue to argue on the basis of easily exposed falsehoods.

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"So be proud to be a decent American instead of just a w'anker whipping up fear!" - Michael D. Higgins, President of Ireland

Romney wants the estate tax (such as it is) eliminated because it would specifically benefit extremely wealthy families such as his own. In fact his entire tax plan is written to benefit families such as his own. Families who represent the tiniest sliver of Americans. Currently fewer than .3% of inherited estates in the US owe any tax at all.

Myth 2: The estate tax forces estates to turn over half of their assets to the government.
Reality: The few estates that pay any estate tax generally pay less than one-fifth of the value of the estate.
Today, more than 99.7 percent of estates owe no estate tax at all, according to the Urban Institute-Brookings Tax Policy Center. Among the few estates that owe any tax, the "effective" tax rate — that is, the percentage of the estate’s value that is paid in taxes — is less than 20 percent on average. That is far below the top estate tax rate of
45 percent.
Why is the effective tax rate so much lower than the 45 percent top tax rate? For several reasons. First, estate taxes are due only on the portion of an estate’s value that exceeds the exemption level for the tax, not on the entire estate. At today’s exemption level of $3.5 million, a $4 million estate would owe estate taxes on $500,000 at most. Second, a large portion of an estate’s remaining value often can be shielded from
taxation through various deductions. (http://www.cbpp.org/6-14-06tax.htm)

Myth 3: Many small, family-owned farms and businesses must be liquidated to pay estate
taxes.
Reality: The number of small, family-owned farms and businesses that owe any estate tax at all is tiny, and virtually no such farms and businesses have to be liquidated to pay the tax.

[www.cbpp.org]

"I am fairly sure that spouses do not get hit with a federal inheritance tax." - $tevie

Exactly. I think swampy is stretching the truth - sort of like the person she saw with the food stamps and Escalade with gold spinners.

In fairness to swampy here, estate tax rates were much higher in the 60's and 70's , and I'm assuming that's the time period during which her parents died. And exemptions were much lower. The exemption level was raised to $175K in the mid-1970's, so prior to that even small estates would have been subject to hefty taxes.

But that's all changed now. As shown above, very few Americans will experience any inheritance tax at all under the current law. But it will tax families in the Romney megawealth category, although there are many tax avoidance schemes of which they can avail themselves.

"Death tax" is a red herring and a non-issue as far as tax reform is concerned.

You're correct, LD. dad died in 72, mom in 78. We are faced with returning to the 55% estate tax with low exemption next January. Obama wants to bring back the tax.

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If you don't stand for something, you'll probably fall for anything.

Here's a very interesting article from Forbes on why the super rich want to keep the death tax.

[www.forbes.com]

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Finally, the death tax may actually increase, rather than decrease inequality in wealth.

How?

First, the death tax destroys family businesses and farms that seldom have enough liquid assets to pay the estate tax bill, forcing a liquidation of the business or sale of the family farm.  That wipes out the source of modest wealth for many middle-class families, but leaves the truly wealthy, who have ample liquid assets and sophisticated estate plans, relatively untouched.

Second, by encouraging consumption and discouraging investment, the death tax reduces the total capital stock of the United States by an estimated 3.2%.  This reduction in the supply of capital increases the returns on existing capital.  Who benefits? The already rich who own most of the existing capital.  If you have ever wondered why many of the very wealthy advocate the death tax, the reason is because it is in their self-interest – imposing the death tax on others helps the truly rich maintain their absolute and relative wealth.

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If you don't stand for something, you'll probably fall for anything.

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swampy
You're correct, LD. dad died in 72, mom in 78. We are faced with returning to the 55% estate tax with low exemption next January. Obama wants to bring back the tax.

We still have the tax, it's 35% for estate amounts over $5 million.

This is what President Obama is proposing:
"President Obama has proposed moving the top rate to 45 percent (up from the current 35%) with an exemption of $3.5 million per estate. That would be same formula that was in effect in 2009 (when he took office.)"

That means a $7 million exemption for a married couple. Zero taxes on estates up to $7 million. And there are lots of ways to shelter income above $7 million from the tax. I think most Americans can live with that.

Republicans are proposing complete elimination of the inheritance tax.

If you're fortunate enough to worry about paying more under President Obama's proposal, then congratulations, you're SUPER wealthy!

[www.csmonitor.com]



Edited 1 time(s). Last edit at 08/02/2012 04:21PM by Lemon Drop.

You were doing OK there, until you got to this part...

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swampy
Obama wants to bring back the tax.

Which is false. The tax hasn't changed but the exemption has increased over time. The democrats have in fact tried to increase the exemption to include more people, while not altering the estate tax amounts. The republicans have stonewalled exemption increases because they want to provide the rich with a big fat tax break by eliminating the estate tax altogether.

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Edited 1 time(s). Last edit at 08/02/2012 04:19PM by davester.

If you were very wealthy, 2010 was the lucky year to die (at least for your heirs.) The estate tax was zero that year.
Hope nobody was pulling the plug on dear old Dad on Dec. 31, 2010.

Any death tax is morally wrong unless you approve of robbing graves. It's a terrible government grab for more money.

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If you don't stand for something, you'll probably fall for anything.

It's NOT a death tax, it's another tax on personal income. Income, weather derived from wages, gifts, investments or inheritance is still income. Taxing income is the way we pay for our military, Medicare and infrastructure.

The rational behind making government bond income tax free is obvious. Explain, if you will, why it is that income derived from gifts or inheritances should be tax free.

I said nothing about gift taxes. The estate tax is a double tax in that the accumulated wealth has already had taxes paid on it. Suppose in your lifetime you work, pay taxes on that earned income, put what's left in the bank and pay cap gaines on any dividends or interest and reinvest what's left. You die and that nest egg is worth $5M. Now the government wants your estate to pay taxes on that money AGAIN.

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If you don't stand for something, you'll probably fall for anything.

The estate gift tax is a double tax in that the accumulated wealth has already had taxes paid on it. Suppose in your lifetime you work, pay taxes on that earned income, put what's left in the bank and pay cap gaines on any dividends or interest and reinvest what's left. You gift that nest egg worth $5M. Now the government wants your estate you to pay taxes on that money AGAIN. Not again since YOU never paid a dime of taxes on that income, weather gifted or inherited.

Why is inherited money less taxable than gifted money?

"I said nothing about gift taxes." - swampy

So what? Roger brought up gift taxes in making a point. You don't get to spew your arrogant uniformed nutty opinions around without people being able to correct them.



Edited 2 time(s). Last edit at 08/02/2012 11:49PM by Dennis S.

weather derived - is that blown out by 90 mph hot air ?

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This is the problem.

Family businesses are not Wal-mart stock.

They are not liquid, but are still taxed on their total value, not just cash on hand.

Most would have the value for federal estate tax purposes calculated as a multiple of EBITDA - "earnings before interest, taxes, depreciation, and amortization." - essentially a multiple of their annual revenue.

Keep in mind the exemption re-sets to $1 million 1/1/13, and it's easy enough to hit that with the value of one's residence in some parts of the U.S.

If the owner had the foresight to take out permanent life insurance when they started the business it's unlikely it has kept up with inflation enough to pay the tax, 25-35 years later when they die.

Even if the heirs can get a bank loan to cover the shortfall, the money to service it has to come from somewhere, and the biggest variable expense of your average small business is labor.

So rather than an estate tax that impacts the very rich, we currently have one that punishes capital formation in those businesses which are supposedly our "engines of growth".

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swampy
First, the death tax destroys family businesses and farms that seldom have enough liquid assets to pay the estate tax bill, forcing a liquidation of the business or sale of the family farm. 

That wipes out the source of modest wealth for many middle-class families, but leaves the truly wealthy, who have ample liquid assets and sophisticated estate plans, relatively untouched.

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Bill in NC

Even if the heirs can get a bank loan to cover the shortfall, the money to service it has to come from somewhere, and the biggest variable expense of your average small business is labor.

So rather than an estate tax that impacts the very rich, we currently have one that punishes capital formation in those businesses which are supposedly our "engines of growth".

I don't understand your reasoning here. In a well run profitable business each employee makes possible more revenue than the labor cost of the employee. Laying off employees to pay for a loan would be self-defeating. So if the heirs of someone who owns a small business worth more than $1 million cannot afford the taxes they would have to sell the business. If the business was making a good profit then someone will buy that business and the heirs will get the after-tax inheritance. The new buyers may have even more capital to work with and expand the business. At any rate I don't see yet why the inheritance tax would cause there to be less jobs.

Also, the business owner can gift up to $10,000 a year to her/his heirs without paying taxes on the gift. If they think ahead and tell the heirs to keep that $10,000 per year, then the heirs could have enough money to pay off a loan to pay for the inheritance taxes and keep the business.



Edited 2 time(s). Last edit at 08/03/2012 10:46AM by Ted King.

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Bill in NC

Keep in mind the exemption re-sets to $1 million 1/1/13, and it's easy enough to hit that with the value of one's residence in some parts of the U.S.

I

Bill do you really think the President and congress will let that happen? They won't.
Pres. Obama is proposing a $3.5 million exemption per individual, that's probably the lowest exemption that will go into effect. Congress more likely will hold onto the current $5 million exemption. And under that exemption, you will not find a "small business" or farm that had to liquidate simply due to estate taxes.

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Lemon Drop

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Bill in NC

Keep in mind the exemption re-sets to $1 million 1/1/13, and it's easy enough to hit that with the value of one's residence in some parts of the U.S.

I

Bill do you really think the President and congress will let that happen? They won't.
Pres. Obama is proposing a $3.5 million exemption per individual, that's probably the lowest exemption that will go into effect. Congress more likely will hold onto the current $5 million exemption. And under that exemption, you will not find a "small business" or farm that had to liquidate simply due to estate taxes.

have you priced a 20 acre vineyard lately ?

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Ted, few farmers can afford to give their kids $10K a year. I think there are a lot of people on this forum that don't have a clue what it takes to run an agricultural business.

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If you don't stand for something, you'll probably fall for anything.

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swampy
Ted, few farmers can afford to give their kids $10K a year. I think there are a lot of people on this forum that don't have a clue what it takes to run an agricultural business.

I grew up in rural Iowa and have a degree in agronomy. I know perfectly well what it takes to run a family farm. If a farmer gifts each of his children with $10,000 a year in deed in part of the farm property each year from the time their children a born, I'm sure the taxes wouldn't be too much to bear when it is time for them to inherit it. In the area of Iowa where I grew up actually the most common thing was for a family farmer to retire into town and sell his farm to his children - of course under generous conditions their kids can afford. They don't tend to wait for the death to pass on the farm from one generation to another.

Incidentally, this has next to nothing to do with Bill in NC's point about having to fire workers to get a loan to pay for the inheritance taxes.

I have a serious question here. This is in no way intended to be a "gotcha" or "food for thought" or whatever. I sincerely want to know why a "family business" would not be owned by the family. What is the point of having one person own a company in the first place, instead of having one's spouse and offspring be co-owners?

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"Stop thinking about art works as objects, and start thinking about them as triggers for experiences." ~ Brian Eno

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$tevie
I have a serious question here. This is in no way intended to be a "gotcha" or "food for thought" or whatever. I sincerely want to know why a "family business" would not be owned by the family. What is the point of having one person own a company in the first place, instead of having one's spouse and offspring be co-owners?

Ha I was just thinking that too. With some of the comments being made here it's like people never heard of CPA's or tax accountants or estate planning. I'm not saying it's cheap or easy to do, but you can plan ahead to avoid the sale of your business after your death, regardless of the size of the business. A business is considered "closely held" by the IRS if the owner holds 20% or more interest. So sharing with spouse or kids can still result in estate taxes being owed on the share controlled by the deceased. (and if 20% of your business is worth over $5 million, you probably shouldn't be complaining much about taxes.)
Estate taxes that are owed can be paid five years after death, even then you can take another decade after that to pay in installments. So this idea that "death tax" regularly leads to the destruction of small businesses and farms simply isn't true, unless the people running it are just clueless about tax law and don't manage their affairs well.

Many farmers in my family and my wife's family in previous generations throughout the 1900s. They all either sold the farm to their kids, or sold the farm off entirely at retirement age if their kids did not want it. I'm sure the attorney in town drew up the papers in an afternoon; no high-priced estate planner needed.

The other problem with family farms (and I'd imagine other mom-and-pops) is that so often they are in debt up to their eyeballs as a matter of routine. All that illiquid land and equipment didn't come free. Of course when the owner dies the creditors are going to line up first. How many of these "lost" family businesses were actually bled dry by outstanding obligations other than estate taxes?

Land and equIpment are not liquid assets. Often those "outstanding obligations" are the result of disasters (flood, drought, pestilence etc) and not mismanagement. Farming is a huge risk and a couple years of bad luck can run up debts. Again, a lot of you have no idea what farming is all about.

Here's a hint. Because or the current and ongoing drought the supply of corn is way down. Ranchers ar culling cattle now and you may see a glut of meat and lower prices over the next couple months. It would be a good time to stock up if you have a freezer. Come December-January, the price of beef will hit the roof as the supply goes down. Just sayin'

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If you don't stand for something, you'll probably fall for anything.

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swampy
Land and equIpment are not liquid assets.

Right. That's why Acer referred to them as "illiquid assets." "Illiquid" is the opposite of "liquid."

Also, it is perfectly possible to inherit tax free. When my father died the estate paid no taxes. It was well under $5 million. For that matter it was well under $3.4 million, which is the Democrats' suggested ceiling.
Estate tax is not an issue for the 99 percent.

It's just a money grab with those doing the grabbing justifying it from every angle possible.
Even those countries with progressive health care either don't have a death tax at all or have a very smalll rate are considering discontinuing the practice as well.

You didn't build that, so we get to add another layer of tax.

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billb
It's just a money grab with those doing the grabbing justifying it from every angle possible.
Even those countries with progressive health care either don't have a death tax at all or have a very smalll rate are considering discontinuing the practice as well.

You didn't build that, so we get to add another layer of tax.

[docs.google.com]

Quote

Of 25 other countries for which data are available from the Organisation for Economic Co-Operation and Development (OECD), 22 levied some form of estate tax, inheritance tax, or other wealth or wealth transfer tax in 2007 (or in the latest year for which data are available).

U.S. estate tax revenues as a share of GDP were below the OECD average for wealth and wealth transfer taxes (including inheritance taxes). Moreover, these data are for 2007 when the U.S. estate tax had an exemption of $2 million for individual — only a little more than half of today’s $3.5 million exemption — so estate taxes today are still lower as a share of GDP.

The rest of the article is worth a read. For example, this:

Quote

A Congressional Budget Office study, as well, exploded the myth that small businesses and farms have to be liquidated to pay the estate tax. CBO found that of the few farm and family business estates that would owe any estate tax under the 2009 parameters, the overwhelming majority would have sufficient liquid assets (such as bank accounts, stocks, bonds, and insurance) in the estate to pay the tax without having to touch the farm or business. For instance, of the 65 farm estates that would owe any tax after the $3.5 million exemption, just 13 could potentially face liquidity constraints, and CBO explained that even this figure likely overestimates the number of farm estates with liquidity constraints, because CBO was unable to take into account certain assets held in trusts (such as life insurance trusts) when calculating the liquid assets available to estates to pay the tax. Furthermore, the few, if any, farm estates that would face any liquidity constraints would have other important options available to them — such as spreading their estate tax payments over a 14-year period — that would allow them to pay the tax without having to sell off any of the farm assets.

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Ted King

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billb
It's just a money grab with those doing the grabbing justifying it from every angle possible.
Even those countries with progressive health care either don't have a death tax at all or have a very smalll rate are considering discontinuing the practice as well.

You didn't build that, so we get to add another layer of tax.

[docs.google.com]

Quote

Of 25 other countries for which data are available from the Organisation for Economic Co-Operation and Development (OECD), 22 levied some form of estate tax, inheritance tax, or other wealth or wealth transfer tax in 2007 (or in the latest year for which data are available).

U.S. estate tax revenues as a share of GDP were below the OECD average for wealth and wealth transfer taxes (including inheritance taxes). Moreover, these data are for 2007 when the U.S. estate tax had an exemption of $2 million for individual — only a little more than half of today’s $3.5 million exemption — so estate taxes today are still lower as a share of GDP.

What a wonderful way to exclude all those countries that don't impose a death tax from the equation.

The rest of the article is worth a read. For example, this:

Quote

A Congressional Budget Office study, as well, exploded the myth that small businesses and farms have to be liquidated to pay the estate tax. CBO found that of the few farm and family business estates that would owe any estate tax under the 2009 parameters, the overwhelming majority would have sufficient liquid assets (such as bank accounts, stocks, bonds, and insurance) in the estate to pay the tax without having to touch the farm or business. For instance, of the 65 farm estates that would owe any tax after the $3.5 million exemption, just 13 could potentially face liquidity constraints, and CBO explained that even this figure likely overestimates the number of farm estates with liquidity constraints, because CBO was unable to take into account certain assets held in trusts (such as life insurance trusts) when calculating the liquid assets available to estates to pay the tax. Furthermore, the few, if any, farm estates that would face any liquidity constraints would have other important options available to them — such as spreading their estate tax payments over a 14-year period — that would allow them to pay the tax without having to sell off any of the farm assets.

A tax so ovrbearing it takes 14 years to pay. Wonderrful. There's a way to grow small business in this country.

The tax rate is 55% and a 1million exemption as of Jan 01, 2013.
The CBO estimates this will cost us 1.5 million jobs.
It's just jobs. Poor and middle class people working on farms jobs.
Why to you hate America ?

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Edited 1 time(s). Last edit at 08/09/2012 07:25AM by billb.

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billb

The tax rate is 55% and a 1million exemption as of Jan 01, 2013.
The CBO estimates this will cost us 1.5 million jobs.
It's just jobs. Poor and middle class people working on farms jobs.
Why to you hate America ?

After looking over the details of this more I agree that a $1 million exemption is too low. Democrats in Congress also agree and have been pushing to continue the $3.5 million exemption which would make the number of farms subject to a tax (and remember its only on the margin of inheritance over $3.5 million) minuscule.

$1,000,000 is too low. 55% is too high. But it should not be nothing.

What if the business is breaking even?

Everyone's still getting their salaries, or hourly wages, but it isn't generating any significant profit over and above that?

That's a much more likely scenario, especially over these last several years of our "Great Recession."

The business still faces the issue of an estate tax based essentially on revenue, not profit, of at least 35% above whatever exemption Congress ultimately decides.

So, again, how do the heirs service the loan they'll need to pay the estate tax?

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Ted King
I don't understand your reasoning here. In a well run profitable business each employee makes possible more revenue than the labor cost of the employee. Laying off employees to pay for a loan would be self-defeating. So if the heirs of someone who owns a small business worth more than $1 million cannot afford the taxes they would have to sell the business. If the business was making a good profit then someone will buy that business and the heirs will get the after-tax inheritance. The new buyers may have even more capital to work with and expand the business. At any rate I don't see yet why the inheritance tax would cause there to be less jobs.

Also, the business owner can gift up to $10,000 a year to her/his heirs without paying taxes on the gift. If they think ahead and tell the heirs to keep that $10,000 per year, then the heirs could have enough money to pay off a loan to pay for the inheritance taxes and keep the business.

Quote
Bill in NC
What if the business is breaking even?

Everyone's still getting their salaries, or hourly wages, but it isn't generating any significant profit over and above that?

That's a much more likely scenario, especially over these last several years of our "Great Recession."

The business still faces the issue of an estate tax based essentially on revenue, not profit, of at least 35% above whatever exemption Congress ultimately decides.

So, again, how do the heirs service the loan they'll need to pay the estate tax?

Let me repeat the point you made that I was responding to:

Quote

Even if the heirs can get a bank loan to cover the shortfall, the money to service it has to come from somewhere, and the biggest variable expense of your average small business is labor.

So rather than an estate tax that impacts the very rich, we currently have one that punishes capital formation in those businesses which are supposedly our "engines of growth".

Because of your first sentence I assumed that you were talking about small businesses throughout your argument. Why would a small business be an engine of growth if it was only breaking even?

And let's consider how much impact on job growth the inheritance tax has in general anyway:

[www.taxpolicycenter.org]

Quote

About 2.4 million people died in that year [2008 - when the exemption level was $2 million]; of those, only 1 in 73 generated an estate tax return and only 1 in 166 had to pay any estate tax.

Now this included all estates, which probably included a lot of estates that did not have a small business as part of the assets. Of the smaller number of estates that did include a small business as part of the assets, how many of those happened to close to breaking even (not noticeably below or above that)? And out of those, how many were in a situation where the heirs could not pay for the tax?

You had 1 in 166 estates having to pay any inheritance tax at all and by the time you subtract out the number that didn't have a small company as part of the assets and out of what is left leave only those that were close to breaking even, and out of those leave only those where the heirs could not afford the taxes and it just isn't going to be a very large number.

Also, the estate tax is based on appraised value of the inherited company as an asset, not just strictly on revenues. So though revenues play a role in the appraised value, there are a great many other factors that could play much more of a role in appraised value than revenues.

And last, I'm not sure how your point in this posting about an inherited company being close to break even is related to your comment that I was responding to in your previous post about "the biggest variable expense of your average small business is labor." Of the small proportion of estates that pay any estate tax and of the smaller number of estates that have a company as part of the assets that are very near breaking even and whose heirs cannot afford the taxes, if the heirs had to sell the business because they couldn't afford the taxes how would that end up effecting a significant number of jobs?



Edited 4 time(s). Last edit at 08/10/2012 03:05PM by Ted King.