When the laws pertaining to estate taxes make their switch in January, many families will lose millions of dollars compared to had their rich family members passed away earlier. Currently, the tax is set at 35% for estates valued at the inflation-adjusted $5 million minimum. The new laws drop the government bounty number down to $1 million and increases the tax to 55%.
That’s right – if you’ve worked your whole life to accumulate wealth that can be passed along to your family when you die, the government will take more than half of it. Why should your family prosper from your work when there are plenty of government expenditures that could use the money more effectively? That is, at least, the thinking in Washington DC today.
As CNBC points out:
Many families are faced with a stark proposition. If the life of an elderly wealthy family member extends into 2013, the tax bills will be substantially higher. An estate that could bequest $3 million this year will leave just $1.9 million after taxes next year. Shifting a death from January to December could produce $1.1 million in tax savings.
As unfair and inhumane as it sounds to hope that a family member dies in time, it’s a real dilemma. It isn’t just the family that has to battle with the personal conflict of greed and/or fairness versus loving and honoring a family member. It’s the dying wealthy family member themselves who are likely aware of the tax burden that they’re survival puts on their family.
Check out some of the statistics and facts in the CNBC article, then ask yourself about the callous nature of the government under which we live. Why does everything have to be done in dramatic fashion? This wouldn’t be nearly as much of an issue if the changes were incrementally spread out over time. The “death deadline” is such a dramatic change that it is definitely affecting both the moral integrity of the family members as well as the personal end-life desires of the dying person for many families in the country. Wouldn’t it have made more sense to make the changes less dramatic, to lower the threshold and raise the tax a little at a time every year for several years? Where is the planning and the forward thought in Washington?
This isn’t the type of problem that affects most Americans but it is a clear highlight on the poor fundamentals that drive our government.
- Estate Taxes And The Cliff: Would You ‘Pull… The Plug On Grandma To Save Tax Dollars?’ (mediaite.com)
- ‘Fiscal Cliff’ May Accelerate Millionaire Deaths (cnbc.com)
- If you have a big estate, die or give it away by January 1 (geneveith.com)