Commentaries
Fear the Reaper
Fear the Reaper
April 1, 2009
The estate tax, often called the death tax, is a post-mortem tax on all assets transferred to living relatives after a person has died. Many claim that it only taxes the top two percent of the nation's wealthy while others report that this way of thinking ignores the fact that this tax also adversely effects long-term saving and small business investment. As a consequence, the estate tax is often overlooked by tax-payers and often avoided by government officials.
In 2001 Congress instituted a tax cut that phased down the estate tax from 55% to 45% this year and then to zero in 2010. It was set to be re-instated at the 55% level the following year; however, the common political expectation was that it would not return after its brief absence in 2010. Enter a new president and a new administration. Faced with an almost insurmountable economic crisis that will balloon the federal budget deficit, President Obama has decided that the estate tax- should not be allowed to go. The Wall Street Journal recently reported that buried in the President's budget proposal is a footnote (on page 127) announcing that the "estate tax is maintained at its 2009 parameters." What this means is that all estates will be taxed at the rate of 45% over 3.5 million ($7 million per couple); so don't plan on dying just yet.
NCPA research has found that the estate tax punishes not only the small, family-owned businesses, but also those who are land rich and cash poor, including farmers, ranchers, and forest owners. According to a 2006 Joint Economic Committee study, death tax "liabilities depend on the skill of the estate planner, rather than the capacity to pay." Most generational businesses and farms are rich in assets such as land or equipment, but are not liquid enough to "meet their estate tax liabilities." As such, they must sell off their assets to pay the reaper and in the process lose their livelihood. According to Pamela Villarreal, senior policy analyst at NCPA, "These estates are taxed plenty while people are living; why should they have to be taxed again at death?"
To hear more on Pam's take on the future of the estate tax to the Alabama Forest Owners Association, click here.
Posted: Apr 01, 2009 | Research Topic: Research Topics
The Road to Recovery Hits Financial Triage Detour
The Road to Recovery Hits Financial Triage Detour
February 6, 2009
A recent Washington Post article reported that the Obama administration is considering another bank rescue to buy out troubled assets in order to limit bank losses by stabilizing asset prices. This amounts to what the writers have termed "financial triage"; that is, a government decision on which assets the banks will keep and which the government will take responsibility for. This essentially creates a "bad bank" controlled by the U.S. government to house the toxic assets. The article also reports on Obama's decision to cap executive pay at $500,000 for companies who accept "massive government assistance."
Meanwhile, Yves Smith, the Naked Capitalist, writes a response detailing the effects of this second bank bailout here. It's worth the read for some sobering clarification.
Posted: Feb 06, 2009 | Research Topic: Research Topics
Taking a Swipe at the Capital Gains Tax
As evidenced by the recent Democratic debates, the presidential candidates are focusing their attention on the capital gains tax. Sen. Barack Obama has indicated that he would consider raising the tax to its 1996 level of 28 percent.
Posted: Apr 22, 2008 | Research Topic:
Fixing the AMT: Could a Flatter Tax System Be in the Works?
Millions of Americans will be hit with the Alternative Minimum Tax this year if measures are not taken to patch or repeal it. Reps. Charlie Rangel (D-NY) and Paul Ryan (R-Wis) have both sponsored bills to repeal the AMT. One of them, Ryan's Taxpayer Choice Act, closely resembles a flat tax. Could this type of tax system become a reality?
Posted: Nov 12, 2007 | Research Topic: Income Taxes/AMT
Hillary's New "American Retirement Account:" The Saver's Credit Repackaged?
Any proposals to eliminate tax penalties to get individuals to save for retirement are worthy of consideration. But what about plans that reward savers with government funds?
Posted: Oct 10, 2007 | Research Topic: Overview- Taxes and Growth
Lottocracy
[Wall Street Journal| August 31, 2007] Curtail the First Amendment? Why not just do away with elections?
Posted: Aug 31, 2007 | Research Topic: Monetary Policy
Moral Hazard at the Fed
[Dallas Morning News | August 23, 2007] With the recent credit crunch and drop in the markets, pundits criticized Fed Chairman Ben Bernanke for not taking action sooner. But there are reasons why the Fed is so reluctant to intervene in financial markets.
Posted: Aug 24, 2007 | Research Topic: Monetary Policy
Don't Dismiss Our Dismal Savings Rate
[The Wall Street Journal | July 17, 2007] The main fallacy in monetary theory and policy is the confusion of money and wealth. The bottom line is that real wealth has to be produced; it can't be printed.
Posted: Jul 18, 2007 | Research Topic: Monetary Policy
Dems Want You to Take a Hike
[The Wall Street Journal | May 24, 2007] The hottest domestic political issue of the coming two years will be federal income taxes.
Posted: Jun 22, 2007 | Research Topic: Monetary Policy
P=MV/Q
[The Wall Street Journal | January 23, 2007] While a weaker economy might well reduce inflation, that isn't a necessary condition. Faster growth can also reduce inflation.
Posted: Feb 09, 2007 | Research Topic: Monetary Policy
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