Another tax breaks for the wealthy and the fallout on the poor, that’s the way of doing big business in America. As EarHustle411 begins to reflect on the year coming to a close, we came across this article and unfortunately the contents have come to pass. An inheritance tax break to the tune of $269 billion dollars for the heirs and heiresses of America’s wealthiest families. More financial heartache for the poor.
Read more as reported by Huffington Post:
House Republicans this week will vote to hand the heirs and heiresses of America’s largest fortunes a $269 billion tax break by repealing the federal inheritance tax.
The legislation would shield the very richest families from taxes on the fortunes they inherit. After years of GOP attacks on the inheritance tax, also known as the estate tax, only a few thousand of the wealthiest families are subjected to it — 4,700 total in 2013, according to the Joint Committee on Taxation. Only individual fortunes worth over $5.43 million can be taxed under current law, an amount that doubles to $10.86 million for wealthy couples. The Republican proposal would eliminate all of these estates — which are over 15,700 percent richer than the median American household — from taxation.
Inheritance taxes are at the center of the policy debate over economic inequality. French economist Thomas Piketty has called for a global wealth tax to combat widening economic inequality based on unearned wealth passed between generations. But the Republican bill scheduled for a vote this week would move in the exact opposite direction, eliminating even the limited taxes on family capital that the United States currently deploys.
“There has been a very aggressive lobbying campaign by some of the wealthiest families in the country for a couple of decades now,” said Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities, a liberal-leaning think tank. “But this is more radical than other recent efforts.”
No Democrats voted for the GOP bill, dubbed the Death Tax Repeal Act of 2015, in committee. And the legislation wouldn’t just eliminate the estate tax — it would also allow heirs to escape the already-generous capital gains tax on any stocks and real estate they receive. The change would significantly alter the meaning of the capital gains tax, since capital gains taxes only hit the wealthy when they actually sell an asset. Moguls could keep their wealth in the stock market and pass it down from generation to generation without ever being taxed.
The result is an economic inequality double-whammy in which two of the most pro-rich elements of the tax code are further weakened, costing the federal government $269 billion over the next 10 years, according to the Congressional Budget Office.
Half of all capital gains flow to the richest 0.1 percent of Americans, and they are taxed at just 20 percent, well below the 39.6 percent rate for ordinary income. But the estate tax is even more regressive, applying to just 0.2 percent of estates a year, at an average effective rate of less than 17 percent, since millions of dollars of the inheritance are exempted from the formal 40 percent rate.
Federal inheritance taxes used to be broader. In the 1970s, according to the JCT, about 6 percent of all estates were subject to the estate tax. During the Great Depression, the rate on the estate tax was 70 percent. But the Republican campaign against it went into overdrive in the 1990s and hasn’t let up, even in the Obama era. Conservatives routinely make a moral argument against what they call “the death tax,” saying it is unfair to tax a family just because one if its members has died.
Economists point out that shielding unearned inheritances from tax doesn’t encourage any useful activity, and Democrats have typically opposed efforts to chip away at the estate tax. But they have allowed a host of Republican efforts to go through in broad bipartisan deals. In 1997, President Bill Clinton’s budget secured child health care funding in exchange for a GOP item narrowing the estate tax to exclude a host of wealthy families. In late 2010 and again in the 2013 fiscal cliff deal, Democrats included generous inheritance tax measures into a bargain with Republicans.
The GOP has more than enough votes in the House to pass its latest proposal. But the legislation would likely succumb to a Democratic filibuster in the Senate or to a presidential veto. But while the bill has almost no chance of passing on its own, it could spur lawmakers to include a new break for the super-rich in must-pass legislation later this year, when Congress will need to raise the debt ceiling or fund the government, particularly if the GOP is able to peel off a few dozen conservative Democrats to vote in favor of this week’s bill.
Source: Huffington Post