http://www.reuters.com/article/2013/02/26/us-column-feldman-idUSBRE91P0NY20130226 The amount an individual can exclude from estate taxes (including gifts given during his or her lifetime) is an extremely generous $5.25 million per person for 2013. That leaves very few people who will be subject to the tax. After all, a couple could exclude $10.5 million from estate or gift taxes, and with smart estate-planning - putting assets into an irrevocable trust, for example - pass on many times that amount tax-free to the next generation. The result: Just 3,800 estates are expected to be big enough to owe any federal estate tax in 2013, according to estimates from the Tax Policy Center. SO EFFECTIVELY THERE IS VERY LITTLE ESTATE TAX LEFT, in spite of the nominal Estate Tax rates that have a high end of 40%. Certainly all the uber-rich in the USA already have irrevocable trusts and even (in some cases) specific Congressional exemptions. So this is great news, right? Less taxes and what you save you can pass all on to your kids (less funeral expenses). But the past 35 years of economic history in the United States has seen a widening of real wealth with the top 0.1% benefitting way more than the rest of us (in changes in percentages of real wealth, not just nominal changes) and the top1% benefitting quite a bit more than the rest of us. We were told that this was good for the rest of us (trickle down theory) but even though productivity improved markedly somehow the payoffs from those improvements were distributed extremely unevenly. The continual answer of the Republicans on this Forum is that the efforts of those who reap the huge rewards merit those huge rewards. But if that is true, why are they also in favor of effectively no Estate Tax so that their potentially useless family (as Ayn Rand herself pointed out) unfairly inherit ALL that wealth and get a huge leg up on the rest of us rather than a giant leg up on the rest of us. Just how does this situation support meritocracy and free market capitalism? It smacks much more of an aristocracy inheriting ALL it's family's position.
Unless they changed it last year when the top rate went up, trusts pay a 35% income tax rate so the ubber wealthy who put their money in a trust really are likely paying more taxes going forward on income from those assets than they were paying in their lifetime/pre-establishing the trust unless it is a charitable trust. In the long run, it is better that the trust be taxed at the top rates than the assets be liquidated at death to pay a one time lump sum IMO.
You may or may not remember this, but President Obama is the one who slashed the Estate tax in a BIG way. The age of multi-generational wealth stealing is over. This was all part of a deal Obama made with the Republicans way back, a few years ago, the first time they stonewalled the government budget with demands... Well, the Estate tax cut was NOT one of the Republican demands but Obama put it in anyway. He went above and beyond the call of duty. See? Obama doesn't hate rich people after all, despite what some people may say.
Actually the better question is: Why should there be an estate tax at all? The estate was taxed as income in the first place. Looks a lot like fiscal double jeopardy. None of this would matter if all taxation were strictly consumption-based.
