Posted on 01/19/2015 12:21:35 PM PST by Nachum
As the old saying goes, there are two things that are certain in life, death and taxes. Tomorrow night during his 2015 State of the Union speech, President Obama will announce that people paying taxes their entire lives just isn't good enough. The President wants the current 40 percent death tax rate increased to 60 percent. Americans for Tax Reform breaks down the details:
2. Stealth increase in the death tax rate from 40% to nearly 60%.
Under current law, when you inherit an asset your basis in the asset is the higher of the fair market value at the time of death or the decedent's original basis. Almost always, the fair market value is higher.
Under the Obama proposal, when you inherit an asset your basis will simply be the decedent's original basis.
Example: Dad buys a house for $10,000. He dies and leaves it to you. The fair market value on the date of death is $100,000. You sell it for $120,000. Under current law, you have a capital gain of $20,000 (sales price of $120,000 less step up in basis of $100,000). Under the Obama plan, you have a capital gain of $110,000 (sales price of $120,000 less original basis of $10,000).
There are exemptions for most households, but this misses the larger point: the whole reason we have step up in basis is because we have a death tax. If you are going to hold an estate liable for tax, you can't then hold the estate liable for tax again when the inheritor sells it. This adds yet another redundant layer of tax on savings and investment. It's a huge tax hike on family farms and small businesses.
(Excerpt) Read more at townhall.com ...
I am watching that like a hawk to be sure. We will probably be called a racist or elitist for actually saving something up. All our fault I guess.
It seems to be the way the US is heading for sure. Nothing belongs to those who have worked for it.
Sorry, but wine will not be strong enough to make the pain go away...Think in the 150 proof range...
I guess all these filthy rich democrats (BO included) somehow exempt themselves from these estate taxes for their heirs. Why else would they go along with this confiscation insanity. I swear it’s almost like Obama is just trying to piss people off-republicans and democrats-on purpose. He is such a little punk.
Hey! Congressional Republican ‘conservatives’!
Obama will surely compromise at 50%!
So far, so good - under the present laws, my inheritors value it ar 380K, sell it and that's it, no capital gains tax. Or sell it for 350K and take a loss.
Under this proposal, as I read it, they sell it for 380 and pay capital gains tax on 300K (paid 80, sold for 380). Sounds fair except....
That 80K I spent in 1977 has a value today of a lot more than 80K. Where's the adjustment for inflation on the intital purchase? 80K in 1977 was a lot of money, a brand new car was 3 or 4 thousand dollars. Heck, a new Cadillac DeVille was under 10K. So that 80K then is like 250K today. Without inflation adjustments it's not a true cost basis.
This will affect thoise who have no knowledge of estate planning.
Two big bottles. I might start early. Tonight. With all the news reports of what he is gonna say with a few “surprises”.
Geez. We’ve worked very hard. Saving for our kids college since the day they were born, one in college and one headed there come Fall 2015. We also want to leave them a little something when we’re gone. Same as our parents who are getting up there in years. And greedy government wants to get their paws all over it. We’re not rich. But we’ve worked extremely hard for the savings and wealth we do have.
And the GOP won’t or can’t fight. They roll over and play dead. The scales have tipped. And they are winning and taking everything they can.
Well, my 79 yr old father is selling his house by March 2015 to one of my nephews. Then he is kicking in 1/3 the cost of a new big house my sister and her husband are buying (they will be paying cash as soon as their current home sells) and he’s moving in with them. His will shall be re-written to reflect that deduction from her final 25% share of his estate. Guess he will barely beat them at their wealth/estate grabbing venture. My Mother has already passed and while he is still fairly good health, it is a preemptive move on their part . . . I live almost 1K miles away and help when I can and when needed.
Vultures!
Yup. Nothing is "free". He already jacked up the capital gains tax from 15 percent to 23.5 percent, of which 3.5 percent goes towards paying for Obamacare. Shell games all around to give our money (the "free" money) to Obama's sons. And inheritance tax used to be under capital gains until Obama separated it out and jacked it up previously. What a crook, exactly!
I'd need a bottle of vodka!
We have yet to test the new Congress. I would not be so sure, just yet.
Doesn't sound fair at all if the parent's estate exemption exists and is above 380K. Why not? Because it's not an exemption at all.... the inheritors don't pay unless they sell, but if they do, they pay the same tax as if there was no estate exemption.
To your other point, which is I think your main one, yeah, capital gains should be indexed for inflation. Otherwise (estate issues aside) you are taxed for inflation... you pay for the privilege of keeping up in nominal terms. Inflation is a bad enough tax on savings as it is.
This proposal is Soooo Bad... it doesn't even sound good first time around. Many of Obumbler's other ones sound good... at first... like the $2500 you'd save on health insurance, haha.
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