How Romney plans on playing a game on the Middle Class with the Estate Tax (What Romney calls the "Death Tax)
Mitt Romney's policy on the Estate Tax (What Romney calls the "Death Tax) is below:
"Eliminate the Death Tax(from the "FULL PDF" file accessible from Mitt Romney's page on taxes at http://www.mittromney.com/... )
Government should not tax the same income over and over again. The federal estate tax, also known as the “death tax,” does exactly that by taxing the wealth that Americans have been able to accumulate after already paying taxes throughout their working lives. This tax also creates a series of perverse incentives that encourages the most complicated and convoluted tax-avoidance schemes at tremendous cost to all involved. Finally, it can have catastrophic effects when a small family-owned business, in the course of passing to the next generation, creates tax liabilities that the family cannot meet without breaking up the business itself.
The federal estate tax has become a political football in recent years. The tax was temporarily eliminated in 2010, was reinstated in a last-minute deal between Congress and President Obama at a top rate of 35 percent for 2011 and 2012, and is slated to bounce up to 55 percent in 2013. As president, Mitt Romney will work to eliminate the tax permanently. All told, the negative effects on savings, investment, and job creation show how pernicious an estate tax can be. For those reasons, it should be stricken from the books as soon as possible. "
First- The Estate Tax does not affect the Middle Class since the existing law has the base exemption of Five Million Dollars, and then there are several exemptions that can go on top of this such as spouse.
(See http://en.wikipedia.org/... for further information on the further exemptions)
Second- Who pays this really? Not too many estates!
(Source: IRS, SOI Tax Stats - Historical Table 17)
As the table above shows under "Investment real estate" which includes "farm land and underdeveloped land, real estate mutual funds, real estate partnerships and other investment real estate" we are talking on the average about 10 to 15 percent of the estates.
It is expected that a large percentage of what is a small business (which I define as than 50 employees) is under Business assets which is less than 5 percent
The above makes it had to believe especially with the availability of money to borrow given assets the Romney statement " Finally, it can have catastrophic effects when a small family-owned business, in the course of passing to the next generation, creates tax liabilities that the family cannot meet without breaking up the business itself."
So If Mitt Romney abolishes the estate tax what will be the loss to the federal government?
The 2011 data is available (which are for deaths in 2010), it had an net estate tax of $3,077,408,000.
(source http://www.irs.gov/... )
And just to show how perverse the "hiding" of assets is, listed for "total lifetime transfers" (which is the sum of assets given to descendents included in the estate) of $14,721,159,000. Let's all cry for the poor descendents! And this also does not include all the loopholes. For an example, there is an interesting article on Bloomberg titled "Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit" (see http://www.bloomberg.com/... ). As Mitt's basic article from above states " This tax also creates a series of perverse incentives that encourages the most complicated and convoluted tax-avoidance schemes at tremendous cost to all involved." I am still wondering who are the "all involved' in this last sentence?
I wish someone in comments will give an example of a Middle Class technique which has any anywhere the power of these tax avoidances.
So now Mitt, since there would be a loss of revenue to the federal government,how are you going to make up this revenue? Are the middle class going to pay part of this? They, very much in general, do not fall within the Estate Tax group!
Now I will leave it to someone else to work out what the abolishment of the Alternate Minimum Tax (AMT) which Mitt wants to abolish will cost the middle class!