Since my name was dragged in here, I'll respond on that point. The issue of the estate tax can be
GENERALLY couched in terms of liberal vs. conservative, just as one can
GENERALLY refer to Democrats as liberal and Republicans as conservative. Rarely is anything black and white, but denying that trends exist is equally as misguided as saying that absolutes are always present.
That said, it has generally been a conservative tenet, read: Republican, that the estate tax is a bad method of taxation. Conversely, it has been a liberal tenet, read: Democrat, that it is a good way to eliminate financial dynasties and to replenish government coffers.
It is unwise to dismiss what
stalinator says because there is a great deal of truth in it. Why should we dictate to a dying person how to spend his or her money? The government has never forced charitable contributions, unless you consider government subsidy programs like food stamps to fall under that umbrella. The money that was earned during the person's lifetime has already been taxed -- income, capital gains, etc. Then, we slap a FURTHER tax on it because...why? We envy someone who has worked hard to amass personal wealth (for one broad category, yes there are others)? I don't follow the logic, or more likely, the lack thereof.
We also have the issue of farmers and small business owners. Here's a quote about someone the estate tax defenders use as an example of why the tax isn't so bad:
Judy Wicks, owner of the White Dog Cafe in Philadelphia, does not see the estate tax as a threat to her plans to pass on her business to her daughter. If Wicks died today, her business would be worth about $2 million. She says her daughter could take advantage of a special $1.3 million exemption that is available to small businesses and family farms, and then make payments of $18,000 a year for 14 years to pay the $245,000 estate tax bill. Linky
$18,000 per year for 14 years?? That's a sizeable chunk of change, especially if the cafe fell on hard times or the economy were in depression. And that's a GOOD example? Hmmmm. Interestingly enough, a normally liberal organization, the American Bar Association, supports repeal of the estate tax. That one surprised me.
Also, it appears that the repeal of the entire stepped up basis was put in place to placate less conservative legislators so we can blame them for altering the nature of Bush's proposal. I have had a difficult time actually finding the text of the law, but I am late for dinner so I'll look later. I also found mention of the increase in the exemption that
shifrbv mentions.
Here is a complete description of the tax, which I have yet to read in its entirety.
One of the reasons for the estate tax, and for the elimination of the stepped up basis incidentally, is the argument that much of the value of an estate is never taxed because it is appreciated gain from investment essentially. So, the estate tax acts as the capital gains or income tax on that property when it is transferred. That sounds wonderful, but in the same breath, they quote a study which says that,
at most, 56% of estates over $10 million are comprised of untaxed gains. So, if that's the case, then the tax effectively taxes that portion of the estate AT 100%!! (with the 55% tax rate for large estates, leaving the already taxed portion untaxed, the remaining ~45%) Now, THAT'S logic. Check
this page for that little tag of brilliance.
Gee, it's not as simplistic as it looks at first blush, now is it?