What's the point of even having government anymore? Seriously, we're in such a bad state these days. Republicans refuse to endorse any Democratic stance/idea/proposal and it seems to be the same for the reverse. It's pathetic and completely disheartening. I don't think I've heard one positive reaction to O's Afghanistan policy. Everyone of them immediately jumped on it yet offered no solution themselves to the problem that they created. I've completely given up on government. They're worthless.

Comparing any other Congresscritter to Lieberman. MAN, that's cold. (I have Jewish friends who use "Lieberman" the way Latino friends use "Tio Taco".)

It is impossible to call any tax fair, because "fair" is a subjective measure.

However, surely the estate tax comes closest of all taxes to the fair concept.

The deceased, whose death triggers the tax has not lost any assets because, well, the deceased is dead. The heirs have not lost anything because they never had the assets. The tax affects only a very small number of estate, and those estate are very large. Good estate planning can mitigate much if not all of the tax even for large estates. The tax has an impact, albeit small, or the trends towards highly skewed income distribution towards the very wealthy.

While some argue that the estate causes the "fire sale" of farms and small businesses, no one has ever been able to document that assertion.

If you support reduction or abolition of the estate tax, kindly tell us what programs you would cut, or what taxes you would raise or how much you would borrow to offset the loss of revenue.

If "good estate planning can mitigate much if not all of the tax even for large estates", then what's the point of the tax?

The point of the tax is that even with good estate planning which mitigates the tax for even large estates, (1) one way to mitigate the tax is to make large contributions to charity which serve a public good similar to government spending, see Gates and Buffett (2) estate planning frequently only postpones the tax, and (3) even with good estate planning, there are estates in this country that are so large that no amount of planning can defeat the tax, and these estates are the ones which make up the huge majority of the estate tax. The argument that the estate tax causes families to have to sell the family farm, or close down the family business is an urban myth, much like crocodiles in the sewer and aligators on golf shirts.

The concentration of wealth in the upper .1% of the population is huge, and this fact alone would create a lot of support for the tax if the majority of folks realized how large it is. A recent tax case in New York City involving a potential tax liabilty of $27 million for NYCity taxes for a hedge fund manager is illustrative, because in order to owe that much NYCity tax the individual would have had to have taxable income of over $700 million in one year. Does any one single individual, particularly a hedge fund manager, ever contribute enough to society to justify that amount for one year's worth of work?

Finally, on a personal note, the estate tax gives rise to lucrative employment for tax consultants like me, thus shifting income from the very wealthy to the not-so-wealthy but very deserving, but I doubt if this argument will win the day with many other folks and so I will not mention it.

Dear Mr. Finkel,

Back in the early eighties when estate taxes were more brutal than they are now, my mother died at 56. She was was predeceased by my father whose unexpected illness killed him at 59 two years earlier. My sisters and I (from teens to early twenties then) were forced to pay $65,000.00 in inheritance taxes on property that my parents had struggled to purchase, and own outright, free and clear. Like our home, for example. We had minimal liquid assets. My parents had not planned their estate, granted, but check again their ages at the time of their deaths.

The lucrative employment of a tax consultant like you gave us very little comfort at the time. Fortunately, a dear family friend and professional was willing to assist us for a lowered rate. How you feel you would have been in a position to deserve anything from us in beyond me.

Well, PDXLifer obviously I cannot comment on the situation you faced in the 1980's and I can see it is a very serious subject for you and continues to cause you pain even today. I am sorry for that. With respect to your situation I can say this.

1. My position and comments are directed at today's Estate Tax environment, not what was in the past, which is not relevant for policy considerations.

2. In order to have an Estate Tax liability of $65,000 (or say about $250,000 with inflation) under the house bill passed today and opposed by the gentleman cited in Jack's blog and by all of the Republicans, a married couple would have to have a taxable estate of slightly over $7 million. Do you really think it is wrong for an estate of that size to pay $65,000 of Estate Tax? Does that really create a hardship on the heirs?

3. Your question of what would someone like me deserves from you is simple. For a fee far less than the amount of the Estate Tax we could have provided advice that is legal, ethical and morally sound that would have eliminated the tax entirely, or reduced it in an amount substantially greater than the fee.

I am sure the family friend you mentioned was indeed a dear family friend, and it sounds like he or she prepared the Estate Tax Return at a reduced rate, which is very nice. However, where was this dear family friend when you needed that person to do the Estate Tax planning to avoid the tax altogether? You need to understand that Estate Tax Planning is done prior to death, not when the Estate Tax Return is prepared and filed.

4. Finally, I again raise my question. If the Estate Tax is eliminated, what government programs would you reduce, or whose taxes would you increase to offset the revenue loss, or would you just add the lost revenue to the deficit and national debt that is already huge and growing?

PDXLifer

You were not "forced" to pay the tax. You could have sold the home and paid the tax out of the proceeds. Or you could have taken out a mortgage on the property and paid the mortgage payments by converting the house into a rental.

It would obviously have been better to plan for the unexpected, but the fact that someone struggles to purchase a house and owns it free and clear really doesn't change the social justice consideration about the estate tax.

...the estate tax gives rise to lucrative employment for tax consultants like me, thus shifting income from the very wealthy to the not-so-wealthy but very deserving, but I doubt if this argument will win the day with many other folks and so I will not mention it.
But you just did. And it basically sounds like you're saying that the law should stay on the books because you deserve that money more than the people who own it, simply because they have more of it than you.

If the folks up that way want people in Portland to take them seriously, they could start by finding a real Democrat to represent them.

Jack, why do you think the people "up that way" care at all what the people in Portland think about them? Maybe they keep electing Baird because he's not Randy Leonard or Sam Adams or Diane Linn or Neil Goldschmidt or Erik Sten or...

Sidney, hitting 7 million in assets is not that hard for a farmer these days. Land and equipment is very expensive and these guys just don't have the liquid cash laying around to pay extra taxes with. I wouldn't be suprised small businesses can hit the cap without to much problem too and also not have the liquid cash sitting in the sock drawer to pay with.

The primary reason to have the estate tax is the fact that the income tax on the growth of one's assets is not triggered at death, and yet one's heirs get a "fresh start" in the basis of those assets for purposes of income tax transactions in the future.

Picture a hypothetical taxpayer, Bill Gates. He founded Microsoft with an initial investment of $5,000. Now his MS stock is worth $1 gazillion. When he dies, there's no income tax, and forever thereafter there will be no income tax on the growth of that stock from $5,000 to $1 gazillion. If his kids sell it for $1 gazillion, there's no income tax on that appreciation at all. If they sell it for $1 gazillion + $1, the income tax is imposed only on $1.

The estate tax is the tradeoff for that gigantic income tax benefit.

I wouldn't be suprised small businesses can hit the cap without to much problem too and also not have the liquid cash sitting in the sock drawer to pay with.

Estates that are comprised largely of interests in closely held businesses are allowed to pay their estate taxes over a period of many years, with interest charged at only a highly favorable interest rate.

why do you think the people "up that way" care at all what the people in Portland think about them? Maybe they keep electing Baird because he's not Randy Leonard or Sam Adams or Diane Linn or Neil Goldschmidt or Erik Sten or...

You're right. He's freakin' Joe Lieberman.

Enjoy your tolls.

Ken, and others

The final paragraph of my original post was written with tongue firmly in cheek (and while I was watching a pretty good football game). Tax Policy is a serious issue, but that does not mean we cannot comment some times in a somewhat light and less serious manner. Obviously some of you took my statements in that paragraph in a more serious manner than I intended. Hey folks, lighten up. If that paragraph had been in say, the New Yorker I would have been praised for my sardonic wit.

Darrin, Your point is well taken, but Jack's point is that there are provisions to take your point into account. Also, those who would continue the tax have also proposed provisions for special consideration for family farms. Again, I would ask someone to document for me that there are a large amount of family farmers and small businesses devasted by the estate tax. It may sound logical, but it just doesn't happen.

Finally, again, no one has answered my question about how to replace the revenue, or which expenditures to reduce or whether we should just borrow more money if the estate tax is eliminated. There is no free lunch. If the estate tax is repealed we know who will benefit, my question is who will pay for those benefits?

Why would people in Vancouver care if Portland takes them seriously?

The ones who work in Portland care a lot about how they're treated by the Oregon tax system; that's one of many examples.

I guess my point is that most people I know who live in Vancouver don't spend a lot of time worrying about what Portland thinks of them. They definitely aren't going to take that into consideration when electing their representative. I've lived in Portland all my life. One thing I've increasingly noticed is that people in Portland seem to have a feeling that other cities in the region are somehow inferior to ours. I think that attitude has hurt us. And I think your comment was an example of that. No big deal, but I thought it was worth a comment.

My thought on the estate tax has always been that we shouldn't impose the tax as long as the assets are left, unrestricted, to the next generation. In most of those situations the assets would be spent within a decade or two and would end up in the hands of more productive individuals. Under the current system many large estates use trusts or other devices to lock up assets so that the next generation (or second or third generation) is protected from losing what previous generations accumulated. I think this should be allowed, but at the cost of paying the estate tax.

So the folks of Southwest Washington should elect people who Oregonians consider "serious," or they can't expect to be treated fairly by the Oregon tax system? That -- along with Mayor Slimy's threat to kill the CRC unless it has light rail -- sound a lot like quid pro quo. Or extortion. Pick your label.

"Finally, again, no one has answered my question about how to replace the revenue, or which expenditures to reduce or whether we should just borrow more money if the estate tax is eliminated. There is no free lunch. If the estate tax is repealed we know who will benefit, my question is who will pay for those benefits?"

I'm convinced that being opposed to taxes of all kinds is simply a stance many people have adopted--almost all Republicans these days, for instance--without any regard for the intellectual, moral or civic merits of the position. You're wasting your time, Sid, if you think anti-taxers are going to engage seriously in a discussion of government funding and personal responsibility for providing that funding. Some people just see a tax, any kind of tax, and they're against it--social responsibility be damned.

Thank you, Ronald Reagan, for making pure, stupid selfishness seem like a legitimate political position.

Replace the name Vancouver with Gresham and you will have a good idea of the demographics, values, etc.
Move Mary Starett and get her to run for Baird's seat. This gets her to DC and visibility. [She is able to speak although what she says is idiotic.]
Voila! --- 2012 Republican or Tea Bagger candidate for President and good bye Sarah!

no one has answered my question about how to replace the revenue, or which expenditures to reduce or whether we should just borrow more money if the estate tax is eliminated. There is no free lunch

If the estate tax were eliminated the charade of stepping up cost bases would stop as well. Then when John the spendthrift heir or Jane the wastrel heiress gets around to blowing the dough they would pay whatever the appropriate income tax is on the net proceeds from the sale of the appreciated asset.

Grandpa and grandma when no longer encouraged to give bucks to some quirky foundation in order to avoid the tax man will be more likely to pass assets on to heirs, adding to the pool of taxable gains.

When it is all said or done tax revenues might not be much different. A slice of the tax planning sector could find more productive pursuits. And if revenues are shaved, we're only talking about one or two percent of Federal receipts to begin with. You could make a heck of a down payment (or cover the difference entirely perhaps) on whatever revenue is lost by requiring GM and Chrysler to sell bonds to fund a buy out of the government's ownership interest.

And by the way, since you all seem anxious to get into Bill Gates and Warren Buffet's pockets, what assurance do we have that they will pay one red cent of Federal Estate Tax (assuming current law) when it is all said and done?

Jack-- Why would anyone take Portland serious now that the inmates are running the asylum?