By Robert Lowry and Christine Butler, JD. | RedCounty.com | Hollywood, FL
The new death tax will kill your personal finances
President Obama repeatedly stated in his campaign that Americans making less than $250,000.00 would not have their taxes raised one dime. The American taxpayer has been duped again.
All Americans, especially middle class Americans, are in for a rude awakening, when the largest stealth tax increase in American history takes effect on January 1, 2011, without so much as a stroke of a pen. In fact, it will occur by the sheer inaction and complicity of a democratically controlled Congress, drunk on spending and taxing Americans into obscene levels of debt and deficits. Unless Congress acts to extend the Bush era tax cuts now in place, they will expire on December 31, 2010, and taxes on personal income, capital gains, dividends and estate taxes will escalate for everyone, across the board on New Years Day.
At the stroke of midnight, as we toast the new year, personal income tax rates for all income brackets will increase, with the lowest rate rising 50% from 10% to 15% and the top rate increasing from 35% to 39.6%. The capital gains tax will increase from 15% to 20%, and for dividend income, from 15% to a maximum of 39.6%. These rates pale in comparison to the dramatic increase in federal estate taxes (“Death Tax”), which return with a vengeance to strike at the heart of all Americans’ hard-earned earnings, investments, family businesses, farms and estates accumulated over a lifetime, as the rate increases from a current 0% in 2010 to a staggering 55% of estates exceeding $1 million!
The resurrected Death Tax means that an individual who dies on New Years Eve leaving a $10 million estate will pay no federal estate taxes, but if he or she dies on New Years Day, he could pay 55% of $9 million or $4.95 million in Death Taxes! That a tax bill could be so radically different from one day to another is not rationally based or economically sound tax policy, but an arbitrary and capricious confiscation of individual property by the government. More insidious, such a dramatic reversal in tax policy incentivizes the planning of one’s demise in 2010 rather than later years, in order to protect any sizeable family estate from being eroded by Death Taxes.
Reinstatement of the Death Tax does not affect just the wealthy and well heeled. It affects anyone with an estate over $1 million. A million dollars is not what it used to be, even 10 years ago. For many Americans making considerably less than $250,000, a million dollar estate consists of a house, an IRA or 401K plan and some life insurance. Not exactly a fortune, yet a decedent’s loved ones could pay 55 cents of every dollar of that estate over $1 million in Death Taxes to the federal government.
On July 21, Sen. Jim DeMint’s (R-SC) proposed amendment to repeal the Death Tax was shot down by a Democrat majority in the Senate. In casting his vote, he described the Death Tax as an “unfair, immoral double tax on property and assets that folks have already paid taxes on throughout their lives.” He stated “The Obama death tax is just the latest example of this administration’s assault on small businesses.”
The Death Tax is just one of a whole array of federal taxes looming on the immediate horizon, that targets and punishes entrepreneurs and Americans who save, invest, build up family businesses and accumulate a modicum of prosperity over a lifetime to pass on to their children. If Congress fails to extend the tax cuts and repeal the Death Tax, every American will face increased taxes on earned income, dividends and capital gains, as well as a return of the marriage penalty tax and loss of tax credits afforded to families with children. The Tax Foundation estimates that a family of four with two wage earners earning $85,000 a year will get hit with an additional $1,800 in federal income taxes in 2011 as a result of the stealth tax increases from the expiring tax cuts. Taxpayers earning less than $250,000 include small businesses, which form the engine necessary to create new jobs and drive a flagging economy forward.
According to the Congressional Budget Office, if Congress does nothing and allows the tax cuts to expire in 2010, taxpayers will pay $115 billion more in taxes just in 2011, and an estimated $2.6 trillion through 2020. Repeal of the Death Tax would create 1.5 million new jobs, according to projections by the American Family Business Foundation.
Obama’s position is that the tax cuts only go to “folks at the top who don’t need them and didn’t ask for them” (President Obama, Weekly Address July 17, 2010). Ben Bernanke, Chairman of the Federal Reserve and his predecessor Alan Greenspan, have joined a growing chorus of prominent democrats, including Senators Evan Bayh (D- IN), Kent Conrad (D-ND) and Ben Nelson (D-NB) and several Congressmen who support an extension of the tax cuts as necessary to economic recovery. Allowing the tax cuts to expire would be the wrong economic move at the worst possible time for a fragile economy.
America stands at a critical crossroad – will we passively stand by and watch Obama’s unbridled pursuit of socialist policies and assault on American capitalism and our American way of life, using a mind-numbing array of ever-increasing taxes, failed stimulus spending, trillion dollar deficits and rising unemployment? OR will we stand and fight to reassert our American exceptionalism and reclaim free enterprise by limiting job-killing, intrusive government regulation, repealing Obama care, reducing federal spending and decreasing taxes, starting with the permanent repeal of the Death Tax?
We must demand of our elected officials that they stop the tax and spend attack on small business and hard-working Americans. They must rein in federal spending and extend needed tax cuts to businesses and individuals and eliminate the Death Tax to spur job growth, invigorate the economy and encourage capital investment. The liberal policies of massive trillion-dollar deficit spending have failed.
As a U.S. Congressman, I will fight to bring back fiscal sanity to the federal government by sponsoring and supporting legislation that limits government spending, reduces the federal deficit, reduces or eliminates taxes and regulations that stifle growth, kill jobs and discourage capital investment, including repeal of the Death Tax.
