California Estate Planning Blog by Kevin Staker

March 13, 2010

Estate Tax News – March 13, 2010 by Kevin Staker

Filed under: estate tax,Other Kevin Staker Blogs — Kevin Staker @ 1:22 pm
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The Frum Forum has interesting dueling articles on Why the GOP Should Support the Death Tax and Why the GOP Should Oppose the Death Tax.   The Republican  Party has long opposed the federal estate tax.

In his article,Cetulus”, apparently a pen name for an estate planning attorney who wants to remain anonymous to his Republican clients, argues not only is the estate tax a great deal for taxpayers, but it is also a sound pro-growth alternative to high marginal income tax rates. Kevin Staker

On the other hand, Brian Domitrovic, a professor at Sam Houston State University and author of Econoclasts, however responds that the estate tax would only discourage work and investment.

Cetulus argues:

The GOP has long stood for a pro-growth tax system.  Thus, Republicans have favored low income tax rates, and have even argued for replacing the income tax with a more growth-friendly tax such as a tax on consumption.  The estate tax, meanwhile, is about as pro-growth a tax as one can hope for.  Not only that, but it has existed for almost 100 years. To create a more pro-growth tax system, Republicans don’t have to design a whole new tax from scratch. A pro-growth tax is already there to be exploited.

Professor Domitrovic, on the other hand, states:

Studies (such as here) of the estate tax have shown that returning to the old rate north of 50% would result in $2 trillion less in gross yearly reported estates. The lost $2 trillion represents both money entrepreneurs will spend and otherwise forsake from making in view of the estate tax, as well as the efforts undertaken (at great expense) to shield inheritances from the code. The efficiency, output, and employment consequences for the economy will be very high if we bail out to a high tax on estates – unless, of course, the self-made are so motivated that all they really care about is the thrill of the chase, or little blue ribbons.

The article in favor of the estate tax is more down to earth and understandable.  The article in opposition really does sound like it is from a college professor.  However, both have great arguments.

By Kevin Staker


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