Democratic Repeal Of Inheritance Tax
On June 7, 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001.
Among the many changes to the tax laws is the so-called Estate Tax repeal. The 2011 the tax law is scheduled to completely revert to its status prior before the enactment of the Estate Tax repeal. The repeal encompasses a host of taxes among them Estate tax which is slated to be completely repealed in 2010.
Before enactment of the new law Federal tax was exempt on the first $675,000 of a taxable estate and taxable lifetime transfer. This amount was scheduled to be increased to $1 million in 2006.
Repeal of estate tax or near-enough repeal, would represent a massive tax cut for the beneficiaries of the wealthy-bracket with the working class Americans footing the bill. A complete repeal including interest payments on additional debt would cost the country nearly $1 trillion in the first ten years of implementation. This would add to the current annual deficit of $7.7 trillion. While the nation as a whole would bear this crippling cost, only a few of the super-rich heirs would stand to benefit.
Obama has a fourfold approach to economic reform. One of the factors is he wishes to retain an inheritance tax on the wealthy; a move that is being hotly contested. Obama is aware of the pitfalls in a society which hinges all opportunity and privilege essentially on one’s parents’ wealth. What was disturbing to him was the implication of creating a society based on wealth concession and opening that was inherited. He is concerned that America will revert to a society with a privileged class.
Obama’s proposal was that estate tax would be effectively repealed for 99.7 percent of estates, and retained at a 45 percent rate for estates valued at over $7 million per couple. This would cut the number of estates covered by the tax by 84 percent relative to 2000 and impact only the wealthy.
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