Thrashertm
01-02-2011, 11:34 PM
http://www.factcheck.org/2010/12/let-the-distortions-begin/
More Estate Tax Malarkey
Rep. Ron Paul repeated some distortions about the estate tax when the Texas congressman issued a statement Dec. 17 in support of Obama’s tax cut deal.
Paul, Dec. 17: This bill also reduces the burden of the estate tax, which according to law is set to return in 2011. This unconscionable tax is an insidious form of double taxation and comes into effect in 2011 with a 55% tax rate. Americans should not be penalized for accumulating savings during their lifetimes. The estate tax especially harms small and family-owned businesses, which often must be sold to pay the tax bill.
We’ve debunked arguments of this sort before. It is simply not true that the burden of the estate tax falls primarily on small and family-owned businesses, and it’s only partially true that it amounts to double taxation.
In a 2006 report, the Tax Policy Center (a project of the centrist Brookings Institution and the liberal Urban Institute) said small farms and businesses – those valued at $5 million or less – “account for only 1 percent of total estate tax liability.”
Tax Policy Center, October 2006: Much of the debate about the estate tax centers on its impact on farms and small businesses. Roughly 350 taxable estates-or 2.8 percent of all taxable estates-will be primarily made up of farm and business assets in 2006. Just over 200 will be small farms or businesses (valued at $5 million or less); these small enterprises will account for only 1 percent of total estate tax liability.
More recently, the TPC issued new figures showing much the same thing.
Had the estate tax been allowed to return at the levels that prevailed in 2009, family farms and businesses were projected to account for only 520 of the estates taxed in 2011, or less than 8 percent of the total. Under the Obama/GOP compromise that Paul supported, that number would be cut to 440 estates, of which 290 are worth more than $20 million each.
As for the "double taxation" argument, we have said before that "it’s true that some portion of a taxable estate might be made up of cash that was taxed before, when it was earned as income." But any "stocks, bonds, real estate or other holdings" accumulated and unsold by that business would not have been taxed. In a Dec. 16 opinion piece in the New York Times, Roberton Williams of the Tax Policy Center said the estate tax is designed to impose a tax on income "that has escaped tax over a wealthy person’s lifetime."
Williams, Dec. 16: Investors pay no tax on capital gains until they sell their appreciated assets. For example, the owner of a small businesses or a long-held stock portfolio never pays tax on their growing value unless he sells these assets. Those substantial unrealized gains are taxed only through the estate levy. Get rid of the estate tax and people will find even more ways to avoid income taxes.
More Estate Tax Malarkey
Rep. Ron Paul repeated some distortions about the estate tax when the Texas congressman issued a statement Dec. 17 in support of Obama’s tax cut deal.
Paul, Dec. 17: This bill also reduces the burden of the estate tax, which according to law is set to return in 2011. This unconscionable tax is an insidious form of double taxation and comes into effect in 2011 with a 55% tax rate. Americans should not be penalized for accumulating savings during their lifetimes. The estate tax especially harms small and family-owned businesses, which often must be sold to pay the tax bill.
We’ve debunked arguments of this sort before. It is simply not true that the burden of the estate tax falls primarily on small and family-owned businesses, and it’s only partially true that it amounts to double taxation.
In a 2006 report, the Tax Policy Center (a project of the centrist Brookings Institution and the liberal Urban Institute) said small farms and businesses – those valued at $5 million or less – “account for only 1 percent of total estate tax liability.”
Tax Policy Center, October 2006: Much of the debate about the estate tax centers on its impact on farms and small businesses. Roughly 350 taxable estates-or 2.8 percent of all taxable estates-will be primarily made up of farm and business assets in 2006. Just over 200 will be small farms or businesses (valued at $5 million or less); these small enterprises will account for only 1 percent of total estate tax liability.
More recently, the TPC issued new figures showing much the same thing.
Had the estate tax been allowed to return at the levels that prevailed in 2009, family farms and businesses were projected to account for only 520 of the estates taxed in 2011, or less than 8 percent of the total. Under the Obama/GOP compromise that Paul supported, that number would be cut to 440 estates, of which 290 are worth more than $20 million each.
As for the "double taxation" argument, we have said before that "it’s true that some portion of a taxable estate might be made up of cash that was taxed before, when it was earned as income." But any "stocks, bonds, real estate or other holdings" accumulated and unsold by that business would not have been taxed. In a Dec. 16 opinion piece in the New York Times, Roberton Williams of the Tax Policy Center said the estate tax is designed to impose a tax on income "that has escaped tax over a wealthy person’s lifetime."
Williams, Dec. 16: Investors pay no tax on capital gains until they sell their appreciated assets. For example, the owner of a small businesses or a long-held stock portfolio never pays tax on their growing value unless he sells these assets. Those substantial unrealized gains are taxed only through the estate levy. Get rid of the estate tax and people will find even more ways to avoid income taxes.