What happened to the estate tax? Had to keep that at no tax on 10 million to create jobs?

[No Compromise]

Does anyone know?

It seems like a big jump to go from one million to 10 million exempted and now that is the accepted number?

We need to ensure family dynasties why?

[leftstreet]

1. Robber Barons are now called Job Creators

apparently

[ProSense]

2. On the estate tax, the deal worked out was better than the Senate bill that previously passed

This deal was better than the previous Senate bill that everyone wanted the House to pass.

http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=2&vote=00184

The estate tax was a sticking point with even Democratic Senators (the Senate bill above kept it at $5 million with a rate of 35 percent). This is how the proposals facing Republicans measured up:

1) Accept the President's proposal with "dividends to be taxed as ordinary income" and the "estate tax to be levied at 45 percent on inheritances over $3.5 million."

2) Pass the Senate bill, "which currently taxes inheritances over $5 million at 35 percent," but excludes Obama's dividend proposal.

3) Go over the cliff when "the estate tax is scheduled to rise to 55 percent beginning with inheritances exceeding $1 million."

G.O.P. Balks at White House Plan on Fiscal Crisis
http://www.nytimes.com/2012/11/30/us/politics/fiscal-talks-in-congress-seem-to-reach-impasse.html

The deal increased the rate to 40 percent.

Raises tax rates on the wealthiest estates: The agreement raises the tax rate on the wealthiest estates – worth upwards of $5 million per person – from 35 percent to 40 percent, in contrast to Republican proposals to continue the current estate tax levels.

Capital gains goes to 23.8 percent and a tax increase also applies to incomes at $250,000
http://www.democraticunderground.com/10022116613

[PoliticAverse]

3. Individual estates up to $5 million are excluded, estates above that pay 40%. n/t

Last edited Wed Jan 2, 2013, 03:15 PM - Edit history (1)

(edited to add the word individual, since the $5 million is per person, $10 per family).

[Harmony Blue]

4. Facts on DU what is this?

I am shocked...o.O

[No Compromise]

5. why did I see the number 10 million as well

I'm not arguing, just clueless about this...

[PoliticAverse]

8. It's $5 million per person so for a married couple/family estate it's $10 million total. n/t

[FreeJoe]

6. And just to be clear...

Estates above $5,000,000 pay a 40% tax on the portion above $5,000,000.

I is also worth pointing out that a married couple with $10,000,000 in assets can pass it down without estate taxes if they plan well.

Personally, I was OK with either the $3.5 million number or the $5 million number. I would not have liked to see it much lower or higher.

[awake]

7. As long as the married couple is not gay, in which case the feds still screw them over on taxes

[PoliticAverse]

9. Yes the Federal government doesn't recognize same-sex marriage re tax purposes...

For an example see: http://www.cnn.com/2012/11/29/justice/court-marriage/index.html

[No Compromise]

13. +100000

nt

[Dkc05]

10. We got screwed by the republicans. President Obama dropped the ball

We gave away the estate tax issue. 10,000,000 tax free is wrong. How did president Obama agree to this gift to the pubic hairs. I hope we can get that back. Maybe take it back in the next tax bill later this year.

[bluestate10]

11. Well.

Obama got tax rates raised back to Clinton levels, insured unemployment benefits for 3 million people for another year, got stimulus money to help the economy and protect nascent green energy efforts and kept Social Security, Medicare, and Medicaid out of the agreement. Your idea of getting screwed vastly differs from mine.

BTW, the $250,000 that Obama campaigned on, that works out to $397,000 after inflation is accounted for. Obama got a starting value of $400,000.

[Dkc05]

12. But he gave in on billions in estate taxes

He gave the rich a gift that the economy needed. That was wrong. He had the puppies by the balls he should have clipped them off.

[hfojvt]

15. "Obama got tax rates raised back to Clinton levels"

Well, that was scheduled to happen automatically. The top 1% would have faced $1.2 trillion in tax increases. What Obama skilfully managed to do was to reduce that amount to just $600 billion AND get a bunch of gullible liberals to cheer him for it.

Turns out you can fool many of the people much of the time, especially when the media is in your pocket.

[Warren DeMontague]

17. He wanted to raise taxes on people at the top without them going up for people making, say, 40K a yr

and he accomplished that.

[hfojvt]

18. except Obama did not SAY $40,000 a year

he kept saying $240,000 a year - an income which puts a family well in the top 5%. Most of the benefits of Obama's tax cut - 65% of them goto members of the TOP 20%. http://www.democraticunderground.com/10022130101

What he accomplished was a Reagan-Bush style tax cut, with the bulk of the benefits going to the top.

And just for kicks - he made it permanent.

[Warren DeMontague]

21. Right, but had the Bush cuts expired- something I would have been fine with, BTW-

then taxes would have gone up for ALL rate levels.

Obama wanted to avoid that. He held the GOP's feet to the fire and got them to agree to something they were sworn not to do- i.e. raise taxes on people at the top of the spectrum, PERMANENTLY.

Yes, the cutoff was $400K as opposed to the original $250K. That's what negotiation is.

Had the cuts expired across the board, the people earning $40K would have to pay more, too. Now they won't.

[hfojvt]

27. that's what a losing negotiation is

Yes, tax rates would have gone up for all levels. The bottom 60% would have faced $800 billion in tax increases and the top 20% would have faced $3 trillion in tax increases.

The latter being something Obama REALLY wanted to avoid.

Permanent tax increases on the top? Compared to what? Obama did not increase taxes on the top - he cut them, including estate taxes. The top 1% was scheduled to have $1.2 trillion in tax increases. Obama reduced that to $600 billion, giving the top 1% permanent tax cuts of $60 billion per year plus.

If Obama was so worried about tax increases on those making $40,000 a year, he could have proposed tax cuts that would prevent that, and fought for them. He chose not to. He chose instead, to fight for tax cuts that favored the top 20%.

BTW - the original cutoff of $250,000 - it sucks the big one. It already favored the rich.

[Warren DeMontague]

36. The original cutoff was 250k because thats already where the top maginal rate started.

You seem more interested in grinding an axe against what you perceive as the DNCs definition of "rich", than dealing with the actual facts around how this thing went down.

Fine, whatever.

[hfojvt]

40. perhaps the actual fact, that you want to pretend isn't important

was that the DNC betrayed the working class from the start.

That's part of how this thing went down. It was a big giveaway to the rich.

But you are correct. Most people do not seem to give any more of a shit about it than you do.

The beat goes on.

[Warren DeMontague]

42. I would have been fine with all the cuts expiring.

But the President made it damn clear that he wanted the tax cuts enacted on the lowest brackets in 2001, to remain in place.

So that's what happened. If it was a "giveaway to the rich", it wasn't a giveaway to the super-rich, because the top marginal rate will now pay 39.6%, and that's a permanent- not temporary- increase.

Yes, that top marginal rate starts at 400K, not 250K. We can quibble- as many do- as to just how rich those figures imply. Personally, I think they're both rich, and they're both way higher than any marginal rate I'm ever likely to see.

But the Grover Norquists and the Rich Lowry crowd are equally as appalled that anyone- anyone!- could consider a measly 400K a year "rich". And that's the rub; with the way the income disparity in this country has shaken out Post-Reagan, there are all sorts of levels to richitude. 250K, while not being toothless banjo playing poor, is pretty damn ordinary compared to the skyrocketing incomes of the folks who pull down 7,8,9+ figures a year. Easy.

So it is what it is. There was going to be negotiation or all the rates would go up, including for people who are ACTUALLY only scraping by. I would have taken that instead of the GOP's demand to keep all the cuts for everyone, and I think Obama would have too. But he didn't want taxes to go up on the real middle class. Give the guy a small amount of credit.

[hfojvt]

44. Obama does not deserve a small amount of credit

this business of "he only cut taxes for the rich in order to protect the poor" is one of the worst sorts of bullshit. Exactly the same crap that Bush claimed when he first proposed his tax cuts.

"Yes, I'm worried about the deficit. I'm worried about the deficit, but I'm more worried about the fellow looking for work. I'm worried about the deficit, but I'm more worried about the single mom who's worried about putting food on the table for her children, so she could find work. And that's where the focus of this administration is going to be." May 12, 2003

"The unemployment number is now at 6 percent, which should serve as a clear signal to the United States Congress we need a bold economic recovery package so people can find work. (Applause.) That 6-percent number should say loud and clear to members of both political parties in the United States Congress, we need robust tax relief so our fellow citizens can find a job. (Applause.)" May 6, 2003

"But in spite of the good news, people are looking for work. And as long as our fellow citizens are looking for work, we must act. So long as families are struggling to pay the bills, we must act here in America. So long as small businesses are hesitant to expand and to create new jobs, we must act. And the "we" in this case is the United States Congress." May 12, 2003

Yeah sure, the only reason Obama negotiated a $2.4 trillion tax cut for the top 20% was to keep the bottom 60% from facing an $800 billion tax increase. That's why he made the tax cuts permanent and the tax benefits to the bottom will sunset in 5 years.

And Obama cut taxes for the super-rich. He CUT, for one thing, the Estate tax rate from 55% down to 40%, and THAT is apparently permanent. He CUT the rate for dividends from 39.6% down to just 20%. I am not sure if Romney qualifies as super-rich, but that cut seems to save him almost a million dollars a year in taxes.

But yeah, I am sure Obama just did that so I would not face a $600 tax increase from the expiration of the Bush tax cuts.

What's that, I am facing a $600 tax increase because of the expiration of the accursed payroll tax cut? The average payroll tax increase is bigger than the average Bush tax cut for members of the bottom 20%?

Yeah, Obama should get some credit. After all, he played about 40 million voters for fools.

[hfojvt]

14. and lowered the rate from 55% to 40%

while Obama claims he raised the rate.

But what is a few hundred billion in tax cuts for the rich and a few lies? Obama kicked Republican a$$!!!

[Warren DeMontague]

16. Simple fact, although people may not want to hear it; the exemption was NEVER going to go back down

to $1 Million.

The reason? States like California. New York. States with powerful, influential Democratic Senators and Representatives, by the way.

States with real estate values- rightly or wrongly, fact is that's where they are- which can easily put the "estates" of fairly ordinary folks within range of the old exemption. Leading to heirs potentially having to sell the family home to pay the taxes on it.

This is why the exemption was going to be raised.

[hfojvt]

19. simple fact then

The Democratic Party does not represent ordinary people, it represents people at the top. Those "fairly ordinary folks" somehow manage to be the top 5% (or less) of all estates.

Sure, let's say it loud. The Democratic Party represents the TOP 5% and NOT the bottom 95%.

What's the matter with Kansas, indeed.

[Warren DeMontague]

20. I guess you didn't hear me.

A lot of ordinary people who happen to live in places like California or New York happen to own pieces of real estate that -even after the crash- are 'theoretically' valuable enough to put their assets over the $1 Mil mark.

If you don't believe me, check zillow.

[TheKentuckian]

23. Maybe "many" but very, very far from even a significant minority.

Hell, what percentage inherits even 50k (a widely felt super low number)?

70% or so never inherit 10k.

What this is rich folks making rules to benefit rich folks, fueled in no small part by preemptive avarice and statistically rare anecdote among the working class.

[Warren DeMontague]

37. Someone asked the question, I answered it.

Im merely explaining the facts. If you want to express your anger about the literally millions of fabulously wealthy people in places like Los Angeles, or Santa Clara, whose 1400 sq. foot 2 bedroom house will no longer qualify them for being subject to the Estate Tax, then I'd suggest you complain not just to the President, but to Senators Boxer, Feinstein, Schumer and Gillibrand, because I have bo doubt that their legislative influence was instrumental to this process.

But the fact is, the exemption is not ever going back down to the old level, and the value of real estate in certain parts of the country is a major factor in why not.

Not going to happen.

[haele]

25. The house we are renting in San Diego could, with just a little renovation, be valued at $500K.

$600K if the yards, including the lower back yard (a 40 x 25 sloped lot perfect for planting terraces or a small orchard) was fixed up with about $20K's worth of contracted labor and materials.

Right now, as is, the 1100 sq ft. 3 bedroom, 1 bath, 1 garage house built in 1957 located in a somewhat sketchy area of town, is valued between $250 - $300K (Zillow indicates taxes are paid for a value of $287K). A house in a similar situation in Texas or Ohio would probably be worth $50 - $100K at best. The smaller 820 sq ft. 2 bedroom, 1 bath, 1 car garage house we were renting in a better neighborhood (i.e. "gentrified&quot two years ago is still valued above $400K - pretty good for a house built in the 1930's with only minor renovations (basically just central air and heating).

If our current owner - a retired 30 year military veteran and retired Union Mechanic - has investments along with his life insurance and pensions and decided to improve the house, it could easily push his estate above the million dollar asset mark when he passed. Heck, he might even be above that level now.

These values are inflated due to the shenanigans of flippers and loan officers back in the 2000's, but it still does not mitigate the fact that these houses were originally built for and owned by an average working semi-professional - a teacher or tradesman - decades ago, who, if they still own the house and want to pass it down to their children, find their estates are now liable due to the greed of others.

Haele

[hfojvt]

29. I think you are undervaluing houses in Texas and Ohio

My own 1,000 square foot house, with no garage nor even a driveway, built in 1887, is valued at $40,000.

Considering I only own ONE such house, a person who owns a 2nd home worth $250,000 does not seem very ordinary to me, especially not if the 2nd house is fully paid for. And he has two pensions as well - just like everybody else, eh?

[haele]

30. Original owner who bought a house in 1957 for $20K . California real estate market pre Prop 13 upped

value around $90K. He never sold, but some small house renovations made the value go up to where it is now. He is living with his son, who is taking care of him to save costs. This isn't a "second house".
As for the pension "issue", a lot of older people, especially WWII vets, have two pensions. My father had two pensions also - as a High School Teacher and as a 20-year military resrvist retiree.

Peace to those green eyes - The owner of the house we rent is a 92 year old man. If he was smart and lucky enough to have started some investments back in the 1960's, keep his SGLI (which can pay out up to $500K), and have smart short- and long-term medical assistance coverage (as well as his TriCare), just the principle of his investments and the insurance payout could be enough so that adding the house as is can push his estate above 3/4 of a million dollars if he passes without lingering and accruing medical costs.
As I indicated above, if he decided to go ahead with $25 - $30K worth of improvements, the revaluation of his property would bump it up significantly and his heir - he has one surviving child - could be looking at around $1 million should that child decide to sell the house.
That's not an uncommon situation in Southern California with the estates of depression/WWII-era or early boomers who have lived into their 80's and 90's.

You need to put retirement and inheiritance in perspective for the time people develop their estate; if you are currently in your 40's, your situation is not at all like your grandparent's situation was. The "wealth accrual" of a working man in the 1950's and 1960's is not the same as that of a someone who entered the job market in the 1980's. I know my 73 year old mother, a retired university secretary, has taken care to cover any long-term medical issues and with her fully paid house will be able to leave far more - probably by a factor of ten - to my brother and me, than I will be ever be able to leave my husband should I lose the job and insurance policies I have now.

Haele

[hfojvt]

35. I am still not seeing a huge hardship

the son inherits an estate worth $1.5 million, let's say. Pays a 55% tax on the last $500,000, walks away with $1.2 million. I am supposed to feel sorry for him? How tough it must be to get a mere $1.2 million when the evil tax man took $275,000.

Most people would love to be in a "tough" spot like that.

[lumberjack_jeff]

32. And the "ordinary" couple that owns 20 of them would be exempt from taxes.

I'm not buying the idea that "wealthy" is a state of mind. It is a state of math.

[Warren DeMontague]

38. They wont find the etates liable now, since the exemption has been raised permanently.

Im trying to explain the rationale for why that was done- and supported widely by our party- but its sort of a futile effort that only seems to invite irrational temper tantrums.

[hfojvt]

28. I guess you did not hear me

if only 10% of estates are paying the tax with a $1 million exemption then those people do not fit a reasonable defintion of ORDINARY. The ordinary people are down in the bottom 90% where $1,000,000 is a gigantic sum of money.

[Warren DeMontague]

39. Where are you getting that 10% figure?

The last time the exemption was at $1M was 2001.

[hfojvt]

41. I pulled it out of my a$$

Point is, even if it is 10% that's a pretty small group compared to 90%.

Furthermore, by lowering the estate tax to 40% from 55%, the bigger estates get the largest benefits from such a cut. An estate worth $200 million gets a much bigger cut than an estate worth $1.6 million.

Back in 2000, less than 4% of estates were paying the tax in any state. http://www.ctj.org/pdf/estatetax2010.pdf

By inflation, a $1 million estate is 2000 is worth $1.34 million today. If the value of wealthy estates has grown faster than the rate of inflation, that is still not an argument in favor of tax breaks for the wealthy.

[Demo_Chris]

43. Then they aren't ordinary. If they were they would have to sell it

Ordinary is not the 1%.

Ordinary people are working at America's largest employer, Walmart, earning 17K a year with no benefits or future. Ordinary people are working at America's second largest employer, McDonalds, or perhaps at Target, Home Depot, Lowes, Penny's, Sears, etc. All paying as close to the legal minimum, part time, no benefits, no nothing, as they possibly can. All desperately relying upon the welfare safety net that suppliments their incomes and allows them to exist.

A safety net we are going to have to cut in order to gift tax breaks to the other "ordinary" folks who own and pay property taxes on multi-million dollar mansions.

[LiberalAndProud]

22. Old estate tax myths never die.

http://povertyandpolicy.wordpress.com/2012/09/24/old-estate-tax-myths-never-die/

[TheKentuckian]

24. Hell no, they instead spread like cancer through the ideological spectrum.

[Dkc05]

26. Obama caved on this--- can he change it now. maybe by exectutive order

This should be at $1,000,000. Enough riches for the rich. Why did he give in on this issue. They had it going back to the original base. Seems that didn't have the guts to redistribute the wealth back to the masses as it should be done.

[jeff47]

31. Yes, the 8 people who pay the tax sure got a deal.

It's trivial to avoid the estate tax using trusts and other financial tools. We should happily give the estate tax to Republicans in return for something that helps lots of "normal" tax payers.

[democrattotheend]

33. This is the element of the deal I am most pissed off about

Overall I think the deal was decent, but I am really pissed about the estate tax cut, although it is a little better than what they did in 2010 with the estate tax. Still, the floor is way too high, and I feel strongly about the estate tax in principle, because inherited wealth is a major source of perpetuating inequality in this country.

Republicans can't be bothered to extend the payroll tax holiday that provided tax relief for hard-working low-wage earners, but they consider it imperative to ensure that estates worth millions of dollars get passed down tax-free so that the deceased's children never have to work a day in their lives.

Even my staunchly libertarian aunt says that if there were no other taxes, she would be ok with the estate tax.

[lumberjack_jeff]

34. Yes and no. The idle rich don't compete for jobs at the lumberyard. n/t