The Deathly Death Tax
Oct 29th, 2009 | By Kris | Category: All Content, Ethics, Finance
One of my goals in writing blogs for your viewing pleasure is to bring up issues that may not be often talked about. We all know about healthcare, the current state of the economy, the ongoing War on Terror, and the other various stories that dominate the headlines. One thing you may not know about is that when you die, the government will cease nearly half of your assets that you plan to give away. This includes investments in the market, houses, cars, cash, or any type of personal or business asset that you plan to pass on.
In practical terms, if you plan on leaving $200,000 to someone when you die, that person will only get about $100,000. The government takes the rest. So, a hundred thousand dollars that you have spent your life accumulating is gone. This is money that you have saved/invested that has already been taxed by the government. This, ladies and gentlemen, is what we call double taxation.
The IRS defines the “Federal Estate Tax” (aka death tax) as “a tax on your right to transfer property at your death.” Basically, the government believes that they have an equal right to your assets after your death as your next of kin even though you have put in the hard work to accumulate the wealth and pass it along.
The reason this is an issue that is beginning to get attention is 2010 is a year that will be free of the death tax. Beginning 12:00 AM January 1, 2010 and ending 11:59 PM December 31, 2010 there will be zero estate tax. Beginning January 1, 2011 the death tax will be reinstated at 55%.
Economic Growth Tax Reduction and Reconciliation Act
| Calendar Year | Estate Tax Exemption | Rate |
| 2002 | $1,000,000 | 50% |
| 2003 | $1,000,000 | 49% |
| 2004 | $1,500,000 | 48% |
| 2005 | $1,500,000 | 47% |
| 2006 | $2,000,000 | 46% |
| 2007 | $2,000,000 | 45% |
| 2008 | $2,000,000 | 45% |
| 2009 | $3,500,000 | 45% |
| 2010 | Tax Repealed | 0% |
| 2011 | $1,000,000 | 55% |
*source http://www.nodeathtax.org/deathtax/currentfight
Depending on what you know about the death tax, you may know that former President George W. Bush signed legislation that decreased the death tax from 55% to 45% as a part of his “Bush Tax Cuts.” Speaker of the House Nancy Pelosi and Senator Harry Reid wish to keep the death tax permanent at 55% once it is reinstated in 2011. 55% tax! On money that has already been taxed!
David and I wrote recently about the fairness of the FairTax as well as the immorality of the income tax. The death tax is an issue that I believe is both immoral and unfair. I believe that taxing income a second time that has been saved with the intent to benefit a loved one is wrong. Passing on assets to loved ones is a right that hard-working individuals have more than earned.
If you don’t know about the death tax and how it could affect you and your family, check out nodeathtax.org. There you can learn about the tax itself, the history, and how you can help further the cause to repeal the death tax permanently. Oh, and just in case you were wondering, the death tax would be permanently repealed through the passing of specific legislation or through implementation of the FairTax.
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It is so unnecessary! I mean, we do have to keep funding our military that occupies more than 100 countries and our stimulus bill and medicare and et cetera. I think we would be less inclined to hide our money from the government if it weren’t so darn greedy with it
YES KRIS I AGREE ON THE FAIRTAX PLAN. WE NEED TO KEEP ON FIRING OUR NON REPRESENTING REPRESENTATIVES AND SENATORS UNTIL THEY REALIZE THAT THEY WORK FOR US AND IMPLEMENT THE FAIRTAX. GREAT BOOK BY BOORTZ AND LINDER. COULD REPLACE OVER 60,000 PAGES OF TAX LEGISLATION.