Good Morning Gentle Readers,
A few days ago the House passed HR 4154, the Permanent Estate Tax Relief Act, which would establish a permanent estate tax exemption at 3.5 million dollars. Anything in excess of this threshold is taxed at 45% federal and at top state marginal rates which vary depending upon residency. Residents of California could expect a combined 57% tax bite.
Reality dictates that one of my guy's kids (manufacturing business employing 17 people and currently valued at 7.8 million) would be forced to sell the business because they simply do not have 2.45 million dollars to fork over to the government because their parents had the bad sense to die. Worse, HR 4154 has no indexing for inflation, which means that in ten years the effective exemption will be less than 2.75 million (assuming no hyper-inflation resulting from the trillion dollar bail-outs).
The vote was split along party lines, with all Republicans opposed and most Democrats in favor.
Many of you may recall that the late Senator Ted Kennedy was a big supporter of the death tax yet his family hired the best legal minds money could buy to circumvent the inheritance tax and to ensure that the Kennedy fortune passed to the heirs essentially untaxed (should be .0045% effective rate of tax-$135,000.00 tax on a $300,000,000.00 estate-thanks Danny).
What is good enough for the heirs of bootlegger Joe Kennedy is apparently not good enough for America's small business owners and farmers.
If you can't see the video of Teddy whining that the Kennedy's paid their fair share, click here.