Wednesday, March 25, 2009

Estate Tax

Austin American Statesman's article is a good example of why I am hoping that in the need to raise taxes, the estate tax is not one of the methods used. Estate planners pretty much say that you need to have about 1 1/2 million dollars saved to be able to fund your retirement giving the longer lives Americans have. Many people do plan ahead, work hard, and save to be able to finance not only their active retirement years, but also to be prepared for their declining years and for those medical needs that occur as their lives near the end. The income that produced these savings were taxed all along and often these savings are invested to allow new companies to grow their businesses.

As in the case with this ranch, many families own small family businesses that were built with much hard work. Small businesses pay tax on their income as they grow their businesses. When you start taxing these estates, the remaining family members often end up having to sell or shut down the business to pay estate taxes, effectively removing an income stream forever from the tax rolls.

There is no doubt about it, we will have to raise taxes eventually in order to pay for the spending our government is doing now. But we need to be careful that our tax structure does not discourage people from building businesses or from working hard to better the lives of their families because such a big percentage goes straight to the government.

In my early adulthood I remember when the top tax rate in Sweden was over 50%. While i was not a fan of Bill Clinton, the reason he was able to reduce the national debt during his presidency was that businesses grew and flourished, the stock market went up providing increased revenue from taxes as business paid their income tax and people paid tax on their capital gains.

I'm not against much of the spending that is going on right now, but when we try to figure out how to pay for it, we must find ways that encourage people to build successful businesses - we need to fund our taxes from growth and success - not from taxes that resemble that old fable about killing the goose that laid the golden eggs.

1 comment:

Unknown said...

I agree. I inherited some property from my father that I'd like to leave to my kids. Unfortunately, they will have to sell it to pay the estate taxes if those are enacted.