#Estate Taxes

[dontmeantobepoliticalbut]

The vast majority of the Senate Republican caucus united last week to introduce a bill that would permanently repeal the estate tax, targeting one of the few provisions in the U.S. tax code that solely affects the richest 0.1% of Americans.

Led by Sen. John Thune (South Dakota), the top Republican on the Senate Subcommittee on Taxation and Internal Revenue Service Oversight, 40 Republicans reintroduced their bill to ensure that ultra-rich individuals seeking to hand off tens of millions of dollars — or more — to their heirs can do so completely tax-free. The extremely regressive proposal has been a longtime goal of Republicans, who have already massively watered down the estate tax in past years.

Currently, the estate tax threshold is $12.9 million, and nearly $26 million for couples. Amounts under this are exempted from taxes. This is nearly triple the threshold from 2016 and earlier, as Republicans more than doubled the estate tax cutoff in their major tax overhaul in 2017. The threshold is now so high that it is estimated that less than 0.1% of Americans are subject to the tax.

Evidently, these tax cuts are still not enough for Republicans, who had tried to repeal the tax altogether in 2017. In a press release on the bill, Thune, Senate Minority Leader Mitch McConnell (R-Kentucky) and Sen. Mike Crapo (R-Idaho) attempted to couch their support of the repeal in efforts to supposedly support farmers — claims that reveal themselves to be a farce when more closely examined.

“For years I have fought to protect farm and ranch families from the onerous and unfair death tax,” Thune said. “Family-owned farms and ranches often bear the brunt of this tax, which makes it difficult and costly to pass these businesses down to future generations.”

Thune’s statement is a misrepresentation of the truth. The vast, vast majority of “family-owned farms” are not subject to the estate tax. In 2020, a mere 0.16% of farm estates owed the tax, according to data from the Economic Research Service of the U.S. Department of Agriculture. This is an exceedingly small number of farms. As the Tax Policy Center estimated, only 50 farms total paid any estate tax in 2017, and this research was done before lawmakers doubled the threshold.

The criticism of the estate tax in defense of farmers is disingenuous for another reason, as Inequality.org pointed out in a blog post this week. The tax code “already has provisions that protect the very few families with farms and businesses subject to estate tax,” wrote Institute for Policy Studies associate fellow and senior adviser for Patriotic Millionaires Bob Lord. “If the bill sponsors truly cared about family farms, ranches, and businesses, they could have proposed legislation to expand these protections but leave the estate tax intact.”

In reality, deep-pocketed lobbyists with the Farm Bureau have long been pushing a repeal of the estate tax — and the group’s deep ties to big business and Wall Street are well documented.

Perhaps not coincidentally, repealing the estate tax would complete the loop of tax avoidance for the wealthiest Americans. The bill targets the “die” part of “buy borrow die,” a common tax dodging scheme used by the wealthy to avoid paying taxes; it is part of the reason that the wealthiest Americans are able to pay little to no taxes year over year.

In the practice of buying, borrowing, and dying, the rich first pour their wealth into assets like stocks, building up a large portfolio. Those assets are then used as collateral for taking out large loans with low interest rates — lower than, say, the income tax rate — that become a wealthy person’s spending money. Then, they die, and hand off their wealth to the next generation, maintaining their dynasty for decades to come.

At very few points do taxes come into the buy, borrow, die equation. Buying and keeping stocks doesn’t incur a tax bill. Taking out loans allows the wealthy to claim very low incomes to skirt income taxes. The estate tax is essentially the only guarantee, and even then, the wealthy have come up with extreme loopholes to dodge the estate tax, too. Republicans, then, are hoping to make tax avoidance even easier by legalizing it entirely; Lord has pointedly labeled the bill the “Billionaires Pay Zero Tax Act.”

The proposal stands in sharp contrast to progressives’ views on taxation. Pointing to extreme and growing wealth inequality, progressives have been calling for increasing taxes on the rich and specifically targeting their wealth and stock portfolios, rather than endlessly allowing the “buy” and “borrow” portions of the cycle.

[nando161mando]

I hope the tax reduction fans take note

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You Get to Decide How Much Taxes to Pay in Retirement | 005 [Video]

[davidl2001]

The Role of Trusts in Minimizing Estate Taxes: Strategies for Savvy Planners

Trusts Estate taxes are often a looming concern for those with significant assets. They can diminish the wealth you wish to pass onto your loved ones, but the judicious use of trusts can offer a shield against this financial drain. Here are the essential strategies to leverage trusts and effectively minimize estate taxes. 1. Revocable Living Trusts: The Foundational Shield Establishing a…

[beingjellybeans]

Rebooting your finances: How to restart your financial journey

Do you sometimes get the feeling that you’re in a financial rut? When you feel overwhelmed with bills and debts, or short on funds? Or when you worry about what you will leave behind for your kids? It may be time for a financial reset. In a recent leg of Sun Talks, Sun Life’s series of talks on financial wisdom, Cluster Head Valerie Lagarde-Amora and Financial Advisor Andrea de Guzman provided…

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Taxes d'habitation

[roosterfinancial]

Estate Planning: The Basics You Need to Know

When it comes to securing your legacy, what steps have you taken? This might sound like a heavy question, but it’s crucial to consider. Estate planning is not only for the wealthy, but it’s also a practical step anyone can take to ensure their assets and loved ones are taken care of after their passing. Let’s dive into the basics of wills, trusts, and power of attorney, and unravel the enigma of…

[dontmean2bepoliticalbut]

[theshitpostcalligrapher]

yesss i got the uranium glass salt n pepper shaker

[holy-anxiety-batman]

i hate!

[dontmeantobepoliticalbut]

Ultrawealthy Americans enjoy so many ways to avoid taxes that Gary Cohn, former President Donald Trump’s director of the National Economic Council, once wisecracked, “Only morons pay the estate tax.”

On Monday, a group of four Democratic senators urged Treasury Secretary Janet Yellen to crack down on a host of specially-designed trusts and financial vehicles that allow the wealthiest individuals to shield their personal fortunes and pass down massive inheritances tax-free.

The letter, from Sens. Elizabeth Warren, Bernie Sanders, Chris Van Hollen, and Sheldon Whitehouse, laid out a series of potential IRS regulations that would make trusts, particularly, less attractive as tax shelters for the 1%.

“Billionaires and multi-millionaires use trusts to shift wealth to their heirs tax-free, dodging federal estate and gift taxes,” the senators wrote. “And they are doing this in the open: Their wealth managers are bragging about how their tax dodging tricks will be more effective in the current economy.”

Only about 0.1% of Americans pay estate taxes, despite thousands of families having fortunes larger than the current $25.48 million exemption.

When President Joe Biden promised on the campaign trail to raise taxes on the richest Americans, it unleashed a race to set up the kinds of legal tax shelters that would protect their inheritable assets from the estate tax.

They feared Biden would lower the estate tax exemption — which Republicans under Trump had raised to its all-time high — and resuscitate proposed IRS rules that make it more difficult to use trusts to avoid taxes on substantial inheritances.

But Democrats dropped their plans to raise inheritance taxes early on in the Biden administration. And in their letter, the lawmakers argued there is far more the IRS can do to crack down on the “shell games” the ultrawealthy use to shield huge generational wealth transfers from taxation.

Popular schemes they highlighted include families using special vehicles, called family limited partnerships, to understate the values of their estates; placing assets that will rise in value, such as a stock portfolio, inside a tax-shielded trust before the price can rebound; and cycling stocks and other assets through a grantor trust to avoid inheritance taxes.

The current economy, where stocks have lost double digits in value, actually supercharges some of these tax shelters because they shield appreciation from taxation.

“As the richest Americans celebrate and take advantage of these favorable tax opportunities, middle-class families struggle with inflation and Republicans threaten austerity measures and the end of Social Security and Medicare,” the lawmakers wrote.

They argued that the Treasury Department could crack down on these tax-avoidance vehicles without action from Congress.

It can revoke a rule that currently exempts transfers between grantors and grantor trusts from taxes, and it can require grantor trusts to hold a minimum value so they would be less useful as a pass-through for avoiding taxes. And it can clarify and rein in the kinds of asset sales and valuation practices tax planners have abused to wedge their clients’ enormous estates into various tax-shielded trusts and partnerships.

“Although the details of various trusts may differ, the result of wealthy individuals transferring millions in assets to heirs tax-free does not,” they continued. “The ultra-wealthy at the top of the socioeconomic ladder live by different rules than the rest of America.”

[dreaminginthedeepsouth]

Bagley

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LETTERS FROM AN AMERICAN

August 14, 2024

Heather Cox Richardson

Aug 15, 2024

The July report for consumer prices from the Bureau of Labor Statistics, which came out today, showed that prices rose less than 3% in the previous twelve months. Core inflation has fallen to its lowest rate since April 2021. For well over a year, wages have grown faster than inflation.

President Joe Biden cheered the news but added in a statement, “Prices are still too high. Large corporations are sitting on record profits and not doing enough to lower prices. That’s why we are taking on Big Pharma to lower prescription drug prices. We’re cutting red tape to build more homes while taking on corporate landlords that unfairly increase rent. And we’re taking on price gouging and junk fees to lower everyday costs from groceries to air travel.” 

When a reporter asked Biden if the U.S. has beaten inflation, Biden answered: “Yes, Yes, Yes. I told you we were going to have a soft landing…. My policies are working. Start writing that way.” 

Just yesterday, the administration announced $100 million worth of investments in new housing in the form of grants to state and local governments to spur the production of new housing. Kriston Capps of Bloomberg reports that “more housing units are under construction now than at any point in half a century—some 60,000 multifamily units were completed in June alone—and rents are stabilizing in some areas as a result.” 

Single-family home construction is slower, and with Senate Republicans having blocked a $78 billion tax deal that would support housing tax credits that promote the construction of housing, the White House is finding other ways to spur housing construction. 

On Monday the White House continued its attempt to protect the interests of consumers after years in which they lost ground. Continuing to combat junk fees, it proposed rules to fight back against “all the ways that corporations—through excessive paperwork, hold times, and general aggravation—add unnecessary headaches and hassles to people’s days and degrade their quality of life.” 

Companies deliberately design processes to be burdensome in order to deter people from getting a refund or a rebate, or canceling a membership or a subscription. Those frustrations waste money and time, the administration said, and after listing some of its own proposals for making it easier to navigate ending subscriptions or activating insurance coverage, it invited Americans to submit their own on a public portal. 

In a speech on Friday in North Carolina, Vice President Kamala Harris is expected to take on the issue of price gouging by large corporations. Researchers for U.K. think tanks Institute for Public Policy Research and Common Wealth found in late 2023 that profiteering, or “greedflation,” “significantly” boosted prices, leading to increases of 30% or more in corporate profits. “Excessive profits were even larger in the US, where many important sections of the economy are dominated by a few powerful companies,” wrote Phillip Inman of The Guardian. 

Responding to today’s news that inflation is coming down, the stock market ticked up in expectation that the Fed will now be more likely to cut interest rates in September. 

The White House took notice today of the fact that applications for small businesses continue to boom across the country, with 19 million new business applications since Vice President Harris and President Biden took office, an annual growth rate 90% higher than prepandemic averages. The White House also noted that congressional Republicans are trying to cut the Small Business Administration and to cut taxes for big corporations.

Politico greeted today’s economic news with a headline saying, “Inflation is easing. Now, Harris has an even bigger problem with the economy.” And the New York Times reported that in a speech in North Carolina, “Harris Is Set to Lay Out an Economic Message Light on Details,” adding that she is expected to tweak Biden administration themes “in a bid to turn the Democratic economic agenda into an asset.”

The United States economy under Biden and Harris has been the strongest in the world, and now that inflation seems to be under control as well, Harris needs to turn that record “into an asset”? Political journalist James Fallows wrote: “Now they are all just trolling us.”

The Biden-Harris administration has changed the orientation of the United States government from relying on markets to order society and protecting the interests of wealthy Americans in the expectation that they would invest in the economy more efficiently than they could if the government interfered by protecting workers and consumers. Biden and Harris, along with the cabinet officers and staff of the executive branch, revived an older ideology calling for the government to promote the interests of the American people as a whole. This means regulating business and providing government services and oversight to make sure no interest can run the table. 

What the two different worldviews look like was on display earlier this month, when Republicans and a few Democrats in the Senate killed a bipartisan expansion of the child tax credit, a tax break for parents with dependent children. A hike in that credit during the pandemic cut child poverty dramatically, only for that rate to bounce back when the pandemic relief expired and dropped five million U.S. children back into poverty in 2022. The Center on Budget and Policy Priorities noted that the change “underscores the fact that the number of children living in poverty is a policy choice.”

On January 31, 2024, the House passed an expansion of the child tax credit that was smaller than the one in place during the pandemic, and Republican vice presidential hopeful Ohio senator J.D. Vance, who has been criticized for comments about “childless cat ladies,” seemed to support the measure when he said, “If you’re raising children in this country, we should make it easier, not harder. And unfortunately it’s way too expensive and way too difficult.” He then falsely accused Democratic presidential candidate Kamala Harris of calling for ending the child tax credit (she has actually called for expanding it).  

But Vance missed the vote, and before it, Senator Thom Tillis (R-NC) told colleagues that passing the bill would “give Harris a win before the election.” According to Chabeli Carranzana of The 19th, Tillis “printed out fake checks made out to ‘millions of American voters’ with the memo: ‘Don’t forget to vote for Kamala!’”  

The two different worldviews were also on display Monday night when Republican presidential candidate Donald Trump complimented X owner Elon Musk for firing workers who threatened to strike. The right to strike is protected under federal labor law, and the Biden-Harris administration has stood firmly for workers’ rights. 

On Tuesday the United Auto Workers union filed charges against Trump and Musk with the National Labor Relations Board for threatening and intimidating workers. “When we say Trump stands against everything our union stands for, this is what we mean,” said UAW president Shawn Fain. 

Tonight, Trump gave a speech in Asheville, North Carolina, that was supposed to be about the economy. Before he could appear, Trump had to pay the city $82,247.60 in advance, with city officials apparently concerned about the candidate’s habit of skipping out on costs associated with his rallies. Once on stage, he tossed economic issues overboard and concentrated on personal attacks on Biden and Harris, along with stream-of-consciousness musings on tampons and socialism. Apparently speaking of his campaign aides, he said: They wanted to do a speech on the economy. They say it’s the most important subject. I’m not sure it is.”

The era of unfettered markets and the concentration of wealth may be coming to an end. In late July, the finance leaders of the Group of 20 (G20), a forum of the world’s major economies, agreed to cooperate on fair taxation of  "ultra-high-net-worth individuals,” although they did not agree as to whichinternational body should lead. 

But yesterday, Joe Perticone of The Bulwark noted that MAGA Republicans appear to have figured out a way to use the struggle over the nation’s economic ideology to elect Trump. 

The House recessed in late July having failed to pass a single one of the 12 appropriations bills the government needs to stay in operation because, although the appropriations bills are traditionally kept “clean” of anything extraneous, extremist members of the House Freedom Caucus insist on making extreme cuts and adding their culture war items to the bills. Congress doesn’t reconvene until early September, and the new fiscal year starts on October 1, leaving the House very little time to pass the necessary bills.

Yesterday, members of the House Freedom Caucus called for Republicans to return to Washington, D.C., to pass the bills “to cut spending and advance our policy priorities.” If they can’t pass the bills—and they failed all spring—the extremists want a short-term fix just into “President Trump’s second term.” But they also want the fix to include the SAVE Act, “as called for by President Trump—to prevent noncitizens from voting [and] to preserve free and fair elections in light of the millions of illegal aliens imported by the Biden-Harris administration over the last four years.” 

It is already illegal for noncitizens to vote in federal elections. As Perticone notes, Trump’s own 2017 commission to find evidence that undocumented immigrants voted in 2016 disbanded without finding any, and another audit, led by Georgia Republicans before the 2022 midterms, found not a single successful attempt of noncitizens to vote in the previous five years. 

Perticone reports that the measure is designed to suppress legitimate Democratic voting and, if Trump still loses, by claiming that Trump lost, again, because the election was stolen by illegal voters.

Trump continues to insist that Biden’s replacement at the top of the Democratic ticket was a “coup,” partly because he wants to face off against Biden, rather than Harris. But he also is priming his supporters to believe that those Americans who want the government to work for them rather than the very wealthy are illegitimate.

LETTERS FROM AN AMERICAN

HEATHER COX RICHARDSON

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Painful Reckoning Ahead Due To “Really Really Dumb” Monetary Policy | David Hay [Video]

[itsalmostavengers]

My life is a sitcom

[allthecanadianpolitics]

British Columbia is expanding the tax it created to clamp down on real estate speculation and ensure homes in rental-strapped communities don’t sit empty.

A statement from the Ministry of Finance says the Speculation and Vacancy Tax now includes the municipalities of North Cowichan, Duncan, Ladysmith, Lake Cowichan, Lions Bay and Squamish.

Starting early next year, homeowners in those areas will join owners in 40 other B.C. cities, districts and towns who are required to declare how their property was used in 2023.

The statement says 99 per cent of people who live in B.C., can expect to be exempt for the 2023 tax year, but homeowners in the new municipalities, along with those already covered by the tax, must make formal declarations in the new year.

Full article

Tagging: @politicsofcanada