Estate Tax

1
The Estate Tax
2
(No Transcript)
3
Introduction

• The Estate Tax
• The Gift Tax
• The Generation Skipping Tax
• i.e John D. Rockefeller

4
Pros

• Strengthens Federal tax system
• Provides backstop to the individual income
• Of the small amount of estates that are taxable,
  almost none of small businesses
• Under 2009 law only 100 small businesses and
  family farms would owe any estate tax
• 99.8 of estates will never owe estate tax

5
Cons

• Discourages savings
• Estates were already subject to income tax
• Death is an inappropriate time to tax
• Burden to family businesses

6
Estate Planning

• Many estate tax horror stories we hear are the
  result of poor or no estate planning
• Two basic goals in estate planning
• Avoiding probate
• Reducing various types of taxes as much as
  possible

7
Who is affected

• Less than 1.4 of the population
• Only 100 small businesses and small farms in the
  whole country
• Estate tax is scheduled to be abolished next year
  due to the Bush Administration
• To be reinstated by Obama at a 45 rate on
  estates worth more than 3.5 million ( 7 mill for
  married couples)

8

• Senate is trying to pass a 10 million exclusion
  at a 35 rate.
• Under current law it is projected there would be
  6,160 taxable estates in 2011
• The Tax Policy Center estimates lowering the tax
  to a 15 rate at 3.5 million exemption level can
  lose as much as 78 revenue.

9
Exceptions

• Victims of Terrorism Tax Relief Act, signed by
  President Bush in January 2002, provides estate
  tax breaks for two groups of individuals
• those who died from injuries caused by the
  September 11, 2001 or April 19, 1995 (Oklahoma
  City) terrorist attacks,
• and those who died of illness caused by an
  anthrax attack occurring between September 11 and
  December 31, 2001.

10
Conclusion

• Taxes have always been imposed on any economy as
  a way to redistribute wealth so one class of
  workers do not control the economy
• The estate tax, along with the income tax helped
  to change the business mindset from amassing an
  empire, to making a living

11
Conclusion

• In the end, the estate tax affects everyone
  because it has been an important source of
  federal revenue for nearly a century
• It also encourages billions of dollars in
  charitable donations each year since donations
  greatly reduce the tax on large estates
• affects only those most able to pay and the funds
  it raises are used to support a broad range of
  programs that benefit our country.

12
The End!