Major changes with estate planning exemptions?
There’s a passage in Ernest Hemingway’s novel?The Sun Also Rises?in which a character named Mike is asked how he went bankrupt. “Two ways,” he answers. “Gradually, then suddenly.” Is this the path we are heading for in the United States?
?Some might say that LinkedIn is the wrong forum for political debate but when government policies and legislation directly affects what is happening in the business environment, I believe I must speak up and I urge everyone concerned about our future speak-up. I urge everyone that believes in Capitalism with provisions to help those truly in need to speak up.
?One example of the deleterious effect of the current legislation cited by Sax Accounting and Advisory tax proposal to the estate tax changes in a recent article is the following: “there has been some movement in Congress in the past few weeks that will likely impact these exemptions. The recently proposed “For the 99.5%” Act would bring sweeping changes to the taxation of estates, lowering the exemption from its current high of $11.7 million to $3.5 million, and increasing the federal estate tax from a fixed 40% to a graduated rate schedule from 45% to 65%.”
?Furthermore, in the Op-ed piece from the Wall Street Journal Senator Joe Manchin says when providing his views on the $3.5 Trillion infrastructure bill now before the congress that “The nation faces an unprecedented array of challenges and will inevitably encounter additional crises in the future. Yet some in Congress have a strange belief there is an infinite supply of money to deal with any current or future crisis, and that spending trillions upon trillions will have no negative consequence for the future. I disagree.” So do I!
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Much like the passage from Hemingway, Senator Manchin points to the dangers we face as a nation when Senator Manchin indicates “we are already seeing signs of an inflation tax.”?He also points out that “Ignoring the fiscal consequences of our policy choices will create a disastrous future for the next generation.” Do we really want to saddle our children with incredible debt on top of their already large debts stimulated by government backed student loans? (Another story for later) Maybe the last legacy that Joe Biden’s generation can leave our children and grandchildren is insurmountable debt. Do we want things to change gradually then suddenly? Again, I say no and hope you do as well.
?As our National Debt climbs to more than 70% of our GDP, my last two question are do we really believe that this legislation only affects the 1% and will our country be forever changed by what will happen in the next two months?
Please weigh in with your common sense thoughts on the $3.5 Trillion dollar bill before congress! It’s not too late!
Writer at Terryfic Writing
3 年Thanks for the thoughtful comments. As the reserve currency, the US has an extraordinary ability to leverage its economy. The US and the dollar have the best national and currency brands in the history of the world. The TINA (there is no alternative) factor makes US debt the investment of choice for adversaries and allies alike, and the Fed appears able to absorb as much debt as the Treasury cares to issue. ? The Fed is considering substantially increasing Federal financial firepower by creating a digital dollar, which would enable the end of physical currency. Among other things, this would enable the Fed to establish negative interest rates as low as -5% and distribute dollars directly to individual voters. ? So, the question may not be whether the US should spend trillions, but should it and if so on what? Domestically, the financial power of the US makes it possible for more and more government sector control of the real economy and further politicization thereof. Internationally, it enables the US to wield massive hard and soft power. Libertarians would argue that power corrupts, absolute power corrupts absolutely, and thus giving one country, even one's own, that much power is inadvisable. ? As to high tax rates, all they end up doing is further distorting the private sector. While marginal income tax rates were as high as 70% as recently as 1960, the effective tax take has remained constant at about 20% since the institution of the modern income tax in the early 20th century. High cap gains and estate tax rates similarly distort the free market. Lawyers and accountants will benefit most from the resultant flurry of avoidance, and they will outsmart the government service employees in charge of collection as they always do. ? Given the fact that policy tends to make a 180 degree turn every 2 to 4 years in a razor thin margin of victory in a hyperpolarized economy, government employees lurch from one side of the ship of state to the other as politicians change tack. In such an environment, the political policy continuity needed to enable the bureaucracy to develop a competent culture is unimaginable. Treasury estimates 15% of tax revenue under the current relatively benign rate environment goes uncollected. That number will rise directly as a function of tax rate increases.