Fair Tax Nation

Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

  Why eliminate the estate and gift taxes?   A estate tax with a $5,000,000 exception would tax large estates without taxing middle class assets to be left to family.  This tax would tax large estate…

  Why eliminate the estate and gift taxes?

  A estate tax with a $5,000,000 exception would tax large estates without taxing middle class assets to be left to family.  This tax would tax large estates that have avoided the sales tax that is the FairTax.

  The gift tax with a $50,000 exception would limit the availability to transfer a large estate without the payment of the estate tax.

  These taxes would enable the FairTax 23% to be lowered.

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Comment by Bill Rollyson on July 15, 2012 at 9:20am

A couple thoughts on this off the top of my head.  First, an estate tax is a tax on wealth and money, not income.  Notice I separate wealth from money.  Money is only what you use to obtain wealth, yet that is what most people think of when you talk about wealth.  That aside, taxing it isn't worth it.

The current exemption is $5,000,000 with a 35% rate and according to the Tax Policy Center, a liberal think tank, total collected estate taxes in 2011 was estimated to be $10.6 billion.  That would be enough to lower the 23% rate to 22.89%.  That wouldn't excite anyone and if the estate tax would be lowered to a "modest" 10%, the rate impact would be infinitesimal, essentially lowering it to 22.96%.

On the other hand, you are allowing a precedent of division to stand...one class against another.  All wealth is either saved or consumed.  When it is saved, it is used by others with fewer resources as capital or borrowed reserves for growth.  Taxing it at all reduces the amount available.  It might make you feel better to see wealth taxed, but it doesn't do anything positive for the economy. 

Include among the "wealth" taxed under the estate tax are small business assets.  I've known many small business owners who owned a small business worth between $10 million and $25 million.  Many of them who never planned in advance for their death, left their families with only one choice of liquidation to pay the tax, costing many jobs in the process.

Wealth only benefits the "wealthy personally when it is consumed personally.  It does them no good at all if they never withdraw any wealth or earnings on it for personal consumption.  You can't eat money; you can't drive in it, live under it or wear it.  It is only when you use the money for personal consumption that you benefit personally.  The FairTax taxes it at the correct time.  All wealth is eventually consumed by someone, if not the current owner, it is consumed by the future owners....and until that time, it benefits the whole economy.

I just see no benefit to the estate and gift tax other than political appearance.  JMO

Comment by James D. Schall on July 13, 2012 at 12:42pm

To lower the 23% FairTax would greatly increase the ability to pass the FairTax.

A modest 10% estate tax is not an income tax but a way to collect a small tax on a large amount of untaxed funds.  The gift tax will only limit a large estate's ability to avoid the estate tax.

I have read everything available on the FairTax and do not think any future government will ever reduce the 23% FairTax, they will just spend any increase in revenue!

How about a 10% corporate income tax, that revenue could reduce that 23% quite a bit.

Comment by chiefcook on July 11, 2012 at 7:11pm

You say they will not spend all those funds in the short term if ever.  That is quite possible!  What will they do?  Without any tax penalty, they will invest it!  It will be put to use by others to provide jobs, grow the economy and give others the opportunity to spend their money.  It will provide tax revenue in one form or another. 

James, you have not answered my questions.  Why do you want to create two bases for taxation (income and consumption)?  Why do you want to create any loopholes or exemptions?

I realize you want to lower the 23% rate.  The FairTax has built in adjustments to the percentage.  As the tax revenue exceeds the necessary revenue for the government, it will be adjusted.  The excess revenue can be used to offset the national debt and keep the percentage where it is or Congress can lower the percentage.  If Congress desires to increase spending to exhaust the overages, We the People must keep our thumbs on them so they do not waste OUR money.  That will be our next task.

Comment by James D. Schall on July 11, 2012 at 8:02am

A 10% estate tax and a 10% gift tax would be fair and reasonable.  People who inherit large estates without taxation will not spend those funds in short term if ever.  This would allow the 23% FairTax to be lowered.

Comment by chiefcook on July 10, 2012 at 8:56am

The FairTax is set up with NO exemptions.  It is not based upon INCOME.  When the heirs to the estate receive their part of the estate, it is an income to the individual.  When that individual then goes out and spends that money, they are consuming the estate and it is subject to the FairTax.  The tax is paid at that point.  The same thing applies to gift taxes. 

Why do you want to introducel

1)  An exemption to the FairTax?  This would open up the door for many more exemptions and give lobbyists a field day.

2)  A second tax base (income) and change the entire scope of the FairTax?

The 23% tax rate is set up to provide a revenue neutral dollar to the federal government "at the time of implementation".  Once it is in effect and it starts generating more tax revenue to the government, the tax rate can be lowered to a more acceptable rate.  (or used to lower national debt)

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