Reply #99: But its not [View All]

[ElaineinIN]

... first of all the boogyman of double tax is a red herring in my book--we get double taxed on all kinds of things (state, local, property etc. etc.), all paid using after income tax wage dollars. Double tax, in and of itself, doesn't really bother me, if there is some reason why the tax scheme is that way. From a pure revenue raising perspective, would it be alot better for all of us if they rolled it into one and sent us one big bill? Sure... but at least at this point in our history, taxation not only serves revenue raising goals but other goals as well (see my posts with sui on this point), so having an estate tax, regarding of whether or not its "double" doesn't seem to me to be that big an issue.

but, even if we posit that double tax is a bad thing, I'd tell you that it isn't really a double tax. Given the step up in basis for capital assets (the heirs costs basis in the property steps up to fair market value on date of death for capital gains calculation purpsoes), all unrealized appreciation in an asset upon death goes *poof* and is never taxed for income tax purposes. So if grandma bought IBM in 1929 for 1 penny and it's trading at $100 at the date she dies, all 99.99 in appreciation is never taxed when sold by her heirs.

Not only that, but all life insurance proceeds are excluded from income tax.

Not only that, but all gifts or inheritances are excuded from income tax.

So the fact of the matter is that I can get arrange things so that a heck of a lot of money passes not only free from estate tax, but free from income tax as well.