Tags: estate | tax | Buffett | Gates

Revise the Estate Tax to Account for Charitable Gifting

By Bill Spetrino   |   Thursday, 13 Dec 2012 03:28 PM

I am an independent voter who chooses the most business-friendly, pro-growth, fiscally conservative candidate. I am all for charity that each individual chooses themselves.

I understand a progressive-tax program, but do not believe the federal government should take more than 25 percent of someone's income.

Or more than 15 percent of anyone's capital gains or dividends.

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I am also for eliminating most, if not all, itemized deductions and for lowering the income tax rates.

And I think disability should be taxed like regular income, especially since more people have gone on disability than have gotten a job in the past four years.

The other day, a group wealthy Americans led by Warren Buffett and Bill Gates Sr., the father of Microsoft founder Bill Gates, and a Disney heir supported a proposal from the nonpartisan, nonprofit United for a Fair Economy.

United for a Fair Economy plans to sell this proposal to the next newly elected Congress.

The proposal basically will exempt the first $2 million per person, with a 45 percent teaser rate that would “rise on the largest fortunes.”

So a man with a $10 million estate under this proposal would pay a $3.6 million estate tax, or 36 percent, to the federal government.

The present law exempts the first $5 million and the rest is taxed at 35 percent.

So this same person under the current law would owe $1.75 million in estate taxes, or 17.5 percent.

If the Bush tax cuts expire, we will go back to a $1 million exemption with a 55 percent top tax rate.

My problem is twofold:

1) Buffett and Gates’ son are leaving their entire fortunes to charities run by their children (although Gates is leaving a small amount to his children) and will pay ZERO estate tax.

Yet those who want to pass on their hard-earned wealth to their families have to pay an unusually high percentage.

2) Why should we have such an excessive estate-tax rate given how much taxes the average person pays in a lifetime?

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Federal, state, social security, local taxes and real estate taxes have many people paying well over 55 percent of their income now and this current administration wants to make that amount a higher percentage.

My solution is simple. No matter if you are giving to charity or your children, your estate tax is 10 percent total after the first $5 million.

Buffett and Gates would have sent the treasury over $10 billion with that proposal.

About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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