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Rubin: Bring Back the Estate Tax Now

Wednesday, 01 Sep 2010 08:17 AM

Former Treasury secretary Robert Rubin says the estate tax must be reinstated now.

“If a new estate tax is not enacted as soon as Congress returns from its August recess, this void will continue until the end of the year,” Rubin and Tiger Management chair Julian Robertson write in The Wall Street Journal.

“We would recommend continuing 2009's regime, with a top rate of 45 percent and a $3.5 million individual exemption,” the two say.

“Small businesses and family farms can be protected both through the exemption (which is $7 million for a couple) and through special deferred payment rules.”

Estate taxes, Rubin and Robertson say, can provide revenue with little, if any, adverse supply-side economic impact, to fund deficit reduction, additional public investment or added assistance to those affected by the economic crisis.

“Our government is always going to collect and rely on tax revenues to pay for the activities that our citizens want and need government to perform,” they note.

“A key criterion in choosing taxes is to have the least negative impact on economic activity. The estate tax, in our opinion, meets that test.”

Used for public investment that has a rapid spend out, or applied to assistance for economically displaced citizens, the net effect will be to increase demand, Rubin and Robertson assert.

Moreover, almost 100 percent of the taxes gained would be spent, in contrast to most large inheritances, which they see as “highly likely to be used for savings or debt repayment.”

The federal estate tax, which expired on December 31, 2009, will be re-instated on Jan. 1, 2011, with only a $1 million exemption and a 55 percent tax on amounts over that level — unless Congress takes action to change the law, the High Plains Journal reports.

As a result, even smaller farms and businesses could end up paying a bucketful of taxes if the owner dies next year.

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Former Treasury secretary Robert Rubin says the estate tax must be reinstated now. If a new estate tax is not enacted as soon as Congress returns from its August recess, this void will continue until the end of the year, Rubin and Tiger Management chair Julian Robertson...
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2010-17-01
Wednesday, 01 Sep 2010 08:17 AM
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