The Rich and the Richer at Odds over Estate Tax
According to a recent article in the Washington Post, the
debate over an estate tax compromise is sowing dissention between the rich
– such as small business owners – and the fabulously rich –
such as heirs standing to inherit an empire. The "merely rich"
would like to see an estate tax exemption for estates of up to $10 million.
However, the exemption will do little to ease the suffering of an heir who
just inherited an empire worth hundreds of millions of dollars. So the very
rich would far prefer lowering the rate to 15% instead of 47%. Now it's
clear both groups would support full repeal, but the Senate appears unlikely
to give them that. And while Sen. Jon Kyl (RAZ), the leader in the efforts
to find a compromise, has proposed both the higher exemption and the lower
rate, it is unlikely he will get both. So which is most likely to be sacrificed?
To the dismay of small-business advocates, it appears he's
leaning toward the rate cut. Kyl is reported to be holding fast to the 15%
rate but considering lowering the exemption to $3.5 million. This means
many mediumsized business heirs will have to pay the 15% tax, where a majority
of them would have had to pay no tax at all under a $10 million exemption.
So it appears, in a fight between the rich and the richer,
the outcome is about what you would have expected. To put it in boxing terms,
a good big guy will beat a good little guy every time.
Source: Washington Post, 8-12-05
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