Middle class taxpayers to pay for ending estate tax

[Democrats_win]

A Denver Post Editorial

http://www.denverpost.com/editorials/ci_2722705

House estate-tax reform a Trojan horse

Provisions of the bill repealing the federal estate tax could require heirs to pay significantly more capital gains taxes than under current law.

President Bush's plan for permanent repeal of the estate tax is being promoted as a boon to farmers and owners of small businesses. But the bill actually is something of a Trojan horse - containing a "stepped-up cost basis" provision that will cost thousands of heirs more in capital gains taxes than they would pay under less expensive reform plans offered by a Kansas congressman.

Imagine your parents bought a 5,000-acre farm for $500,000 in 1950 and it was worth $5 million when they died. Under the old rules, the farm's value would be "stepped up" to the full $5 million within six months of their death. If the heirs later sold it for $6 million, they would pay capital gains tax on just the $1 million increase in value that occurred while they owned it.

In contrast, the estate tax repeal (House Resolution 8) passed by the House of Representatives would value the farm at its original cost of $500,000 at the owners' death. If the heirs sold it for $6 million, they'd owe capital gains tax on $5.5 million.

This formula applies to any capital gains, including stocks - which could impose a staggering burden for heirs....

[dweller]

1. poor Paris....n/t

dp

[Selatius]

2. I don't think family farms should be taxed at all

The estate tax should be aimed at the estates of those in the top 5% as far as income and wealth are concerned, not family farms. The only farms I would support taxation of are giant agribusiness firms.

Given the choice, the answer is obvious though: Keep the estate tax instead of adopting the Republican trojan horse.