Tax Reform Group: Obama Budget Includes 'Second Death Tax'
Monday, 02 Feb 2015 03:13 PM
By Joel Himelfarb
President Obama's proposed budget calls for a "stealth increase" in the death tax rate from 40 percent to nearly 60 percent, according to Americans for Tax Reform.
To illustrate the point, ATR provides the hypothetical example of a family in which a father purchases a house for $10,000. He dies, leaving the home to his child. At the time of his death, the fair market value of the property is $100,000. The child sells it for $120,000.
Although the plan includes exemptions for most U.S. households, it misses a larger point according to ATR.
"If you are going to hold an estate liable for tax, you can't then hold the estate liable for tax again when the inheritor sells it. This adds yet another redundant layer of tax on savings and investment," the group said. "It's a huge tax hike on family farms and small businesses."
By ATR's calculations, Obama's plan would function "like a second death tax." When added to the original one, it amounts to "an integrated federal tax of just under 60 percent on inherited capital gains."
Most states have abolished their death taxes, ATR President Grover Norquist observed, realizing that they are "simply another layer of taxation on the life savings of Americans."
The second death tax is but one of numerous new taxes or increases in existing ones which the president wants to impose.
Fox News reported that Obama is calling for a "one-time tax" on up to $2 trillion in U.S. corporate profits accumulated overseas. The White House calculates the tax would generate about $238 billion over six years.
Obama also proposes to generate an estimated $320 billion over 10 years through tax increases that include hikes on couples making over $500,000 per year and imposition of a "fee" on approximately 100 U.S. financial companies with assets of more than $50 billion.
The White House says the revenue from these tax increases will fund middle-class tax breaks, a "free" community college program, and expanded child care.
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