Part of the upcoming “Forward, over the fiscal cliff!”-scenario we’re potentially looking at includes a big hike in estate taxes (or, as they’re perhaps more aptly called, death taxes). Currently, the estate tax is applied to inherited assets at 35 percent after a $5 million exemption; most Republicans and even a mix of Democrats are in favor of lessening or eliminating the death tax altogether, but if President Obama gets the tax deal he wants, estate taxes will go up to 45 percent after a $3.5 million exemption.
In the event of neither a Bush-era extension nor President Obama’s plan, however, going over the cliff means that the estate tax shoots back up to the pre-Bush level of 55 percent after a $1 million exemption — and that has disastrous implications for our economy (which is just great, because we clearly don’t have enough disastrous economic implications looming over our heads already). The effect of heightened estate taxes on small businesses, farms, and ranches is brutal, as Heritage outlines in the video below, and provides ample explanation for why many rural Democrats are against the idea.
And as for the wider incentives on all Americans to earn, be frugal, and accumulate wealth? Milton Friedman breaks that one down better than I ever could:
Katie Pavlich reports that a group of progressive billionaires are going to be touting the ostensible benefits of a healthy estate tax tomorrow, which President Obama will no doubt use as more fodder for his, “See? Business leaders like my plans!”-nonstop campaign… which so far seems to be working out pretty well for him.