Estate Tax Dormant, Billionaire’s Bequest Is Tax-Free - NYTimes.com y DAVID KOCIENIEWSKI
Published: June 8, 2010
A Texas pipeline tycoon who died two months ago may become the first American billionaire allowed to pass his fortune to his children and grandchildren tax-free.
Dan L. Duncan, a soft-spoken farm boy who started with $10,000 and two propane trucks, and built a network of natural gas processing plants and pipelines that made him the richest person in Houston, died in late March of a brain hemorrhage at 77.
Had his life ended three months earlier, Mr. Duncan?s riches ? Forbes magazine estimated his worth at $9 billion, ranking him as the 74th wealthiest in the world ? would have been subject to a federal tax of at least 45 percent. If he had lived past Jan. 1, 2011, the rate would be even higher ? 55 percent.
Instead, because Congress allowed the tax to lapse for one year and gave all estates a free pass in 2010, Mr. Duncan?s four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.
Replies
78
SoWal Insider
I was in a meeting yesterday and we discussed this. Not only 55% beginning 2011 for Estate Taxes, but the exemption of only $1MM goes into effect. Offshore insurance is looking better and better.
Beach Fanatic
Good for them. I cannot understand the reasoning behind the estate tax.
SoWal Insider
Good for them. I cannot understand the reasoning behind the estate tax.
For the Fed to raise money. I have to admit that in quickly doing the math here, it's hard not to realize the potential reduction in the deficit. But, multi-billionaire oil typhoons don't die everyday.
Beach Fanatic
Doesn't the estate tax kick in at $600K? That's a LOT of estates.
I say kill the estate tax and change the laws on taxation of compensation for hedge fund managers to tax their pay as normal income instead of long-term capital gains.
Ought to be a wash.
I say kill the estate tax and change the laws on taxation of compensation for hedge fund managers to tax their pay as normal income instead of long-term capital gains.
Ought to be a wash.
Beach Fanatic
Your dollar is taxed when you earn it. You invest it and make a profit and they tax you again ( capital gains) and then you die and they tax it again. And people wonder why the savings rate is so low.
SoWal Insider
Doesn't the estate tax kick in at $600K? That's a LOT of estates.
I say kill the estate tax and change the laws on taxation of compensation for hedge fund managers to tax their pay as normal income instead of long-term capital gains.
Ought to be a wash.
It was increased to $660K under H.W. Bush or Clinton, I can't remember. Then, up to $3.5MM under W. Bush? Back down to $1MM 2011. It's zero for 2010.
In 1974 it was $60K.
I'll agree with you regarding hedge fund managers. I am not certain how they are taxed, but when you do hedge on short positions, it's all taxed as short term capital gains.
Beach Fanatic
I agree Americans do not save enough but it is not because of estate taxes.
I like a lot of other American own plenty of assets that have never been taxed iota (unrealized capital gains, cash value life insurance, deferred annuities and growth in tax-deferred qualified plans are examples).
If you don't have a lot of these re-consider where you are getting your financial advice. Watch out for the annuities though.
This anomoly in the tax code (zero for 2010 and back to 1M for 2011) was a bi-partisan budgetary gimmick.
Also, it is very simple for married couples to double the allowable exclusion amount. Last year these estates up to 6M saw no estate liability.
There are numerous ways with varying degrees of complexity to minimize or to eliminate estate tax liability.
I like a lot of other American own plenty of assets that have never been taxed iota (unrealized capital gains, cash value life insurance, deferred annuities and growth in tax-deferred qualified plans are examples).
If you don't have a lot of these re-consider where you are getting your financial advice. Watch out for the annuities though.
This anomoly in the tax code (zero for 2010 and back to 1M for 2011) was a bi-partisan budgetary gimmick.
Also, it is very simple for married couples to double the allowable exclusion amount. Last year these estates up to 6M saw no estate liability.
There are numerous ways with varying degrees of complexity to minimize or to eliminate estate tax liability.
Beach Fanatic
I agree Americans do not save enough but it is not because of estate taxes.
I like a lot of other American own plenty of assets that have never been taxed iota (unrealized capital gains, cash value life insurance, deferred annuities and growth in tax-deferred qualified plans are examples).
If you don't have a lot of these re-consider where you are getting your financial advice. Watch out for the annuities though.
This anomoly in the tax code (zero for 2010 and back to 1M for 2011) was a bi-partisan budgetary gimmick.
Also, it is very simple for married couples to double the allowable exclusion amount. Last year these estates up to 6M saw no estate liability.
There are numerous ways with varying degrees of complexity to minimize or to eliminate estate tax liability.
Buz:
You missed my point. It is the widespread perception that we are taxed excessively that contributes to the lack of savings. While it is true that there are a myrid of loopholes in the tax code, these loopholes contribute to the perception that the system is fixed to protect the wealthy and the common people are getting hammered. Most people do not believe the tax system is fair and that is a huge problem for all governments.
There are many other systemic issues behind our failure as a society to save and re-invest in our economy but the perception of unfair/excessive taxation is certainly a major factor.
SoWal Insider
Idlewind, you're for the flat tax, right? I looked into that a few mos. ago and for a moment was on board, but not any longer. I agree with your post here - our current code carries a misperception of unfair taxation. I think it is pretty forgiving for those in all tax brackets. Under a flat tax, I would be paying a lot more to Uncle Sam.......just sayin.
SoWal Expert
I call BS that taxes keep people from saving - there are various tax benefits to saving and planning ahead as well.
Beach Comber
Good for their family!!!
Beach Fanatic
I call BS that taxes keep people from saving - there are various tax benefits to saving and planning ahead as well.
You may call BS but there seems to be some discussion about the issue in academic circles.
Supply Side Economics
While this article agrees with you apparently there is at least room for discussion.
My point was that the PERCEPTION of tax unfairness is a contributor to the lack of savings.
Edited
SoWal Expert
Well, I definitely agree that a false perception would account for a lack of savings for many. They are probably also the ones who think they don't need to save for their retirement and plan to live off Social Security (which should only be 25-35% even according to the SS Admin.) and think they come out ahead by "financing" things and accruing debt.
No financial adviser has ever told me not to save because it would hurt me because of taxes. They do have a wide variety of suggestions as to how to take proper advantage of the many tax benefits of knowledgeably investing and saving.
No financial adviser has ever told me not to save because it would hurt me because of taxes. They do have a wide variety of suggestions as to how to take proper advantage of the many tax benefits of knowledgeably investing and saving.
SoWal Insider
If politicians really wanted people to save, why would they put limits on 401K contributions? Why do they tax long term capital gains?
Beach Fanatic
Idlewind, you're for the flat tax, right? I looked into that a few mos. ago and for a moment was on board, but not any longer. I agree with your post here - our current code carries a misperception of unfair taxation. I think it is pretty forgiving for those in all tax brackets. Under a flat tax, I would be paying a lot more to Uncle Sam.......just sayin.
Most Americans would be paying more with a flat tax.
Edited
Beach Fanatic
Well, I definitely agree that a false perception would account for a lack of savings for many. They are probably also the ones who think they don't need to save for their retirement and plan to live off Social Security (which should only be 25-35% even according to the SS Admin.) and think they come out ahead by "financing" things and accruing debt.
No financial adviser has ever told me not to save because it would hurt me because of taxes. They do have a wide variety of suggestions as to how to take proper advantage of the many tax benefits of knowledgeably investing and saving.
I totally agree. Now we can look at what the effect is of individuals making investment choices to avoid paying taxes instead of the highest rate of return.
Anyone under age 60 who is counting on Social Security is an idiot IMHO. And personally I abhor debt.
Beach Fanatic
Most Americans would be paying more with a flat tax.
Most Americans can't do fractions either so a slogan like "Do away with the IRS" is something they can get their hands around.
Almost 50% of Americans don't pay income tax. So a 1% rate would represent a tax increase. Rich people have advisors to shelter their income and so their actual rate is far lower than the stated bracket. Guess who that leaves to take it up the wazzooo? You guessed it, the working poor aka the middle class. We may not understand fractions but we understand that, hence the bitterness towards the IRS.
Beach Fanatic
Almost 50% of Americans don't pay income tax. So a 1% rate would represent a tax increase. Rich people have advisors to shelter their income and so their actual rate is far lower than the stated bracket. Guess who that leaves to take it up the wazzooo? You guessed it, the working poor aka the middle class. We may not understand fractions but we understand that, hence the bitterness towards the IRS.
In the current system if your income isn't high-6 to low-7 figures, then "No Loopholes for you!" It has traditionally taken a good bit of money to participate in the various schemes concocted to exploit the system.
If you're earning a few hundred grand or less, you are screwed.
Edited
Beach Fanatic
Under the Flat Tax, loopholes available to almost every homeowner would disappear-mortgage interest deductions and deductions for local property taxes.
SoWal InsiderAuthor
look at who is promoting the flat tax and you will see the greatest beneficiaries
Beach Fanatic
look at who is promoting the flat tax and you will see the greatest beneficiaries
I don't think I will "benefit" but at least I will know that everyone else is paying the same rate as I. Fair and equal for all.
SoWal InsiderAuthor
I don't think I will "benefit" but at least I will know that everyone else is paying the same rate as I. Fair and equal for all.equal does not always mean fair
Beach Fanatic
equal does not always mean fair
You are going to have to explain that one.
SWGB
I always find it interesting that a small minority rails against taxes that effect them and seem to get a large majority who will never experience, even remotely, those tax brackets to vote along with them.
I believe that's called the Kansas Effect?
I believe that's called the Kansas Effect?
SoWal Insider
look at who is promoting the flat tax and you will see the greatest beneficiaries
Interesting, you're probably right!
Checking your forum account
Please wait while we verify your forum account.