President Obama's proposed changes to inheritance and capital gains taxes could raise the estate tax rate in the U.S. to the highest in the industrialized world.
The plan, announced during the State of the Union address, would eliminate what is called "step-up basis at death" on capital gains taxation. And the top capital gains rate would jump to 28% from 20%.
Under current law, when a parent or grandparent dies, the increase in the valuation of his or her asset from when it was originally purchased is not taxed.
This is to offset the effects of the estate tax.
Obama's plan would tax estates and impose the regular capital gains tax on inherited assets — a business, property or stocks.
 |
| CLICK CHART to ENLARGE |
This could bring the effective death tax rate to 57%, according to Dick Patten, chairman of the American Business Defense Council.
Including state inheritance taxes, the rate would average 65% but could go as high as 68%.
Of 38 industrialized countries tracked by Ernst & Young, only Belgium would have a higher death tax, at 80%. But Belgium provides a lower 60% rate to immediate family members.
Add in state estate taxes, and the U.S. would have the highest rate in the world. At least a dozen nations, including Sweden, Russia and China, impose no death tax at all.
The Obama proposal would raise about $200 billion over the next decade, according to White House projections. Spouses would not have to pay the tax, but other family members, including children, would.Read the rest of the IBD editorial HERE.
If you like what you see, please "Like" us on Facebook either here or here. Please follow us on Twitter here.
No comments:
Post a Comment