Herman

Cain

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December 1, 2008

Insanity Alert: Democrats Look to Bring Death Tax Back to Life

While some people are still gushing over the victory of President-elect Barack Obama, and others are now grumbling about his early cabinet announcements, fiscal hawks are focused on the volatility of the stock market and the attempts to unthaw the frozen credit and cash-flow markets.

But some of us are more concerned about the coming legislative insanity of the newly elected Congress.

The Unfairness Doctrine and the Employee No Choice Act are leading the parade, but I must now alert you to the No Death Tax Holiday.

The insanity of the previous two pending actions was discussed in my column last week, and are designed to suppress our liberties. The latest addition will confiscate our lifelong earnings.

In the current tax code, which is consistently called the Bush tax cuts by Democrats to imply to the great unwashed that they must be bad by definition, the Death Tax (aka the estate tax) is scheduled to go to zero percent on January 1, 2010. That’s the good news.

The bad news is that the zero percent tax rate will expire on the last day of 2010. So you have one year to die in order to minimize your death taxes.

The worse news is that Congress does not have to do anything for a one-year death tax holiday to expire in 2010. It is the language incorporated into the legislation passed in 2001 and signed by President Bush, because the president and the Republicans had to make that concession to get the tax changes passed.

Yes, it is insane.

The Democrats’ solution to this insane proposition is to not allow the death tax holiday at all. Namely, kill the year-long death tax holiday altogether. That means the death tax rate would go back to 55 percent of all assets over one million dollars in 2010.

In case you do not think you could be affected by this, consider how easy it is to be worth $1 million in your lifetime.

If your average annual income in your lifetime is $75,000 a year, and if you save an average of 10 percent a year through 401(k) or personal savings, and you do this for 45 years (age 20 through 65), you will have saved with interest over $400,000 for your retirement.

If you are not on that schedule, then you should be.  

If both spouses are working then that’s $800,000. And, if the two of you are living in a $200,000 house then that’s one million dollars. Voila!

If you succeed at creating a net worth of more than $1 million, such as with life insurance policies or other investments, then 55 percent of the excess would go to the government and 45 percent would go to your children or heirs.

This is what happens to most small or family-owned businesses.

That’s insane.

Even if you do not object to surrendering 55 percent of your life’s work to the government (I object passionately), think of the jobs and careers eliminated because someone had to “sell the farm to save the farm”, or they had to “sell the business to save the business.”

It happens all the time, but it does not make the mainstream news.

I am not willing to surrender 55 percent of my lifelong work without a fight. That’s why I joined www.nodeathtax.org .

And I am not insane.

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