Now that winter is virtually gone for most of us, it's time to begin the annual rites of spring—mowing the grass, baseball, golf, gardening and other outdoor activities. But, let's not forget one of everyone's all-time favorites—taxes. Perhaps we should amend that to say, "complaining about taxes."
During his budget proposal speech to Congress, President Bush gave us some details on his tax plan: reducing the tax brackets to four; lowering the tax rates of the new brackets; reducing the marriage penalty;—and my favorite—eliminating the "death" tax.
For years, small, family-owned businesses have been lobbying Congress to repeal this vile tax. It's not because the individuals that own these businesses don't want to pay taxes, although they might prefer that.
So, what are the complaints about the death or estate tax? The tax forces many businesses and even the government to expend substantial funds to comply with and administer the tax. To avoid the tax, businesses spend money on lawyers and accountants instead of investing in new technologies and employees. And according to a 1996 study, the nation's economy would grow by $11 billion per year if the estate tax was repealed. The list goes on and on.
Some of you reading this might be saying, "I don't own a business. I don't need to worry about this." Are you sure about that? With the substantial increases in the stock market and real estate values during the last decade, your estate might be closer than you think to the minimum value ($675,000) that would cause the tax to kick in.
While President Bush has asked Congress to repeal the estate tax back, there will be opposition to this proposal. Most likely it will come from lawyers and accountants who make loads of money creating trusts and planning other tax diversions. Even the "ultrarich," such as Bill Gates and Warren Buffet, are clamoring that the estate tax should not be repealed because it will diminish charitable giving (one of their best tax breaks).
Some of you might be thinking about waiting to see if the tax is repealed before doing any planning, but procrastination is never a good idea. And, can you ever really count on anything any politician says? So, your best bet is probably to continue with that estate plan and get your complaints ready for next year.