Even the Charlotte Business Journal understands that we are operating on life support in small private businesses and family farms when it comes to tax predictability. No one knows that the future holds.
In their recent story: Congress gives short-term relief on taxes writers Heidi Royal and Jessica Hardin note that “Last year’s tax legislation maintains existing tax rates until year-end 2012″. In a world that operates on 5 year plans, and life and death decisions, there no certainty in planning with only a 21 month window.
The article explains that the federal law permits the transfer of $5 million without payment of U.S. taxes on estates. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 provides temporary certainty on these issues. Temporary Certainty. Tell that to the families dealing with the illness of a founding father, or grandparent.
The reality we have to deal with is we can’t afford to have the uncertainty in business, and the US Congress can’t live with repealing taxes right now, and hasn’t for the last 50 years on the Estate tax. What’s the answer?
The ASSET method of collection based on AGI thresholds with a trigger to reduce the surcharge with capital gains taxes on those estates that have been paying the surcharge is the answer. The ASSET method is the way we change the dialogue. Too many people are entrenched on both sides.
On one side, there is a mission to tax accumulated wealth. To tax the transfer of income from one generation to the next. They claim an inheritance tax is necessary.
On the other side, this is a devastating tax that wipes out family businesses and farms. We are taxing income and profits that have already been taxed.
Everyone agrees the tax is dysfunctional. It is missing the target, and it is inefficient. What next?
ASSET has a better way. The estate tax collection method changes. We collect it and make the government whole, with a new collection method that does no harm. Then we reduce the amount of the surcharge based on capital gains collected on those tracked estates that have paid the surcharge. Everyone wins, most especially, jobs are saved.