In the blockbuster movie “Back to the Future” the star uses a device called a “flux capacitor” to travel back in time. Today the President uses his version of the flux capacitor also known as his 2013 budget proposal where he’s calling for an increase in the estate tax to the 2009 level of 45% and a lowered exemption of $3.5million. We are going back to the future.
The President’s budget is a subtle reminder that tax policy is never really permanent. That is why the debate needs to be about the way the tax is collected, not the rates or exemption levels. The same old tax policy will continue to take much needed private capital out of the economy and put it into the hands of the real aristocracy of today: The Fortune 500.
Warren Buffet, for example, who heads a publicly traded company and espouses the importance of the estate tax, never mentions that he owns reinsurance companies that make billions from people paying premiums to hand over to the government in the event they don’t liquidate their farm, ranch or business in time to hide their assets in a trust to avoid paying the estate tax.
Private companies start with little. They take risks. They hire your recent graduate without experience. They hire the people who don’t even have a college education. They pay them good wages. They often provide them benefits like healthcare and 401K. They grow from one location, to two. They become “successful.” In essence, the government is a silent partner, taking profits in the form of taxes at a rate of 45% (federal) plus state…and at the end, if you haven’t properly prepared, will now confiscate 45% again if the President’s budget is passed.
We need real comprehensive tax reform that INCLUDES the estate tax, and a change in the collection method that results in preserving the business and the jobs it creates. ASSET is a business man’s approach to providing the government needed revenue (a debate for others over how much) in a fair and equitable way that first does no harm to the creator of the revenue. Rather than spending millions on tax avoidance strategies and professional fees, the ASSET method of collection makes it easier for the taxpayer and the government to comply, and allows the business and farm to keep operating, paying even more taxes to the Federal, State and local government, and most importantly, growing jobs.
Back to the future was a very successful movie, but “back to the future” tax policies punish successful businesses and taxpayers.
Rob Smith – Americans Standing for the Simplification of the Estate Tax (Rob@SimplifyEstateTax.org)