a false comparison
Reader comment on: Hancock Lumber's Kevin Hancock on the Death Tax
Submitted by ben (United States), Feb 8, 2010 11:17
Correct me if I am wrong, but a capital gains tax is assessed on the GAINS, not on the whole value of the business. The estate tax is assessed on the total value of an estate. In this man's case, what is being taxed is not the same, therefore the tax rate differential probably would not be such an issue. Also, if Mr. Hancock sells his business and THEN tries to pass down the money, he will still have to pay 45% in tax. This tax system encourages him to KEEP the property. If he sells, he pays 15% capital gains and gets hit again when he tries to pass the proceeds of the sale down to his children. Am I missing something here?However, this country clearly must have a conversation about the estate tax. Should people be able to pass on as much wealth as they choose, thereby perpetuating an upper class? How did our founding fathers feel about the landed gentry, the House of Lords and other elements that perpetuated a ruling elite. It seems that a fundamental ideal in our country is that you should have to work your way through life. An estate tax is a an effective way of deterring Bill Gates' great-great-great grandchildren from never having to work a day in their lives, while countless numbers of people unluckily born into poor families do not have health care. Obama's plan is to exempt up to 3.5 million (7 million for couples) from the estate tax. Only 2% of "small" businesses would fall under this tax. Those who try to kill the estate tax attack it under the guise of the small business but in reality they are the owners of virtually unlimited wealth (the Waltons of WalMart of the most aggressive in this regard).
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The Future of Capitalism replies:
Well, if your family started the business from nothing, the gains equal the whole value of the business. I get into this "basis" issue
, and you are right the guy doesn't really deal with it in the video. This guy in the video with the lumberyard wants to keep working; if he sold the timberlands for cash the money (or what's left after tax) would probably go to some brokerage account somewhere.
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