I foresee a multitude of people learning ways around this theft. For that is what it is, theft!! You paid a tax when you bought it, you've paid property taxes on it every year, and then they want to steal it away from your children or grandchildren after you pass away with illegal taxes.
By Daniel Kowalski
There are more millionaires now in American history than there were in 1910. Unfortunately, this isnít a totally good thing.
Itís true that the average American is more prosperous than they were 110 years ago with a higher standard of living, but the purchasing power of the dollar has dramatically decreased during that time as well. Thanks to inflation, more than 20 million Americans have a net worth of one million dollars or more, but to be wealthy like the millionaires of the past one would need about $30 million today.
In fact, many of todayís millionaires consider themselves middle-class, with their largest financial asset being their home. But the multi-millionaires that occupy Congress and the White House appear to be oblivious to this. President Biden wants to be a transformative president that will have the government be more involved in your life while spending a lot more money than the nation can afford under what he calls The Build Back Better Initiative. Part of this initiative is the American Families Plan, which calls for $1 trillion in new spending. Part of the funding for these programs will come from an expansion of the Federal Estate Tax that will widen the tax base to any estate worth $1 million or more.
A Brief History on the Estate Tax
Federal Estate Taxes existed briefly during the 18th and 19th centuries, but they disappeared before the Supreme Court ever had a chance to decide if they were constitutional. The modern Estate Tax was introduced in 1916 during the Progressive Era of American government when there was a large populist movement to tax the rich. This law did make its way to the Supreme Court in 1921 and it was ruled as constitutional, with the reasoning being that it was a tax on the transferring of property and not the actual property itself.
Currently, estates that are valued at less than $11.58 million are exempt from this tax. And because it only affects the very wealthiest Americans, most people are either unaware of it or they are in favor of it because itís a tax that they are not paying.
A realized gain is when you sell an asset for more than you paid for it. If you bought 10 shares of a stock for $100 each and then later sold them for $110 each then you have a gain of $100. An unrealized gain is when you decide to keep the stock instead of selling it. Technically, the stocks are worth $1,100, but that gain is only on paper. Itís also possible that in the future, the stocks could be sold for less than $100 which would make it a realized loss.
What makes Estate Taxes extremely harmful to the people they affect, and the entire economy, is that this is a tax on unrealized gains which can result in the person inheriting the estate needing to sell it off in order to meet the governmentís demand for their 40 percent of the cut.
For example, a farm that has been in the family for generations might have an appreciated value that crosses the exemptionís limit. Because itís an unmovable piece of property, the family would need to sell it to pay the estate tax. Similarly, a profitable and privately owned business would be liable for the tax if the owner expectingly died and passed it on to his children. If the children didnít have this cash available then they would need to liquidate, sell, or even shut down the business. Jobs would be lost, the government would lose corporate taxes from the business as well as income taxes from the people that worked there, and the community would be deprived of a good business that provided a valuable service.
When You Become the Tax Base
The purpose of taxes is to provide revenue for the operation of the government. The fact that Estate Taxes do not effectively meet that purpose and are instead punishments for accumulating wealth in the name of being progressive should be disturbing to Americans.
Most ordinary Americans never thought or cared about Death Taxes because it didnít affect them and/or they believed messaging that the rich need to pay their ďfair share.Ē
Now that run away inflation and devaluing the currency will cause most Americans to become millionaires, theyíre going to suddenly find themselves subject to this tax if President Biden gets his way.