Succeeding Part 8.
Brief and easy. Remember the illusory fiscal cliff? Part 2 of the series touched on the estate tax, which information now needs to be adjusted for the latest congressional heist. The fiscal cliff show innocuously raised the estate tax exemption amount from $1 million per person to $5.25 million per person, and allows traditionally married couples to double that to $10.5 million. The estate tax rate was also lowered from 55% to 40%.
In the spirit of the series, besides the many other tricks the fiscal cliff job slid through, it used the excitement of the charade to get payroll tax dollars to socialize professional tax services, but only for elites. Millions of dollars in prorated congressional and staff salaries and benefits, millions of dollars of media time, and countless hours in public opportunity cost were spent by the tax base in order to subsidize a subtle, yet major, reduction in tax rates for the wealthiest Americans. Not the wealthiest "earners," but the actual wealthiest people.
At first blush, it seems like an obvious money grab: Congress just cut taxes on wealthy estates, right? That sounds bad enough. A small number of "progressive" observers have noted as much. But it's actually much, much nastier than that. Why? Because, even before the "fiscal cliff compromise," wealthy people were not paying estate tax anyway. There are so many ways to "get out" of estate tax that it could make your head spin. Really--get banged in the head by the thousands of pages of the I.R.C., and your head will spin, or at least feel like it.
So why is it so bad to reduce the rate when wealthy families weren't paying the estate tax anyway? Because, in order to not pay estate taxes, it cost those wealthy families a dozen thousand bucks or so to pay accountants or tax attorneys to set up the fantastical tax structures that would cause them to avoid the tax. Essentially, wealthy families would pay a firm ten grand to come up with a tax avoidance scheme, so that they wouldn't pay estate tax. The more money, the more complicated the scheme, and the more the fee. Churches, schools, and charitable structures were the pinnacle of these schemes, for the richest families (those in the Congressional range or above).
The fees, whatever they were, were a drop in the bucket for these multimillionaires and their families. What the fiscal cliff job really accomplished by raising the estate tax exemption amount, and lowering the rate, was to make it cheaper for the wealthy to go on not paying the tax. The tax wasn't going to be paid anyway--the entire fiscal cliff show just reduced the amount that it would cost in order to hire private firms to continue to avoid the pretend-estate-tax. It's not enough that elites get to hoard those obscene chunks of assets over generations; they're also spending prodigious sums of payroll deductions simply to make their avoidance a few thousand bucks cheaper.
If you're an American, would you like to mail Dianne Feinstein $450 to help pay H&R Block to prepare her 1040s this year? No? Well, you already did. And you just prepaid her accountant your share of $17,500, too, to make it easier for her ~$20 million publicly-declared holdings to stay in her family.
Continued in Tax Theft, Part 10.