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Author: draknor One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Re: Estate / death taxes: was my grandfather foo Date: 4/16/2008 2:09 AM
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That doesn't make it a "death tax" any more than getting divorced results in a "divorce tax" or choosing not to marry in the first place results in a "bachelor(ette) tax." These labels are silly.

Her income tax increased because she has a 60% higher income now on a per individual basis.


This is true, but it's something I doubt very many people think of or plan for. And while you are right its not a "death tax", I think ziggy is very fair to call it a "death-related tax", because it was the death of the spouse that changed the income tax situation.

I don't think there really is anything that can, or should, be done about it, except for trying to plan for that sort of thing in your estate planning so it doesn't come as a surprise. I would definitely that as a "salt in the wound" effect -- to just lose spouse, have Social Security flip your benefits around, and then realize the IRS is going to look at you differently for the first time in 49 years. Wow.

And while the income "per individual" has gone up, I doubt the surviving spouse's expenses halved, so the real question (to determine the full impact) is what does her 'net income' (ie money for discretionary spending) look like? I know I'd be a lot more frustrated if my gross income went down, fixed expenses stayed the same, and taxes went up -- meaning my spending money just shrunk. I'd be less annoyed if my gross income went down, fixed expenses went down, and taxes went up -- and it came out about a wash.
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