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A retired friend of mine wrote this. May I have your opinions? It occurs to me that if they drop the estate tax and the exemptions that go with it, the govt. may end up with more income than it currently gets under estate taxes. In 1997 43000 people out of 2,700,000 adult deaths were effected by the estate tax. But if the estate tax is dropped then capital gains taxes will effect possibly all 2.7 million people. I assume that the family home will continue to have the exemption it now has so that won't get into capital gains but I think a lot of people own securities within that exemption of $675,000 that would be subject to tax. If each one of these people had $100,000 in cap. gains the govt would get $20,000 times 2.7million people or an additional $54 Billion in income that they don't get now. This would go a long way in offsetting the reduced taxes for estates over the $675000.

I also wondered how you would treat an IRA or other retirement funds because most people do not have a record of their costs. I'm assuming the retirement funds are a separate entity and while they are in that state do not belong to the recipient until a distribution is taken. So I assume the value would be the after income tax value after a distribution.
I was thinking how is the guy who owns a small business or a farm going to figure out a cost basis for his business. The Cap gains tax could be worse than the estate taxes.
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