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markr33:

[my prior post] <<<<According to secondary sources (I have not read all the proposals), all recent proposals to abolish the FET also abolish the step-up in basis that occurs for assets upon the death of the owner.

I do not know the percentages, but many more estates (and heirs) benefit from the step-up in basis, than are hurt by the FET.

Be careful what you wish for.>>>>

"It's all a matter of relative fairness. If I die, and have paid tax on all my income for my entire life, and saved some of it, why should the government be able to take half of it just because I die ? I think estate taxes ought to be abolished completely.

But for income which hasn't been taxed yet - such as 401(k)'s, IRA's, and assets with capital gains, there is no reason why they shouldn't be taxed just because I die !

The fairest approach in todays system would be to abolish estate taxes, abolish the step-up, and require IRA's and 401(k)'s to be taxed as they are paid out to the beneficiaries. The assets would be distributed and capital gains taxes would be due when they are sold by the beneficiaries. (using the original basis, of course)"


No particlar argument from me, and your position appears consistent to me. I assume you also favor abolition of the GST? Are you concerned at all about dynastic accumulations of wealth?

You did not save just a little money if you are risk of losing 50% to FET. For 2000, the first 675k would escape FET; although I do not know the brackets off the top of my head, they do not start at 50%.

I wish I had better numbers, but I suspect that way more than 50% of all estates do not have FET issues (and I suspect that the number is north of 80%) and the benficiaries of all those estates do benefit from the step-up in basis.

If you accept the idea of a graduated income tax system, then the current FET is more or less in line with that idea. Clearly, if you favor a flat tax, or value added tax, then the current FET is out of step with your thinking.

Just my $0.02. Regards, JAFO


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