From: paul@hsh.com
Newsgroups: alt.politics.clinton
Subject: Re: Inheritance taxes
Date: 17 Nov 92 18:50:44 GMT
Organization: HSH Associates

In article <92321.091903DGS4@psuvm.psu.edu>, DGS4@psuvm.psu.edu writes:
> In article <1992Nov15.150128.8392@anasazi.com>, john@anasazi.com (John R. Moore)
> says:
>>In article <1dvbqnINN10a@agate.berkeley.edu> lazarus@ocf.berkeley.edu (Andrew
>>J Lazarus) writes:
>>]In article <1992Nov6.012419.13792@tvnews.tv.tek.com>,
>>stever@crosstalk.tv.tek.com (Steven E. Rice  P.E.) writes:
[[[Who wrote what? Damn, I HATE trying to untangle these things!]]]

>>Well, let's look at it this way. If you have an estate worth a million
>>dollars, you are likely to get maybe 40,000-50,000 per year from it to live
>>on (assuming you are preserving capital). This is middle class.
> 
> From the Survey of Income and Program Participation:
> 
> Percent of Households with householder age 65 and older who have
> total net worth in the following categories:
>                     65+        75+
> Zero or negative   5.24%      6.03%
> 1-4,999            8.93%      10.61%
> 5-9,999            3.05%      3.60%
> 10-24,999          8.09%      9.04%
> 25-49,999          13.19%     14.60%
> 50-99,999          20.92%     20.83%
> 100-249,999        26.13%     24.17%
> 250-499,999        10.04%     7.99%
> 500,000+           4.37%      3.10%
> 
> Those with an estate valued at 1 million dollars are not middle class.
> 
> Even those with an estate valued at 250,000 or more are in the top
> 15% of the wealth distribution.

I will have to dig out my Statistical Abstract of the US, because your numbers
are misleading; you are excluding everybody under 65.  (Unless you are willing
to demonstrate that estate taxes only hit those 65 or older.)  And a lot of
people *under* 65 die, every day, most of them without wills.  Even
anecdotally, you can make a solid case for a "middle-class," $600K estate: take
a modest home (which, in many high-cost areas, is about $150K), add $100K-$250K
of life insurance, plus personal property and life savings, plus a pension/IRA,
and you can exceed $600K without too much trouble. 

> Given the length of life these days and the significant out-of-pocket
> costs of health care, it's absurd to suppose that middle class Americans
> would be hit by an inheritance tax that went down to $200,000.  The numbers
> clearly show that few people are at that level at the time they die.

This statement helps to reveal a flaw in your choice of statistics:  the high
cost of health care -- and Medicare requirements -- are probably the leading
reasons why most 65+ers don't have any appreciable assets left.  You bankrupt
yourself trying to afford it, and only when you're bankrupt can you get
Medicare -- THAT is disturbing, absent any viable, affordable alternative. 

However, absent those reasons, why not dig out your almanac of choice and post 
the appropriate tables for ALL adult age groups by net worth?  I think you'll 
be convinced that a $200K bite will hit MOST of them.

------ 

 Paul Havemann, VP          HSH Associates            (201) 838-3330 
 Internet: paul@hsh.com     Compuserve: 70410,3507    AOL: HSH Assoc
 "Any opinions expressed are not necessarily those of the company."
  
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