Organization: Penn State University
Date: Mon, 16 Nov 1992 09:19:03 EST
From: <DGS4@psuvm.psu.edu>
Newsgroups: alt.politics.clinton
Subject: Re: Inheritance taxes


In article <1992Nov15.150128.8392@anasazi.com>, john@anasazi.com (John R. Moore)
says:
>
>Keywords:
>
>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:
>]
>]>Politicians champion inheritance taxes as a way to sock it to the rich.
>]>In reality, it is the not-so-rich -- the middle class -- which pays the
>]>bulk of estate and inheritance taxes.  (The United States has estate
>]>taxes, which tax the estate of the deceased.  The United States does not
>]>have inheritance taxes, which tax the heirs, instead.)
>]
>]What definition are you using? The US Estate Tax does not kick in until
>]AT LEAST $600K. With any type of decent estate planning this threshold
>]can be raised significantly. Are millionaires middle class to you?
>
>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.

In addition, the real reason behind the inheritance tax proposal is
the realization that some upper class elderly persons are gaming the
Medicaid system.  Several states have instituted programs to recover
Medicaid payments made on behalf of persons who actually end up dying
with significant assets which they hid from the Medicaid program.
It is likely that if anything comes out of Congress it will be targeted
towards this group.  In addition, in almost every case regarding assets
and the elderly, Congress has included spousal protection.  For example,
the law may exempt assets passed on to a spouse.

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.


Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.

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