While everyone has been discussing the fact that Democrats are fighting to hit many small business owners with a large tax increase at the start of the year, many have ignored another tax that is about to be hiked:
The estate tax - known as the "death tax" - will rise from 0% to 55% on January 1, 2011. The tax hike will apply to all individuals who die with total assets valued at over $1 million.
The lame duck House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-N.V.) have not put forth any plans to stop the death tax hike this year.
The death tax was completely repealed for 2010, but had been a tax rate of 35% in 2009. The death tax hike is not part of the Bush-era tax cuts, which are set to expire on the same date.
That's the Democrats' plan: tax your income when you're alive, tax your dividends that you try to save, and then tax you when you die. As Emily Miller goes on to explain:
The death tax has a particularly detrimental effect on small businesses and family farms. When assessing the tax bill for an inherited small business or family farm, the assets are included in the value, which have less cash. When the death tax is high, families have been forced to sell their small businesses and family farms to pay the tax bills.
Republicans in the House want a total death tax abolishment. Mitch McConnell has offered a compromise in the Senate where no one worth less than $5 million sees a death tax.those over it will be taxed 35%.
The Republicans in the House are right. Government has no right to that money.