Two Tax Extremists For President

Hank  Adler
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Posted: Sep 26, 2016 12:01 AM
Two Tax Extremists For President

What a pair to draw to!

With respect to income taxes, estate taxes and the appropriate use of tax exempt foundations, neither candidate represents American values.

Hillary Clinton, who makes no investments in the free market, wants to increase capital gains taxes, wants to effectively cause tens of millions of Americans who today would pay no death taxes to pay significant hidden death taxes and wants to increase estate taxes on some of the assets of the wealthiest to just under 80%, yes almost 80%.

Donald Trump says he is worth $10 billion, apparently pays no income taxes and wants to eliminate the estate tax.

Hillary Clinton apparently uses her tax exempt foundation to keep her political cronies employed and to finance travel by private jet. Donald Trump apparently uses his tax exempt foundation to pay personal obligations.

Focusing on death taxes, one wonders if Hillary Clinton understands what she is proposing. She is proposing an end the carryover basis for all assets received from an estate on death and all assets sold at death to pay estate taxes. This is far more significant than the increase in estate taxes for the wealthy which is extremely significant on its own.

Carryover basis means that when an individual dies, his/her estate will probably ultimately be taxed regardless of the total value of the decedent's assets. If Uncle Charlie's only asset was a stamp collection worth $25,000 at Uncle Charlie's death, if it had appreciated in value during his life, under Hillary's plan, the gain would be taxed upon its sale by Charlie's heirs. That means that for all American taxpayers who thought they would die without an estate tax because their assets had a total fair market value of less than $5.45 million, anyone with appreciated assets would find their heirs paying a capital gains tax on the sale of these assets.

Literally, under Hillary's estate tax plan, tens of millions of Americans would pay a new tax on the sale of inherited assets.

And under Hillary's plan, millions of taxpayers who would not have seen a penny of estate taxes would have their appreciated assets taxed upon sale and would pay capital gains on the total sale amount. That is because if no one knows and can prove what Charlie's stamp collection cost, its cost basis would be considered zero and the entire sales price of the stamp collection would be taxed at capital gains rates. (It is extremely difficult to get information from someone who is deceased.)

And then there is Hillary's proposal of a 65% estate tax on the most wealthy and the reality of no stepped up basis in the assets inherited or the assets sold to pay the estate tax.  There, the appreciation could be taxed at a rate as high as 43.4% and what is left taxed at 65%. So, if ultra-rich Uncle Robert had a $1 billion dollar gain in some company he started that cured cancer, his heirs could end up with about $220 million and the government $780 million. That is confiscatory and wrong.

And then there is Donald Trump who appears to have paid little or no income taxes and now proposes to pay zero estate taxes. The result is that based upon his own statements, after a small loan from his father, he has become a multi-multi billionaire and yet should never be required to pay any form of taxes to the federal government. That is crazy.

It is a clear choice - new and higher taxes for almost everyone under a Clinton presidency or no taxes for the President of the United States under a Trump presidency. Which choice one makes is clearly up to the individual voter. Apparently, there is no third choice.