Saturday, April 18, 2009

Death tax

The death tax (aka estate tax) is in the news again. I am not a big fan of this tax but on the other hand the government needs the money. So here is my proposal. Increase the exemption to $5 million and tax any excess at 20% while eliminating the charitable deduction and preserving the basis step up. I expect this would raise about the same amount of money (especially when taking into account the reduced incentive to engage in elaborate tax avoidance schemes). I also expect this proposal will have little appeal to the partisans on both sides.

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