11.09.2010 0

Death Tax More Significant to Some Than Others

By Rebekah Rast –

The question remains for Congress, will the estate tax rise from the dead this coming January?

Of course those with more than $1 million of assets are hoping not, but so should the rest of Americans.

Why? Combining your home, retirement accounts, savings and other assets, $1 million doesn’t seem like such a big number anymore. Now, imagine Uncle Sam taking 55 percent of everything you have over the $1 million mark when you die. That could be disastrous for your heirs who might be trying to hold onto your family home, business or farm.

That’s exactly what’s going to happen if the estate tax is reinstated to its 2001 level. Because of a disorganized Democrat-run Congress in 2009, the estate tax was repealed for 2010, but come Jan. 1, 2011, like the rest of the 2001 and 2003 tax cuts, the estate tax might be increasing back to a 55 percent tax rate for the value of your estate exceeding $1 million.

This is especially troubling to the African American community and other minority groups. Not only do African American men have a shorter life expectancy than most, already a barrier to collecting capital and wealth throughout their lives, but even worse is a government ready to come in and take it all away.

“What makes America great is that people sweat equity, which then gets passed down to the next generation,” says Niger Innis, spokesman for CORE (Congress of Racial Equality). “This allows them to accumulate capital and wealth. When the government comes in and swoops it away, it makes developing capital and wealth that much harder.”

Innis sums up taxing the wealthy this way, “People believe high taxes hurt the rich, but high taxes do not punish the rich, they find ways around it. High taxes punish those striving to be wealthy.”

His concerns for African Americans take this a step further. African Americans, Latinos and even in some cases women, have not been able to fully take part in economic freedom because of discrimination, Innis says. “It is a bitter irony, it’s unfortunate,” he says. “As the walls of discrimination have been coming down, government intervention is going up. This has a stifling affect on these communities.”

Furthermore, women of color have been starting businesses at three-to-five times the rate of all businesses for several years, according to The Center for Women’s Business Research. But their success faces challenges in revenue and employment opportunities. An unforeseen tax base doesn’t help either.

“On the tax side there needs to be some certainty,” says Karen Kerrigan, President and CEO of Small Business and Entrepreneurship Council (SBE Council). “There are some taxes that are about to expire, capital gains and income investments, and a lot of taxes are going up in the near future. The Administration needs to build soundness in the system.”

A $1 million exemption will largely impact small- to medium-sized businesses. In many minority communities, these are the very businesses providing the foundation for growth and jobs.

“When you hit small- to medium-sized businesses it will have a negative trickle-down effect,” Innis states. “It hurts businesses abilities to hire, which is not helpful for a struggling economy.”

A business owner in a small community will likely pass that business onto their children. If the net worth of that business is more than $1 million, then the heirs might have to sell the business in order to pay the government its due, thus ending wealth and capital creation — in short, The American Dream — for many.

2010 is the first year since 1916 that there has not been a form of the estate tax. For those who died this year, all was inherited by their heirs — their wealth passed to the next generation. For those who would be impacted by reinstating the estate tax and have a good chance of surviving to see January 1st, 2011, fear that their life’s work will have to be sold off to pay the government.

“Reinstating an estate tax would effectively kill these growing and prosperous communities of minority groups who have already had to overcome so much to become successful,” says Bill Wilson, president of Americans for Limited Government (ALG). “For an African American father who worked his whole life to bless his kids with his inheritance and was instead forced to turn a significant amount of it over to the government is an absolute abomination.”

Congress needs to keep in mind all that are affected by their tax schemes and ways to raise revenue for the federal government.

“Part of the reason America has become such a successful nation in the world is because the government has stayed out of the way,” Innis says.

Let’s hope Congress doesn’t kill the wealth of America come January 1st, 2011, and the estate tax stays buried in its grave forever.

Rebekah Rast is a contributing editor to the Americans for Limited Government (ALG) News Bureau.

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