Re: how to compare living standards


"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
news:re1a42tnof3mroihkvjfnqu179o795d9p1@xxxxxxxxxx

The gift tax exemption in 2005 was $1.5 million. Thus if both parents
died in 2005, there would be no tax on an estate worth $3.0 million or
less. But if the estate were worth $5.0 million, for example, the tax
would be $555,800, or about 11.1% of its total value.

.....

Regarding the overall tax rate on IRA distributions, the figure of 80%
you were quoted is quite unrealistic. That would obtain if you pay
the maximum income tax rate of 35% on your IRA distributions and your
heirs pay the maximum estate tax rate of 47%, totaling 82%. To be in
that tax bracket your taxable income would have to be over $88,000
(filing jointly), and your estate on the death of the second spouse
would have to exceed the exemption limit (currently $2 million) by $2
million. That is, your estate would have to be worth more than $4
million.

.....

The lowest marginal rate on the unified estate and gift tax is 18% on
the first $10,000 above the exemption limit. The highest marginal
rate is 47% on the amount exceeding $2 million. The tax on an estate
worth $100 million would be $46.4 million, but I suspect few actually
pay that large a tax because of the various options available such as
prior provisions for foundations, charitable gifts, etc. largesse.

Comment on this from Grinch to sci.econ Tue, 29 Oct 2002:


A very interesting fact about the estate tax is that the rate of tax
paid goes *down* for the wealthiest estates.

Taking a quick look at the IRS Statistics of Income at www.irs.gov,
for the most recent year readily available, the overall effective tax
rate for the total >$20 million group was 14.6% -- the *lowest* rate
for any group with assets over $2.5 million (which is about where the
tax becomes meaningful for a married couple)

And in there were 88 estates with assets totaling $4.6 billion that
paid a grand combined total estate tax of zero dollars ($0).

So we can see that the estate tax is no threat to the Kennedys (or
Buffets or Gateses) or other billionaires who publicly sign on in
support of it.



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