Friday, April 17, 2015
Obama's Proposed 68% Death Tax Would Be Highest In World
Under the President’s proposal, the estate tax would balloon. Stephen Moore of the Heritage Foundation calculates that by eliminating basis step up, we would end up with the world’s highest estate tax rate. Dick Patten, chairman of the Family Business Defense Council calculates an effective death tax rate of 57%. If you add in state inheritance taxes, the combined tax rate could go as high as 68%.
Accounting firm Ernst & Young tracks estate taxes in 38 industrialized countries, finding that only Belgium is higher at 80%.
Any wealth placed into an irrevocable trust, however, is not considered part of the deceased person’s estate. In other words, money placed into an irrevocable trust will not be taxed upon death.
Mitt Romney's complex estate plan is a model of efficient wealth planning.
With an estimated net worth of $250 million, Romney has a variety of trusts related to his business, Bain Capital, and his family that may allow him to escape the 35 percent estate tax rate on many of his assets valued above the current tax exemption of $5.12 million.
How? Romney removes assets from his estate through the use of irrevocable trusts that provide him with income while leaving most of his wealth and its appreciation to heirs tax-free after his and his wife's deaths.