Debate Over Estate Taxes

* Although your Aug. 22 article, “Estate Tax Fear Is the Bad Part of Good Times,” points out the many shortcomings of the Republican estate tax proposal, it fails to mention two things:

1. Elimination of the estate tax actually shifts the estate tax burden from the wealthy to the middle class. Although the proposal eliminates the estate tax, it reinstitutes the “carry-over basis” which means most inherited property will likely be subject to capital gains tax, including property passed on by the middle class, which is now exempted from both estate tax and capital gains tax. Therefore, while an estate under $650,000 pays no tax now, it probably will under the Republican proposal. In the meantime, the very wealthy get a substantial tax break by having their estate tax cut by almost 66%.

2. The disparity between rich and poor seems to become greater with each day. This proposal furthers that discrepancy by allowing the wealthy to pass their estates to future generations intact, while it fails to address some of the real problems, like allowing small businesses to continue in existence without paying the estate tax burden.

As you skillfully pointed out, most people with moderate estates can avoid the estate tax with a bit of planning. It would be terribly unfair to take this option away so that the ultra-wealthy can have a huge tax break.

JAY ROSE

Attorney, Trusts and Estates

Woodland Hills

* Your article on the growing concern about inheritance taxes was quite one-sided, focusing on plans to cut those taxes. Inheritance taxes apply to growth in wealth that has otherwise escaped taxation. With the step-up feature that revalues assets at the owner’s death, that wealth already escapes capital gains taxes when an inheritance is finally sold.

The rest of us should not subsidize a rich inheritance to a small minority. But that is exactly what will happen through reduced government services, higher other taxes, or an increase in the federal debt if the inheritance tax is cut.

Anyone worried about the breakup of a family-owned business because of inheritance taxes should buy sufficient life insurance to pay for those taxes.

DAVID E. ROSS

Oak Park