Closing Estate Tax Loopholes

" But costs a lot of money right. So the administration is proposing sixty million in new tax increases over ten years. Some of that money will come from a limiting what they called loopholes in the estate tax let's talk more about this we are joined now by. Bob Williams his senior fellow at the urban Brookings tax policy center. And he joins us now Bob welcome to Fox Business. Morning -- our -- state tax some people who oppose that call be death tax very hotly debated. People support -- say hey -- support taxing it say listen this money you'll sit there for generations serves no good purpose but people who are against the estate tax say. This is now the third time you're taxing basically the same dollar. How to we approach."

" A -- income has been taxed before ensemble that hasn't a lot of the incoming largest states is capital gains it has not been subject attacks. But this is the one time to get it you could taxes couple games ticket taxes and estate tax. As things stand right now about one half of all state one half of 1% of all states are subject of the estate tax at the very small fraction of those are very big estates that pay very large amounts of tax."

" Yeah -- love somebody made that money I guess that's what I was going have to basically make the money to pay income tax on that. That's it disperses any dividends are going to get taxed on the dividends right of any dividends or interest 600 less -- Munis or some tax advantage and then when. You know have been limited to his death to when it's passed on you'll get taxed again so is it not getting taxed three times."

" But certainly depends on the income itself if you've got -- say you invested in the business and the business has grown in value so you invest that a 100000 dollars as our ten million dollars you haven't paid any taxes on that ten million dollars it's just grown in value because you've been successful business. When you died at ten million dollars. Less an exemption is subject to the estate tax those that fence about the government's saying as there -- some to the states they're very large very haven't seen tax at all. You know handle a lot of tax has been levied on those court on businesses and small and individual wealth. -- argue from the other perspective that this is heading get a second or third or from even on the fourth time."

" You know well either way it's coming right I mean -- exception that we talked to exemption three happening -- that's probably going to go that did some form of higher tax. Given the current make up in Washington on the estate tax is coming to pay for health care or at least part of health care. What is currently scheduled to happen is this year the exemptions for half million dollars in a 45% tax on what's left. Next year that we -- estate tax at all the estate tax disappears for a year and in 2011. The estate tax comes back with a one million dollar exemption on a 55% rate. What's likely to happen this year is -- do something so attacks will not disappear like fear and will not have a lower exemption in the subsequent years. They -- Obama administration proposed extending the current tax limits of three half million dollar exemption for our present rate making that permanent and indexing for inflation so -- a larger exemption over time. Will help -- has been so much that I was debating with Austan Goolsbee yesterday on Fox News channel's your world. About the impact -- we all it's sort of easy to think that raising a tax rate on whatever it is brings in more money. But does it. But it seemed like does little -- that as a percentage of GDP no matter what you tax the rich dad. From the date I've seen it doesn't really impact that much. Taxes as a percentage of GDP. Brian at the two things that go on one is when you raise the tax rate. People try to shift the kinds of income or taxable income I'm getting from the tax sourced to somebody is taxed at a lower rate or not at all. Or they'll try to hide the income when someone of the money from someone that's what the Obama administration -- to do with there. Changing the rules on estate taxes to to say people ought to value. The assets they have a consistent way because that's my point so let's say you know it whatever I've gotten a state right now annulment you kick off and so what instead of getting this taxes are putting on Myers."

" I'm going to spend it or donated to charity. But the government is counting on me and they in the estate tax revenue to pay for health care if I don't give me any thing to tax. How are they going to pay for health care they're going to have to go get it someplace else right. -- yes they would but the -- is not knowing is going to make changes to their current estate planning. Based on our taxes which is you just said it's ridiculous anybody with that kind of money is going to have really smart people."

" Working for. They have that's been true all along Bryan black -- one million are -- a 600000 are exemption back in the early ninety's. People did their best to hide things the way they were still paying 4530 billion dollars in total taxes each year. People were hiding things away but they were also ending up a lot of money in taxable estates and -- a lot of estate tax. We're gonna want less than we might if they were trying to hide it all but we start getting us a significant amount of revenue."

" Yeah I guess I guess easier you know my point Bob which basically like of the government is counting on X billion. You've got to assume people going to not give them the money. You know so that you are going to -- billion for the probably not going to -- this because people going to hide it we're gonna give it away or do whatever they're going to pull Warren Buffett. Right and that and that's -- except thoughts what the wrong the way the laws are written to give it to a charity fine. But attorneys have been very upset if we get away with the estate tax because it's one of the reasons they get as much given to them they do you get away with the estate -- people get a lot less the charities course they're reducing the deduction ability on charities NASA to get in -- matter where you hope -- are proposing that urban Brookings tax policies -- good discussion thank you sir appreciate it."