A New Meaning for the “Death Tax”
U.S. Rep. Cynthia Lummis says some of her Wyoming constituents are so worried about the reinstatement of federal estate taxes that they plan to discontinue dialysis and other life-extending medical treatments so they can die before Dec. 31….. “If you have spent your whole life building a ranch, and you wanted to pass your estate on to your children, and you were 88 years old and on dialysis, and the only thing that was keeping you alive was that dialysis, you might make that same decision,” Lummis told reporters.
Full article on the rise in the estate tax.
I doubt if anybody on dialysis would willingly make the decision to discontinue treatment knowing they would die. But I can definitely imagine circumstances where a family decides to discontinue treatment of an ill parent if that parent is terminally ill, has dementia or some other degenerative disease or condition that reduces quality of life.
I guess I could be real cynical and point out that current law gives the elderly a choice with some external social benefits. To wit: save money for Medicare (by ending your medical treatment) and you can pass along your estate to your heirs.
These comments are interesting. Maybe we’ve found a solution to the problem of over spending on end of life care. Even if it’s a bit ghoulish.
Alternatively, why don’t we just abolish the death tax?
I guess there’s still time to repeal the suicide exemption retroactively, but the clock is running out.
I didn’t realize it until recently, but
apparently the cost basis step-up is also suspended for 2010. So for appreciated property, the effective inheritance tax rate could be as high as 15% this year (35% for short term gains).
I never understood the rationale for the step-up. To me it seems unfair to heirs of people who held their assets in more conservative liquid instruments. Eliminating the step-up would be my precondition for any reduction in inheritance tax rates.
Bart I: the whole death tax is unfair. Those assets have already been taxed, twice in many cases, and forever and ever when it comes to paying property taxes.
Just more evidence that our tax laws provide perverse incentives. If we’re talking about people discontinuing lifesaving treatment because of a change in tax law, imagine how many other silly decisions we’re making because of them.
Leave it to a republican to suggest that people in her state are so greedy they will end their lives before paying taxes.
Don’t trusts protect you from the estate tax?
Linda, I don’t see how the inheritance tax is any more unfair than any of the other taxes. Can you think of a single tax today that is administered fairly? If multiple taxation is the problem, then perhaps it’s the other taxes that should be blamed.
But even at that, I tend to be more concerned about the total tax bill. I don’t really care if it comes in one big bite or several smaller nibbles.
I suppose many small taxes are inefficient in that they tend to increase cost of compliance. But they probably also reduce perverse incentives, by keeping individual incentives smaller and possibly even allowing some of them to cancel out.
All these problems would go away with a simple flat tax.
Your medical and deantl expense on your itemized deduction schedule is reduced by 7.5% of your adjusted gross income. Your pretax health coverage through your employer is in effect 100% tax free(as if you deduct the full amount). Hence your tax savings will be greater through your employer provided plan even if you itemize on schedule A.