Michael Kinsley and Death Taxes

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From: Zhang, Yangkun (Yangkun.Zhang@FMR.COM)
Date: Wed Oct 25 2000 - 07:11:43 PDT

Note that I wrote:

>>> with income derived from Chapter C corporation being taxed TWICE.

Not all corporations are the same. Income derived from Chapter C
corporations ARE taxed twice, first as corporate income, and then against as
regular income when the after-tax corporate income is distributed in the
form of dividends. Chapter S corporations have its income distributed to its
shareholder of record without having it taxed as corporate income, and is
not taxed twice.

Grlygrl201@aol.com wrote:

> "When he calls the estate tax unfair, especially to farmers and
> small businesspeople, because it "taxes people twice"--meaning first
> when they earn the money and again when they die--is he aware that
> the value of farms and businesses in estates has almost never been
> taxed as income? Or have his advisers and fellow businessfolks
> deceived him on this basic point? When he criticizes his opponent

Michael Kinsley is an idiot. He is also woefully ignorant.

In so far as estate taxes are concerned, farmers, small businesses et all,
are effectively taxed twice, as it is appreciation of risk capital (whose
source must have been taxed as regular income).

If they sell the asset before they die, they are going to be taxed on the
realized capital gains, and we're back to the argument of whether capital
gains taxation is a good idea, but I've wrote amply on that topic--see my
previous messages. However, the death tax whacks them again on the amount on
which they already paid capital gains taxes on.

If they did NOT sell it, and they die, the death tax is assessed on the
ENTIRE MARKET VALUE of said asset, even on the cost basis and inflation
caused capital "appreciation". The cost basis is money they have already
been taxed on. Thus the question is thus not whether they are taxed twice,
but by how much.

Does Michael Kinsley understand what he's talking about? Perhaps he should
consult a tax attorney or an accountant before spewing forth garbage
regarding a topic on which he is obviously clueless. It is amusing to me
that a commentator with no financial training [that I know of] has the gall
of criticising a Harvard MBA of being ignorant on finer points on tax
policy, and then makes a complete ass of himself.

GG, I would never post articles from Glamour on computers, so it's kind of
pointless to post articles from Slate.com on tax policy. Try a source with a
little more gravitas [and less leftist bias]--e.g., the JEC or even Fortune!

P.S. For what it's worth, avoid The Economist, as they're known as a bunch
of Cassandras who are prone to wildly inaccurate economic analysis.

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