Wednesday, February 08, 2006

Death, Taxes, and Bush Budget Proposal

Category: Estate and Inheritance Tax

"The President aims to end estate taxes for the wealthiest Americans. He also wants to scrap a $255 death benefit for the poorest"

In a not unbiased article, Death, Taxes, and George W. Bush, a brief outline of the budget proposal that will effect the cost of dying in America. (There is also a nifty reader comment section that gives voice to a variety of opinions).

President Bush and his administration have been anglign to kill the so-called death tax since they were first elected into office. In prior posts (Only .5% of US Estimated to Pay Estate Tax (and other op-eds for reform, Effects of the Federal Estate Tax on Farms and Small Businesses - Congressional Budget Office Paper ) , I have questioned the emotional and economic elements of this proposal. While eliminating a tax can be something to cheer about, New Jersey and New York residents need to bear in mind that each state will continue to impose its own estate tax outside of and federal estate tax.

As to the Social Security death benefit, it is little known and a small amount. The article describes the issue around repeal of it as follows:

"According to the Bush budget, the benefit would be eliminated "because it no longer provides a meaningful monetary benefit for survivors yet requires significant administrative resources." The Social Security Administration estimates that eliminating the benefit would save the government about $190 million next year.

A spokesman says the benefit has not been increased since 1954 and "no longer bears a relationship to funeral costs.""

However, the death benefit is a real benefit to the person who was relying on social security, and whose last check was just automatically withdrawn as you need to survive the month to earn your social security - the payment for the month you die must be returned.

It is sure that the debate will rage on.

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1 Comments:

At 2/09/2006 1:50 PM, Blogger Aaron said...

We need to prepare for the Baby Boomers and start cutting back on government spending. I think Bush’s budget did not go far enough in trimming government coffers.

In about 10 - 15 years, there will be no way that we can afford to pay for Social Security, Medicare, and Medicaid.

We could radically increase taxes. However, this will cripple future generations. We can increase the budget deficit. But it will lead to serious systemic risks to our economy. We should reduce benefits promised during a previous era of prosperity in our country. Of course, we can try a combination of all three, but we would be left with a situation akin to eurosclerosis.

We must make the painful choice of reducing benefits and reshaping Social Security, Medicare, and Medicaid to care for the very neediest in our country. It will be hard, but the demographic trend is inexorable.

Reality shouts that this is not a Republican or Democrat issue.

 

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