Trump on Estate Taxes

The state of New Jersey has recently decided to begin giving up on the idea of an estate tax. Legislation was passed on October 7, 2016 to increase the tax on gasoline by $.23 a gallon. As part of the state’s plan increasing the gas tax would allow the estate tax to be eliminated over the next 15 months. In 2017 the exemption from the New Jersey estate tax would be increased to $2 million. For years it had been stuck at the one time federal estate tax exemption of $675,000.In 2018 the tax will be eliminated completely.  New Jersey still maintains an inheritance tax the rates of which are based upon the relationship of beneficiaries to the decedent and the amount of money or property received by them. Spouses and children are exempt from the extraction. Other relations are taxed accordingly.  New Jersey has seen the light. By making taxpayers pay at the pump the state may be able to afford to eliminate whole sections of its division of taxation and cut out a huge section of its tax law. Additionally those responsible to collect the tax at the pump now become unpaid agents of the tax agency with personal responsibility should the tax not be paid over to the authorities. Everyone makes out. Now enter the dark horse candidate that no one thought had a chance to become president. As Donald Trump becomes comfy with the office of president one of his campaign platforms has been to eliminate the federal estate tax. It could be said that for the most part only the negligent paid that tax to begin with. The use of all manner of trusts and other estate planning tools too often may have resulted in only the poorly advised finding themselves subject to tax liability. With their current estate tax exemption of more than $5 million the middle class was practically insulated from the estate tax anyway. It seems the American government runs on the proceeds of income taxes paid by individuals and businesses of one sort or another. The federal estate tax in contrast raises only nickels and dimes.  Eliminating the estate tax in its entirety will free up IRS resources to pay more attention to where the golden egg is laid… the income tax. It could also be argued that it levels the playing field among the negligent and poorly advised. Eliminating the estate tax also allows taxpayers to make decisions with regard to their estates based on family need without tax considerations. It also conveniently lops off a big section of the unloved Internal Revenue Code. Lawyers who make their living creating elaborate estate tax plans should be somewhat concerned. There are also many connections to the income tax like carry over basis should both the estate and the gift tax be repealed. And talk of taxing gain at death won’t get a lot of fans. But there is a big difference between campaign promises and real legislation. Certainly the elimination of the estate tax and its sister gift tax may leave a bad taste in the mouths of ordinary Americans who may have voted Trump into office as it looks like catering to the rich. Trump’s plan for the income tax also calls for reductions in rates for individuals and corporations. Is it possible that the country will wake up one day without an estate tax, a gift tax or an income tax but with a VAT tax which is a kind of modified sales tax on consumption similar to the way it is collected in Europe?… Sort of like paying at the pump.