A group of millionaires, billionaires, business leaders, and activists say the estate tax should be overhauled so that the wealthy pay the most.
Their plan was announced through the group, United for a Fair Economy.
They would set a $4 million exemption for couples ($2 million for individuals) and raise the estate tax rate from 35% to 45%.
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If the US goes over the fiscal cliff, the estate tax will increase to 55% and the personal exemption will go from $5 million down to $1 million.
That will make most taxpayers subject to the estate tax—something many say would ruin small businesses by taking half of their inheritances after having experienced devastating losses during the financial crisis.
Supporters for the plan include Warren Buffet, Robert Rubin, and John Bogle, among others.
They say the focus should be on the wealthy.
Larger estates that send more to the government through higher estate taxes will create a multiplier effect since the government will allocate the funds to programs that boost economic growth.
The hurdle is to get the estate tax into the fiscal cliff conversation. So far, little has been said.
Some say conservatives will cause the tax to remain at 35% and the exclusion at $5 million.
Others predict an estate-tax exclusion
somewhere between $3.5 million and $5 million and an estate tax rate of 45%.