The Devil in the Tax Details

Jim gust's recent post, What will happen to the estate tax? prompted me to google the topic. Two gleanings:

Be careful what you wish for. Art Laffer offers a ringing endorsement of repealing the estate tax. He also calls for carry-over basis, so that heirs' capital gains are taxed based on the original purchase price. With repeal plus carry-over basis, Laffer notes, wealthy families would pay an estimated $12 billion more in the 2011-2015 period.

"Small businesses" aren't that small. Representive Eric Cantor of the Ways and Means Committee, in an op-ed in suppport of recent Republican tax proposals, indicates that "small businesses" often are not mom-and pop ventures but those with several hundred employees.

I can think offhand of three family-owned businesses fitting that description in my neck of the woods: two groups of family-owned auto dealerships and a fuel company. The CEOs of all three live in splendid, ocean-view homes, so I guess all have done well. Looking ahead, the auto dealers face problems more pressing than estate taxes. In the case of the fuel company, I would argue that it should be able to continue for another generation if it can. The family should not be forced to merge or go public just to create estate liquidity.