The Progressive Underpinnings of the Estate Tax

Why is there an estate tax at all?  An interesting article in The Nation "The Plutocracy Prevention Act" explores the ideological underpinnings of the enactment of the federal estate tax in 1916.

A century ago this summer, Theodore Roosevelt gave his remarkable "New Nationalism" speech about the dangers of concentrated wealth and corporate power. After witnessing a decade of financial corruption and corporate malfeasance, Roosevelt called on the nation to "effectively control the mighty commercial forces which they have themselves called into being."

 Hmm, dangers of a "decade of financial corruption and corporate malfeasance" - sound familiar at all?  Madoff and BP come to my mind.

 The article goes on to provide why the estate tax was structured as it was:

Part of his vision was a "graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate." Congress instituted an estate tax in 1916 that was in place until last January. For most of the last century, the estate tax was a single tax rate. A person with $5 million was taxed at the same rate as someone with $5 billion.

While the author is using this history lesson to underscore their support for the newest estate tax legislation (see prior post "Estate Tax News From Washington") where there is a "billionaire surcharge" I find it interesting that the facts and circumstances that gave rise to the estate tax almost a century ago are so similar to those facing us today.

Are Americans Overtreated to Death by the Medical Establishment?

A truly valuable article from the AP today "Americans are treated, and overtreated, to death".  The article stares down a hard question - When do we stop focusing on a cure and start caring about how we die?

The statistics are disturbing:

Americans increasingly are treated to death, spending more time in hospitals in their final days, trying last-ditch treatments that often buy only weeks of time, and racking up bills that have made medical care a leading cause of bankruptcies.

More than 80 percent of people who die in the United States have a long, progressive illness such as cancer, heart failure or Alzheimer's disease.

More than 80 percent of such patients say they want to avoid hospitalization and intensive care when they are dying, according to the Dartmouth Atlas Project, which tracks health care trends.

Yet the numbers show that's not what is happening:

_The average time spent in hospice and palliative care, which stresses comfort and quality of life once an illness is incurable, is falling because people are starting it too late. In 2008, one-third of people who received hospice care had it for a week or less, says the National Hospice and Palliative Care Organization.

_Hospitalizations during the last six months of life are rising: from 1,302 per 1,000 Medicare recipients in 1996 to 1,441 in 2005, Dartmouth reports. Treating chronic illness in the last two years of life gobbles up nearly one-third of all Medicare dollars.

Do we want to tell people they can't be treated for their disease because .... (fill in the reason - money, age, citizenship, whatever?).  I don't think so.  However, what is missing from the discussion about terminal disease is how do you care for it as opposed to how do you cure it, because there may not be a cure.  Death is part of life - harsh and unwanted and soul-destroying as it may be, it is and always will be the end.

The article suggest that an answer to all of these disturbing questions may start in a conversation - a real back and forth dialog with all parties being fully informed - of what it means to battle a disease or care for it.  

So where do you go to have that dialog? In a conversation I had with David J. Shulkin, MD, Chief Operating Officer and President-elect, Morristown Memorial Hospital a few weeks ago he suggest patient message boards.  He believes that patients need to be active participants in their own health care, and part of that is leveraging the experience of other dealing with the disease is addressing the "cure" v. "care" question.  

Image: renjith krishnan /

Estate Tax News from Washington

A new estate tax reform solution has been proposed by Sen. Bernard Sanders, Tom Harkin and Sheldon Whitehouse billed  the Responsible Estate Tax Act.  According to Steve Leimberg, this newest estate tax proposal is structured as follows:

· Exempt the first $3.5 million of an estate from federal taxation ($7 million for couples). (According to their estimates, this would exempt 99.75 percent of all estates from the federal estate tax in 2011).

· Include a progressive rate structure so that the super wealthy pay more.

     o The rate for the value of the estate above $3.5 million and below $10 million would be 45 percent, the same as the 2009 level.

     o The rate on the value of estates above $10 million and below $50 million would be 50 percent.

     o The rate on the value of estates above $50 million would be 55 percent.

· 10 Percent Billionaire's Surtax: The proposal would impose a 10 percent surtax on the value of an estate above $500 million ($1 billion for couples).

· Close Estate and Gift Tax “Loopholes” requested in President Obama's Fiscal Year 2011 budget.

· Require consistent valuation for transfer and income tax purposes;

· Modify rules on valuation discounts;

· Require a 10-year minimum term for Grantor Retained Annuity Trusts (GRATS).

· Protect family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes.

     Their bill would increase the ability of an estate to use the Special Use Valuation rule reduce the value of farmland for estate tax valuation purposes from its current $1 million to $3 million and index it for inflation.

· Benefit farmers and other landowners by providing estate tax relief for conservation easements.

     Their bill would provide tax relief to farmers and other landowners by amending estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60 percent.












Jailed Convicts v. Seniors in Nursing Homes - Who has the better deal?

I already tweeted this great post from South Carolina Nursing Home Blog,  but it has been sticking with me.  All seniors have done is work hard their whole lives, age, and not have planned to need to spend $10,000 a month on the care they need to stay alive - and for that they get institutionalized in a nursing home.  Criminals steal, maim and murder and they get 3 square and rights as inmates that are closely monitored and enforced.  Nothing is so simple just to compare the two situations on their faces, but the question "Do we treat convicts better than our elderly?" deserves consideration.

Food for thought:

Let's put the seniors in jail, and the criminals in a nursing home. This way the seniors would have access to showers, hobbies,and walks, they'd receive unlimited free prescriptions, dental and medical treatment, wheel chairs etc. and they'd receive money instead of paying it out.

They would have constant video monitoring, so they could be helped instantly, if they fell, or needed assistance.

Bedding would be washed twice a week, and all clothing would be ironed and returned to them.

A guard would check on them every 20 minutes, and bring their meals and snacks to their cell. They would have family visits in a suite built for that purpose.
They would have access to a library, weight room, spiritual counselling, pool, and education, simple clothing, shoes, slippers, P. J.'s and legal aid would be free, on request.

Private, secure rooms for all, with an exercise outdoor yard, with gardens.
Each senior could have a P. C., T. V., Radio, and daily phone calls.

There would be a board of directors, to hear complaints, and the guards would have a code of conduct, that would be strictly adhered to.

The "criminals" would get cold food, be left all alone, and unsupervised.
Lights off at 8pm, and showers once a week.

Live in a tiny room, and pay $5000.00 per month and have no hope of ever getting out. Justice for all.


Reverse Mortgage Basics - A Tool to be Reconsidered

Are reverse mortgages great for every senior?  No.  However, they can be a very useful tool to many seniors that is often overlooked as the senior and their family have read and heard stories about bad experiences with reverse mortgages.  

A reverse mortgage itself is neither good nor bad - it is a tool that may or may not help fix a problem. In my experience "bad" reverse mortgages occurred where it was not the right solution for the problem - a reverse mortgage was "sold" to the senior instead of being presented as a solution to a problem after careful analysis.

A reverse mortgage can be a solution to a myriad of problems because it allows people over the age of 62 to tap into the equity in their homes without increasing their monthly expenses.  This equity can be used to pay for whatever you need - an addition, home health care, loan to your kids so they can buy a  house, a new house for you.

From a timing perspective, anyone who has looked at reverse mortgages in the past may want to take a second look now as the market as changed.  New players have entered the market, and have eliminated their up front fees.  Others have now done the same to stay competitive.  This means that $5000 - $12,000 of up front fees that might have existed 3 years ago have now gone to the wayside - proof that a little competition can be be good for us all. 

Derek Jensen of Jensen Law Office did a great blog post this week "Reverse Mortgage Loans" where he details the trusts and myths about reverse mortgages - it is a great read about a tool anyone concerned about the costs of living as you age should read.  In the article he includes the following:

Virtually anyone can qualify. You must be at least 62, own and live in, as a primary residence, a home [1-4 family residence, condominium, co-op, permanent mobile home, or manufactured home] in order to qualify for a reverse mortgage.

There are no income, asset or credit requirements. It is the easiest loan to qualify for.

The proceeds from a reverse mortgage are tax-free and can be used for any legal purpose you wish:

daily living expenses
home repairs and improvements
medical bills and prescription drugs
pay-off of existing debts
education, travel
long-term care and/or long-term care insurance
financial and estate tax plans
gifts and trusts
to purchase life insurance
or any other needs you may have.

The amount of reverse mortgage benefit for which you may qualify, will depend on

your age at the time you apply for the loan,
the reverse mortgage program you choose,
the value of your home, current interest rates,
and for some products, where you live.



IRS Open House on Saturday June 5

Local IRS offices will be open on Saturday June 5 to help individuals and small business owners resolve tax issues at a time that is convenient for them. reports:


“In New Jersey, nine IRS offices will be open June 5 from 9 a.m. to 2 p.m.,” said New Jersey’s IRS Spokesperson Gregg Semanick.

The nine New Jersey IRS office locations are as follows:

Cherry Hill: 57 Haddonfield Rd. Cherry Hill, NJ 08002
Edison: 100 Dey Place, Edison, NJ 08817
Freehold: 4 Paragon Way, Freehold, NJ 07728
Jersey City: 30 Montgomery St., Jersey City, NJ 07302
Newark: 20 Washington Place, Newark, NJ 07102
Paramus: 1 Kalisa Way, Paramus, NJ 07652
Parsippany: 1719-C Route 10, Parsippany, NJ 07054
Paterson: 200 Federal Plaza, Paterson, NJ 07505
Trenton: 44 S. Clinton St., Trenton, NJ 08609