Friday, September 23, 2016

Clinton estate tax proposal

Sometimes it's not that hard to wonder if Hillary Clinton is trying to lose this election.  She announced her proposed estate tax policy as detailed in the WSJ article today, "Clinton Seeks Big Jump in Estate Taxes".  Her plan would dramatically impact a relatively small number of extremely wealthy families, but it would also hit families with small businesses and any family inheriting stocks and other assets with capital gains.  Also, the complexity of her suggested capital gains reporting, for all taxpayers inheriting such assets no matter how small, will be a boon to tax accountants and an affront to individual taxpayers who think that they should be able to do their taxes without paying for help.

From an election point of view, why would she go into such detail on a proposal that would need to be negotiated with Congress, the outcome of which is completely unclear.  The estate tax issue is up in the stratosphere for most voters and is not a key to how they would cast their ballot.  To those voters who see her proposal as a significant confiscation of wealth, it will antagonize them and no doubt increase their election activity and contributions in the coming weeks, despite the cloud of Trump.

Relative to the actual budget deficit and tax receipts, her overall tax plan is more cosmetic than it is a major additive to funding her proposals.  It helps, but it is done for the purpose of fairness and wealth redistribution.  That's fine.  There is one proposal, however, that cuts right into the upper middle class, those not rich but doing well.  That's eliminating the step-up in capital gains taxes upon the death of someone leaving an estate.  As it has been, when a person dies their assets are repriced as of the date of their death.  If they have gains, they are eliminated as being taxable.  If they have losses, they can no longer be used to offset tax.  For those who save, those who buy and hold stocks and other assets with the goal of building wealth over time, this would be a significant change for many families and small businesses.  It's a potentially huge hit on the upper middle class, those whose children would benefit from their thrift and work.

While the overall number of families and businesses significantly affected by these proposals still may seem limited, Americans are almost naturally aspirational.  For example, a small business run by a thirty year old may be very small now, but if successful could grow into something that Clinton's proposals could impact years ahead.  Her net may be catching a population segment much broader than she realizes.

There was no good reason to promote this now.  Clinton seems to go out of her way to show how smart she is, how fair she is, and what a swell candidate she is.  With Trump as the alternative, she should win the election.  What she does after that and can get through Congress is after the election of course.  Why provoke voters that absolutely should be in her camp, not in Trump's or with Gary Johnson or Jill Stein.  Her potential victory is not a done deal.

Postscript:  Today's early statement that she would go to Charlotte tomorrow was really not smart. Trump soon followed saying he would go there as well.  Thankfully the Charlotte mayor said to both "stay away"'.  They have their hands full.  What was Hillary thinking in saying that she would go there, as if she is some sort of savior.  She must win, but she is not helping us.


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