President Donald Trump said on Monday that China is ready to come back to the negotiating table and the two countries will start talking very seriously.Politicsread more
The escalating trade war between Washington and Beijing dominated discussions at the G-7 gathering in France.Politicsread more
The latest round of tariff announcements in the last few days means that by the end of the year, essentially all Chinese goods exported to the U.S. will be subject to duties.China Economyread more
Futures fell after Trump said the U.S. will raise tariffs on more than $500 billion worth of Chinese imports, increasing trade tensions.Marketsread more
As Washington and Beijing continue to up the ante in their protracted trade fight, the potential of a recession in the U.S. is now "the biggest concern," according to Standard...US Economyread more
Tensions stemming from the U.S.-China trade war escalated sharply over the last few days, with much happening as Asian markets were shut down for the weekend.China Economyread more
Clouding the G-7 gathering, which represents the world's major industrial economies, are the tit-for-tat tariffs between Washington and Beijing.Politicsread more
Neither the U.S. nor China wants to be seen as the party that derailed trade talks, says William Reinsch of Center for Strategic and International Studies.World Economyread more
China said Friday it will be resuming 25% duties on U.S. autos, and a further 5% on auto parts and components.Asia Marketsread more
World leaders, environmental groups and celebrities have publicly decried the vast swaths of forest being destroyed by the fires.World Newsread more
Education Minister Ong Ye Kung says the Singapore government has been preparing for the challenge of an aging workforce "for the past 20 years."Employmentread more
Gary Cohn's comment that "only morons" pay the estate tax may seem like a Leona Helmsley moment for the White House economic czar. But a close look at tax data suggests that very few of today's rich are actually paying the so-called death tax.
The New York Times reports that as part of the tax-planning discussions, Cohn told a group of Senate Democrats that "only morons pay the estate tax." The comment was made to assuage concerns among the lawmakers that eliminating the tax, as proposed by the White House and congressional Republicans, would be bad policy and would cost too much in lost revenues.
The Times cited another source saying Cohn didn't use the word "moron" but was referring to "rich people with really bad tax planning."
Either way, the comment may strike some as just the kind of calloused, plutocratic disdain one would expect from a former Goldman Sachs executive who is now shaping tax policy. It recalls real estate billionaire Helmsley's comment that "only the little people pay taxes."
Yet while Helmsley was incorrect — the wealthy pay the bulk of income taxes — Cohn may have a point.
The estate tax is a 40 percent levy applied to the portion of an estate valued at over $5.49 million for individuals or $10.98 million for couples. Because it's a tax that applies only to the very wealthy, it only affects one out of every 500 taxpayers.
However, the number of people actually paying the tax, and the money it raises, are both plunging. According to the IRS, only 11,917 filed estate tax returns in 2015 (the latest year available.) That's down more than 75 percent from 2006.
Revenues from the tax are also falling — they totaled $17 billion in 2015, down from $25 billion in 2008, according to the IRS. The decline is even more dramatic given that the number of multi-millionaires and billionaires who are older has grown dramatically over the past decade.
Part of the reason for the decline is that the exemption — the threshold for paying the tax — has gone way up. Back in 2006, estates over $2 million were taxed. Now, estates over $5.49 million are taxed. So the tax applies to far fewer — and far richer — taxpayers.
But the less-noticed reason for the decline in estate tax payments is lawyers. Estate tax planning has become so effective that wealthy families can now easily pass large portions of their estates to their heirs without paying the tax. There's nothing wrong or illegal about it: Shielding an estate from Uncle Sam often merely involves setting up an appropriate trust and filling it with assets. Other wealthy families can avoid the tax through gifts, since the amount that's exempt from gift taxes has also gone up.
The wealthy can also give a large share of their estate to charity, leaving little or none for the government.
"If you want, you can certainly reduce your taxable estate down to zero," said Roberton Williams of the Tax Policy Center.
Williams said that the estate tax, designed to prevent the growth of large dynasties in the U.S. and to reduce inequality, does serve a broader purpose. And many wealthy families continue to pay, because "it's reasonable to pay it," he said.
But he said the amount of avoidance bolsters the argument by those who want to eliminate the tax.
"If you say that people don't pay it anyway, and you're going through all these machinations and tricks and lawyers to get out of it, then you're imposing unnecessary costs on society," he said. "The money is going to lawyers and accountants and not the government. So it could be viewed as wasteful spending."