Lost in the scuffle over all the taxes that progressives want to raise in 2025, is the big increase in the death tax. Our friends at the American Family Business Alliance estimate that the number of families that will have to pay estate tax will double or triple – and those aren't billionaires we are talking about.
NBC News warns that now is the time for some serious tax planning, before the Trump tax cuts expire, and the estate and gift tax exemption shrinks:
The tightening presidential race has touched off a wave of tax planning by ultra-wealthy investors, especially given fears of a higher estate tax, according to advisors and tax attorneys.
The scheduled "sunset" of a generous provision in the estate tax next year has taken on new urgency as the odds of a divided government or Democratic president have increased, tax experts say. Under current law, individuals can transfer up to $13.61 million (and couples can send up to $27.22 million) to family members or beneficiaries without owing estate or gift taxes.
The benefit is scheduled to expire at the end of 2025 along with the other individual provisions of the 2017 Tax Cuts and Jobs Act. If it expires, the estate and gift tax exemption will fall by about half.
Some financial planners are calling it "The Ugliest Sunset":
Alas, one of the only ways for seniors to avoid the tax is to die early.
We are not big fans of the Trump tariffs (he now says he may raise tariffs by as much as 20%), but as we've pointed out in these pages, the Biden administration has kept almost all the tariffs in place and even piled on more. This news came on Friday:
The Biden administration on Friday locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles, to boost protections for strategic industries from China's state-driven industrial practices.
The U.S. Trade Representative's office said that many of the tariffs, including a 100% duty on Chinese EVs, 50% on solar cells and 25% on steel, aluminum, EV batteries and key minerals, would take effect on Sept. 27.
The Tax Foundation reported in June that Biden has been more pro-tariff than Trump:
Now we have a "trade war" between Trump and the Democrats to see who can out-tariff the other. We'd like to negotiate a ceasefire.
California has been the global high-tech Mecca (though less so in recent years), but will the AI revolution happen in the Golden State? The Democrat-dominated state legislature in Sacramento has approved legislation that would kneecap the AI sector – and could drive the industry out of the state and, very likely, out of the country.
The legislation would impose new regulations on AI developers, while also mandating the creation of a state-run "cloud" architecture for AI. What could go wrong with that? These are the same people who couldn't build EV charging stations with $7 billion.
Stanford University's Fei-Fei Li, a leading light in the AI world, is strongly opposed to the legislation and warns that it will "stifle innovation," "shackle open-source development," and "cripple public sector and academic AI research."
The bill is sitting on Governor Newsom's desk. If he signs it, California could be saying adios to what is likely to be a $100 billion industry in a few years.
High-tax countries like Britain are contemplating exit taxes. A figurative Berlin Wall to discourage rich people from leaving.
The Labour Party, which took power in July, is preparing to raise taxes on capital gains and inheritance. Think tanks allied with Labour are already urging the government to slap an "exit tax" on money moving offshore.
Wealth managers say the UK could see a net loss of 9,500 millionaires this year, more than double the 4,200 who left the country last year. Only China is predicted to lose as many millionaires as Britain is.
It's amazing that the U.S. is still importing millionaires, given the socialist trends around the world. But now, with Democrats proposing a doubling of the capital gains tax, a tax on unrealized gains, and a much more onerous death tax (see item 1), don't be surprised if the U.S. starts suffering a brain drain as successful people leave for lower tax climates.
