It truly is one of the most outrageous taxes ever levied on the American people. Formally called an “estate tax,” critics have rightfully dubbed it a death tax because it is levied on estates when the owners of said estate pass away.
Republican presidential nominee Donald J. Trump wants to end it, as reported by Bloomberg Politics, so hopefully there will be enough members of Congress left after November to help him accomplish his goal.
The first thing to note is that not all estates are taxed when the owners die. Under current law, estates valued at more than $5.45 million for an individual and at more than $10.9 million for a couple are taxed at a whopping 40 percent. And while you may not care if you’re not in this particular tax bracket, just imagine if you were: This tax law gives the government the authority to appropriate nearly half of an estate, all of which should be passed along to the rightful heirs. It is a tax on a person’s lifetime accumulated wealth.
And there is this. Estate taxes are after-the-fact taxes because everything within an estate that has been built, bought and paid for has already been taxed. What’s more, estates – like normal homes – are taxed annually in nearly every jurisdiction in the country to support local government, schools and other infrastructure. So you never really truly own your estate or property; miss just one of these tax payments and you’ll see a lien slapped on your property faster than you can say “stop taxing me so much.”
What’s more, it’s bad enough that Uncle Sam taxes us for as long as we’re alive. Taxing us at the end of our lives is just piling on.
Finally, it’s also bad that the tax code is skewered toward “the rich” – only wealthy estates get the death tax – because that is essentially our government punishing the most successful among us. Our economic system of capitalism – when it was still being practiced – was established by our founders to reward hard work, education, dedication and ingenuity, and because it was we’ve seen ours grow into the world’s number one economy. Death taxes are completely anathema to that founding principle.
Eliminating the death tax would actually be beneficial economically for a number of reasons. As noted in a study by the Heritage Foundation, though the tax only applies to a small percentage of Americans and raises only a miniscule amount of revenue, it has a harmful effect on job creation and reduces growth rates.
The group estimates that eliminating the estate tax and related gift taxes, that would boost the economy by more than $46 billion over the next 10 years because it would free up financial assets that would be used for private sector investment and income growth.
Not only that, eliminating the tax would be a boon for the small, family-owned businesses. Many of them, Heritage says, may be rich in assets but they are cash-poor. Being forced to come up with the cold, hard cash demanded by Uncle Sam for cash-poor, asset-rich businesses means that heirs often have to sell them just to pay the taxes.
It’s time for this punitive tax to go away. Trump is the one pushing to eliminate it.
Sources for this story include: