Kill the Death Tax
The death tax, also known as the estate tax, is a tax on a person’s assets at death. Family-owned farms and businesses are most vulnerable to the death tax. When one generation wishes to pass family business assets down to the next generation, the death tax can threaten the continued viability of the business’ operations.
The rate for this tax is currently at 40%. While the tax falls directly on the children and grandchildren of some of society’s most successful members, it also builds harmful distortions and inefficiencies into our economy that hurt everyone by stifling economic growth. A death tax essentially is a double-tax. Congressman Kevin Brady who is Vice-Chairman of the Joint Economic Committee has stated: “[The death tax] is double taxation. You’ve worked your whole life, paid taxes, and then Uncle Sam comes in and takes it again. It’s the number one reason why small businesses don’t pass their business down to their kids—number one reason why our family farms are disappearing.”
Proponents argue that the death tax helps to stimulate the economy and redistribute money mitigating long term income inequality; however, this kind of thinking is completely contrary to free market economics and threatens property rights. Opponents say the death tax is a fine that is immoral and hurts people across the economic ladder while adding little to nothing in revenue. In 2012, the IRS reported that the death tax only added one third of one percent to total federal revenue.
Additionally, the death tax discourages saving and incentivizes Americans to spend money instead of planning for their family’s future. The law allows government to claim almost half of a person’s assets after death, therefore why would someone want to save their money if they knew this was going to happen? The Joint Economic Committee has noted that the death tax takes $1.1 trillion in capital stock out of the economy.
Lastly, the federal death tax unfairly favors the rich as they are the ones who can afford to hire estate planners to find ways to get around the burdensome fine, not middle class families. The administration and bureaucracy surrounding the death tax consumes significant time, effort, and funds, all of which could be better spent allowing families to save and prepare for the future independently of the government.
Family-owned farms and businesses play an important role in the US economy, and are a manifestation of the American dream. It is simply wrong to punish Americans who work hard throughout their lives by confiscating the fruits of their labor when they die.
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