As I have said many times before, the Democrat Party has never met a tax it didn’t like. Why is that, ask you? Because, answer I, “all taxes lead to ‘fairness’” in their opinion (and a stronger grasp on power, but they never mention that aspect).
President Trump wants to eliminate the “death tax.” Is he “unfair?” So let’s look at the Death Tax and “fairness.”
Currently, the United States has the fourth highest estate or inheritance tax rate in the OECD at 40 percent—nearly three times the OECD simple average of 15 percent. Despite its high tax rate, the U.S. estate tax accounts for less than 1 percent of total federal revenue.
Of course, Hillary’s plan during her campaign was to further increase the death tax. I have opined previously on the tenets of communism as the backbone of modern “progressivism.” Well, guess where the notion of the “death tax” originated? Very good – its origin came from the Communist Manifesto.
The Death Tax is the second, third, or fourth tax on earnings. It is sometimes hard to believe that the Democrats have forgotten that a “3 cent tax on tea” helped to foment the American Revolution. For instance, corporations pay tax on their income. When they distribute some of their earnings to their shareholders as dividends, those dividends are taxed again. In this example the citizen has already been twice taxed. However, when he or she dies, (recall that all taxes on their accumulated wealth have already been extracted) the government wants yet another bite of the apple.
The “death tax” has been modified so many times, it’s a joke (footnote).
Here are other reasons this tax is ineffectual and unfair and should be eliminated:
- The estate tax raised $8.5 billion in 2015 (latest data I could find) — less than 1% of the $1.2 trillion inherited in that year and less than 1/100th of a percent of total federal taxes.
- Only 1 out of every 700 deaths results in paying the federal estate tax today. The vast majority of estates — 99.9% — do not pay federal estate taxes.
- While the top estate tax rate is 40%, the average tax rate paid is just 17%.
- The Walton family — which owns half of Walmart — was able to avoid paying $3 billion in estate taxes. This could increase by tens of billions in the future.
- Casino magnate Sheldon Adelson was able to pass $8 billion to family members and avoid $2.8 billion in estate taxes.
President Trump is not only correct in his desire to end this tax, he is FAIR MINDED.
In the Revenue Act of September 8, 1916, as the United States was on the brink of entering World War I, Congress enacted the current estate tax, imposed at rates of 1 percent to 10 percent on taxable estates over $50,000.
In the Act of March 3, 1917, the rates were generally increased by half, to levels of 1½ percent to 15 percent.
In its version of the Revenue Act of 1926, when the gross rates ranged from 1 percent to 20 percent, the House of Representatives raised the state death tax credit to 80 percent of the basic tax, while the Senate version would have repealed the estate tax.
1. Taxation of appreciation at death or at the time of gifts (carryover basis enacted in 1976, repealed in 1980, and enacted again in 2001, effective only for 2010).
2. Unification of the gift and estate taxes. a. Same rates (1976). b. Same base – tax-inclusive (1976, for gifts within three years of death). c. Single exemption (1976 – until 2004). d. Abolition of the “gifts in contemplation of death” rule (1976).
3. Unlimited marital deduction, including income interests (1981).
4. Repeal of the exclusion of interests in qualified retirement plans (1984).
5. More explicit rules governing disclaimers (1976).
6. An “orphan exclusion” equal to the amount of the gift tax annual exclusion multiplied by the number of years by which the orphan is under 21 (roughly in 1976 – repealed in 1981).
7. Tightening of the deduction rules for transfers to charity (1969)
I think you get the point. I could list many more “revisions.”