Death Tax Should Be Laid To Rest -- Forever
April 16, 2002
The House is supposed to vote this week to make last year's tax cuts permanent. One of those is the death tax -- which under the current schedule is supposed to be phased out very, very slowly this decade, end in 2010 -- and suddenly be resurrected in 2011 at its original voracious rate of 55 percent.
Economists warn that such a screwball scenario is making estate tax planning extremely difficult -- if not impossible.
- Only 2 percent of estates pay the death tax.
- And the great bulk of estate-tax filers are not the super-rich, but people with assets valued between $1 million and $5 million -- many of them small family businesses and farms.
- Opponents point out the immorality of double-taxing estates -- once when the money was earned and again when it is passed along to heirs.
- Revenue-wise, it raised only $28 billion for the government in 2000 -- less than 2 percent of total federal revenue.
In a 1998 study, the Joint Economic Committee of Congress argued that "Of all the taxes imposed by the federal government, the estate tax is the one most harmful to economic growth when measured on a per-dollar-of-revenue-raised basis."
The study also estimated that over the past century the existence of the death tax "has reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent."
Source: Editorial, "Dying for a Tax Cut," Wall Street Journal, April 16, 2002.
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