Wednesday, September 17, 2014

Killing the death tax

Killing the death tax

Benjamin Franklin made this observation in a 1789 letter to Jean-Baptiste Leroy: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world, nothing can be said to be certain, except death and taxes.”
The Founding Father was an astute and learned fellow, indeed. Yet even he would have been surprised to find out his quote eventually revealed a certainty within the nation he so loved: the dreaded combination of death and taxes.
The estate tax, or “death tax,” has been a historical grievance for many American families. Its roots go back to the short-lived stamp tax (1797-1802), and includes the 1862 Revenue Act and 1898 War Revenues Act.
Now the modern estate tax is almost a century old. As Darien B. Jacobson, Brian G. Raub and Barry W. Johnson wrote in the Internal Revenue Service’s Statistics of Income Bulletin in 2007, “The Revenue Act of 1916 created a tax on the transfer of wealth from an estate to its beneficiaries, and thus was levied on the estate.” This estate tax differed from the “inheritance tax that is levied directly on beneficiaries,” which occurs in some U.S. states, and is “applied to net estates, defined as the total property owned by a decedent, the gross estate, less deductions.”
Yet as some people may recall, the estate tax cheated death a few years ago.
Then-President George W. Bush started the process of gradually phasing it out through taxation legislation in 2001. The estate tax disappeared by 2010, and only needed to be permanently repealed to be wiped out forever. President Obama and Democratic politicians predictably sat on their hands, and the estate tax’s exemption of $1 million reared its ugly head (again) in 2011.
Hope — as it so often does — springs eternal.
There seems to be some movement in New Jersey to do something about the state’s lofty inheritance tax. Gov. Chris Christie certainly wants to get rid of it, saying that many residents “can’t afford to die here” and they’re “going to pay significant money when they pass away the assets that they worked all their lives for.”
Republican state Sen. Steve Oroho also pointed out that “New Jersey is one of only two states, us and Maryland, that has both an estate tax and an inheritance tax. Yes, New Jersey taxes dead people. They find a way to tax them in the estate tax and the inheritance tax.”
If New Jersey’s efforts are successful, that would be great for this state. Yet I believe that the United States as a whole can go much further on this issue.
I’ve always been opposed to an estate tax. It’s nothing more than the government taking away a significant portion of a person’s estate earned over the course of a lifetime. Rather, it should always be left up to the individual through his will to make the ultimate decision whether to pass down the money, give a portion of it to charity or another cause (e.g., political donation), or simply give it all away.
The state should not be involved in this decision, and should not be allowed to arbitrarily claim a portion once a person has passed away.
When you think about it, the whole matter is rather puzzling.
Throughout history, most Americans have supported greater degrees of personal liberty and freedom of choice. They trumpeted capitalism and free markets. They rejected the growth of the state and bureaucracy. They thought that citizens, and not the government, could make their own decisions about their daily lives.
While there were a few exceptions to the rule, these positions remained fairly consistent under most Republican and Democratic presidential administrations.
It would be easy to blame Mr. Obama for the current mess. As The Weekly Standard’s Fred Barnes wrote in the issue of March 5, 2012, “Are Obama’s tax policies perverse, stubborn, or simply driven by ideology? Probably all three.” Yet this problem has nothing to do with the current president. Incredulously, crippling estate and inheritance taxes — which were always anathema to American views and values — survived under a litany of White Houses, including Ronald Reagan and Bill Clinton.
Moreover, various countries have gradually come to their senses and eliminated this ridiculous measure. My country, Canada, which has hardly been a bastion of free-market economics at times, repealed its estate tax in 1971.
What on earth is the United States waiting for? Kill off the death tax, once for all.
Attribution:
Killing the death tax
The state shouldn’t get the first portion of an American’s worldly wealth
Michael Taube
September 2, 2014
The Washington Times
http://www.washingtontimes.com/news/2014/sep/2/taube-killing-the-death-tax/?utm_source=RSS_Feed&utm_medium=RSS

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