No More Death Tax Please
To be honest, the term “death tax” is used as a pejorative and isn’t a term that accurately describes what it really is.
Something like 5 million dollars can currently be passed on without incurring the federal tax, but that is set to change for those dying from January 1st onward. On that date the tax is set to jump wildly, but I’m not going to talk about the numbers, I want to outline why I hate this particular form of taxation above almost all others.
- Taxes influence behavior. This should be obvious, but most people seem to just ignore that fact when it suits them to do so, they delude themselves into believing that taxes occur in a vacuum and that people are more like rocks than animals when it comes to stimuli. The big problem here is that since taxes do influence behavior, we should expect people to die off before the estate tax increases on day one of 2013. Strangely enough, that’s exactly what happens. No, people are not jumping off buildings at all ages, but people cease pursuing life extending treatments for terminal illnesses or their families decide to take them off life support when they might not otherwise have done so. Estate taxes actively contribute to the deaths of some people.
- It isn’t just the rich. If you look at the current exemption amount and the current rate of taxation, you might draw that conclusion. It isn’t so however. All over the internet stories are popping up noting that even modestly sized ranchers and farmers often own property in excess of the exemption (and that is set to drop as well) and many of their heirs will not have the resources to pay the estate tax and keep the property whole. In some cases if the property isn’t able to be sold for what it is valued at for tax purposes, the heirs of the deceased may be pretty well screwed.
- Double taxation. It shouldn’t be overlooked that everything in every estate has been taxed already. The money that was used to purchase everything in the estate, from a home to a box of pencils, was subject to capital gains, income tax, sales taxes, etc.
- Why? My final major issue is simply that. Why do we tax estates anyway? If it is to try and level the playing field as far as wealth goes, we might also consider maiming athletes and other such atrocities to create this dream world where no one has any advantages over anyone else in any way, shape or form.
In the end I just think the whole concept is immoral from the word go. I noted that it isn’t only the rich that end up getting hit with this tax, but also ranchers and farmers in many cases. Think about your own wealth now, what you have now and what you likely will have in the future. Think of what it took you to get it, think of what it will take you to get what you want in the future. Think of the children you might have and now think of them after you die. There is a considerable noise from some influential members of Congress on the subject of lowering the exemption to only 1 million, or even taxing all estates excluding a few things like a single home, at 100%.
Does that sound “fair”? Work your whole life, be frugal, be smart, be careful, and have nothing or little that can be passed on?
“Your dad died? I’m so sorry. Now give me half of his stuff and make it snappy, I’m busy drowning future generations in debt.”