Repeal the Death Tax? Not so Fast....

"If the American people have their say, the death tax will be histoire."

Don't bet the ranch on that. There are a lot of conservative, working-class Americans who live good lives, work their tails off, and play by the rules who are just getting by, and they resent dissolute, amoral, people (whether it's Bill Clinton or some bimbo heir or heiress) making out like crazy WHEN THEY DON'T DESERVE IT. There is a lot of populist resentment here in red "flyover" land just waiting to boil over.

In particular, there are two statements made that are completely wrong. I don't know if it's simply because he's lazy or purposely twisting the facts.

* Inheritance taxes are "death duties" or "vulture taxes." No. They are not levied on people foolish enough to die, but on those lucky enough to be named beneficiaries in a will. The Wall Street Journal's rallying cry, "No taxation without respiration," is catchier than it is accurate.

No, because it's NOT the beneficiary that pays the taxes. It's the estate of the deceased.

* Inheritance taxes constitute "double taxation." No. They are one-time taxes on the income of the recipients of inherited assets, not a double tax on those who earned the money in the first place. Besides, as William Gale (Brookings) and Joel Slemrod (University of Michigan) point out in a paper prepared for a National Tax Association symposium, "It turns out that much of the wealth subject to the estate tax has not previously been taxed."

Oh, this gets me really worked up here... Again, he's either wrong or lying.

First off, again, the death tax IS paid by the estate, not the beneficiaries. The death taxes come out before the estate is divvyed up. If the money being distributed already had taxes paid on it, then the money inherited is not subject to income taxes. However, if the money has NOT been subject to taxes, as in say, 401K or IRA funds, then the beneficiary DOES have to pay income taxes on the inheritance as income. So, although as Gale and Slemrod wrote, much of the money inherhited has not had taxes paid on it, the beneficiaries will have to pay those taxes, and the death tax is, in fact, an additional tax on top of that.

The only reason I know this is because I recently had an uncle die who had a pretty substantial estate.

Mark

This is some economist!

A long time ago, somebody far smarter tham me said, "you can take all the economists, and all the weathermen, and have them switch jobs, and nobody would notice."

Also, remember that nit-wit at MIT, Whats-his-name, the guy who hates America, is an economist, as is Paul Krugman!

Mark

Yes, and as a conservative I worry about the "moral hazard" created by leaving UNLIMITED amounts of assets to dissolute slacker heirs who have never worked a day in their life and...

With conservatives like you, who needs liberals? Sounds to me like you're either envious or a control freak.

First off, I can't think of a single example of someone who has an unlimited amount of assets. Are you implying that there is someone who has the entire planet's resources and labor force at their disposal?

Did you bother to consider how many people benefit from the wealth that some people/corporations have? If the capital these people hold is taken by the government, what kind of effect does it have on the people and businesses where their money is invested?

Lastly, a slacker is a slacker. You ever see what happens to most big lottery winners after a few years? Most of them end up in the same situation or worse that they started in. It takes effort and brains to stay rich, so if you let nature take its course and keep government out of it, you will probably end up with your desired result anyways.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.