Update 10/9/2017: It now appears certain that Republicans will abandon their effort to repeal the estate tax due to public accumulated public resistance.
It is important for the United States to keep the estate tax in place for a wide range of public policy, social equity and financial reasons. I have long promoted the basic economic observations that:
- Since estates below $5.5 million (or $11 million for married couples) are exempt from the tax, that means that the estate tax only applies to the 2% ultra-wealthy and does not apply to most of us. Simple financial planning tools allow us to increase this tax-free amount even further. Current law allows us to pass millions of dollars of accumulated wealth to our heirs without tax.
- Americans overwhelmingly and consistently indicate their belief that taxes should not be reduced for the rich. Read any major poll of public opinion on this topic.
- Adequate socially desirable ways to reduce or minimize death taxes already exist for the wealthy under our current tax law (aka “estate planning”). This means that estate tax is paid only by those who, for whatever reason, choose to avoid the available means to avoid the tax. Establishment of a private charitable foundation is among the most popular and socially desirable ways for the ultra-rich to avoid estate tax.
- Even the richest and most astute in the U.S. argue in support of the estate tax. See the full page newspaper editorials posted in the L.A. Times and the N.Y. Times in 2002 by Bill Gates and Warren Buffet when the former Republican administration tries to repeal the estate tax.
- Elimination of the estate tax would mean that other taxpayers would bear the financial burden of paying for this fiscal shortage in tax revenue. That would almost certainly mean that middle-class taxpayers would make up the difference by paying Trillions of additional taxes over time.
- The notion that we should not tax “job creators” has been proven to be false propaganda. Remember “trickle down” theory from the 1980s? Some people still actually believe it despite the overwhelming peer reviewed evidence that it is baloney. Likewise, stories of the estate tax destroying family businesses or family farms are distorted and not credible.
- It is detrimental to our society to allow extremely large amounts of wealth to remain in families for multiple generations (think John DuPont syndrome).
- Death tax is the best way we have in our system of government to offset the “rich get richer” bias that is naturally part of our nation’s economic system.
I formed an opinion in support of death taxes during my time of formal study of public tax policy at Villanova Law School in the 1980s and 1990s and it has never changed but rather been reinforced by the dangerous concentration of wealth that accelerated over the past decade.
The only hope that our current Congress has of passing the estate tax repeal is if a block of middle-class voters remain ignorant on the issue or accepts the political propaganda being pushed on the topic. We read in social media that the people supporting the estate tax repeal are simple echoing ‘sound bites’ of lines fed to them by political propaganda campaigns without any personal experience or in-depth understanding of the issue. That’s a separate but dangerous problem for us.
I hope that Americans stand up to the block the effort to repeal estate taxes that Bill Gates and Warren Buffet called “the greatest fraud ever perpetrated on the American public.”