(NaturalNews) There is an old expression that goes something like this:
Nothing is certain in life except death and taxes. If Congress and President Obama don't reach an agreement this week on the so-called pending "fiscal cliff," this expression will take on renewed meaning.
That's because, effective Jan. 1, a series of automatic spending cuts and tax hikes will take effect. And one of the tax rates set to expire is a dramatically lower Estate Tax rate signed into law by President George W. Bush 10 years ago. If no agreement is reached to extend this cut - and it doesn't look like an agreement is in the offing - this so-called "death tax" will rise to its previous rate, which is substantially higher than it is now.
"At the moment," reports
CNBC, "the estate tax is applied to inherited assets at a rate of 35 percent after a $5 million exemption. That means a deceased person can pass on an inheritance of up to $5 million before any tax applies."
The president wants to boost the rate to 45 percent after a $3.5 million exemption; Republicans, on the other hand, have called for a complete repeal of the death tax (though House Speaker John Boehner of Ohio has called for freezing the tax at its current level).
But if lawmakers and Obama do nothing, the rate will revert back to its pre-Bush level of
55 percent after only a
$1 million exemption.
What government takes from some, it can take from everyoneWhy should this matter to the vast majority of Americans who are not in these tax brackets? Because what the government takes from
any of us it can take from
all of us, and that's a conversation worth having.
Understand that the
death tax is nothing more than
wealth confiscation and redistribution. And while any earnings accumulated by a person or a company are counted as income and as such are subject to taxation under the Sixteenth Amendment, a number of legal analysts look upon the death
tax as double taxation, because it is an additional tax levied on earnings that have been taxed once already.
There are other reasons to oppose this kind of tax. According to the
Heritage Foundation:
-- The estate tax, overall, reduces economic growth (something already sorely lacking in today's still-struggling economy);
-- The tax stifles growth, hurts job creation and thus hurts the very people this form of
wealth redistribution was meant to help;
-- It increases "the cost of capital, slowing down research and development and the use of machines that would increase worker productivity -- and thus wages";
-- It keeps interest rates on home loans and other major purchases higher than they should be, which hurts everyone at every economic level;
-- The tax actually raises very little revenue and
may actually cost the government more money in administrative and compliance fees.
Estate tax = envy taxThe current thinking among many in Washington, including President Obama, who favor a higher death tax as a form of wealth redistribution is that it's a "fair" way to empower less-fortunate people. In fact, however, the concept winds up hurting more than just those who it was designed to empower. Per the
Heritage Foundation:
Nearly a century of wealth taxation...shows that well-to-do Americans (including a great number of middle-class families) simply find ways of legally avoiding the tax collector. Not only do they save less and consume more of their income, thus benefiting from the lower taxes on consumption, but they also make less productive investments, such as large life insurance policies and substantial charitable contributions, thus reducing the chances that their death will leave a large taxable estate. The policy of using the estate tax to redistribute economic power actually leads to a distorted distribution of consumption and a less productive economy. Both of these unexpected outcomes worsen the economic condition of the less economically powerful. Others have called the estate tax an
envy tax because it seeks to punish those who have done well and managed to accumulate wealth during their lives (as our founding fathers believed we should).
"Capitalism generates inequality of outcome, and hence envy. When filtered through liberal-speak class-warfare rhetoric, envy translates into fairness. The estate tax or death tax is a classic example of the political exploitation of this envy cloaked in the egalitarian terms of fairness," writes Micah Frankel, Associate Dean at the University of California State University.
Here is another way to look at it:
Suppose you and your family work hard all spring and summer to produce a bumper crop of food. You have enough tomatoes, carrots, potatoes, green beans and other produce to last you the entire winter.
But a couple of your neighbors didn't work as hard on their gardens and, as such, did not produce enough to last the winter. Using the estate tax mentality, the government is saying that those who did not produce enough will simply have to go buy what they need throughout the winter; Washington is instead saying the government believes it has the right to come take what you and your family worked hard to produce and give it to someone who didn't work as hard (because that's "fair," we are told).
This kind of thinking is akin to "rewarding vice" and "punishing virtue," according to the
National Center for Policy Analysis.
Our founding fathers did not envision, nor did they support, wealth
confiscation and redistribution. Those concepts, they knew, are the domain of tyrants and authoritarians who seek to use the wealth and labor of others to empower themselves.
The estate tax is the ultimate government theft scheme, and it should go away - entirely.
Sources:
http://www.cnbc.com/id/100340064http://www.heritage.orghttp://www.ncpa.org/pub/ba347
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