Monday, May 1, 2017

The Death Tax

There is no such thing as a “death tax” in the USA.  The Death Tax is what Republicans label the Estate Tax as a way to manipulate folks who are not affected by it to condemn it, for the political benefit of their wealthy friends.

The Estate Tax is a federal tax on a person’s estate (or Net Worth) that is assessed on a person’s death.  But the Estate Tax is not assessed on many people, only those with estates valued at over $5 million ($10 million for a couple), which is less than 0.2% of the population, or 1 in 700 people / households.

Not only will the Estate Tax never affect YOU (unless you are among the lucky 1 in 700), but the tax is only assessed on the amount above $5 million (or $10 million) that the deceased leaves behind.  For example, if a man dies leaving behind exactly $5 million, he will owe $0 as his Estate Tax.  If he leaves behind $10 million, his estate will be taxed on only the last $5 million of that amount.

Admittedly, the Estate Tax is pretty steep (typically 50%), but once again, only 1 in 700 Americans will ever be subject to it and their first $5 million (or $10 million) is exempt from the tax.

There are two reasons that we have an Estate Tax to begin with.  Number one, it is a rich vein of tax revenues (it will typically bring in tens of billions of US dollars of tax revenues) and no one really suffers from it (pity the poor millionaire’s kids).  Number two, the Founding Fathers (all of whom were self-made gentlemen, none heirs to an aristocratic name and estate) disdained aristocracy (that institution that grants to children the power, prestige and wealth of a parent, without doing anything to earn it themselves); and the most effective way to prevent an aristocracy from rising is to tax the wealth of super-successful men upon their death.

So, do not be so quick to condemn the "Death Tax," as it has several important jobs to do.  And if the Death Tax does not bring in those tens of $ billions, either you (and 698 of your closest friends) will have to make it up or it will just add to the deficit and the National Debt (and no one wants that, do we?).