The estate tax, one hundred years and counting. πŸ€‘πŸ€‘πŸ€‘πŸ€‘πŸ€‘

Before 1916 the estate tax was used as needed during times of crisis or war. Then came progressives using the same logic we hear today. The inheriting of wealth is unfair and creates dangerous concentrations of wealth and enhanced inequality along with political power.

The estate tax has been with us in various forms since 1916 except for 2010.

Progressives, including President Theodore Roosevelt, advocated both an inheritance tax and a graduated income tax as tools to address inequalities in wealth. This thinking eventually led to the passage of the 16th Amendment to the Constitution and the enactment of the Federal income tax. It was not until the advent of another war, World War I, that Congress would enact the Federal estate tax.

The Revenue Act of 1916 (39 Stat. 756) created a tax on the transfer of wealth from an estate to its beneficiaries, and thus was levied on the estate, as opposed to an inheritance tax that is levied directly on beneficiaries. Source: The Estate Tax: Ninety Years and Counting, by Darien B. Jacobson, Brian G. Raub, and Barry W. Johnson

Given the original logic for the estate tax (other than fiscal crisis) and the fact that in 2017 we hear the same progressive tune of fairness, inequality, wealth concentration, etc., is it not fair to ask that if this tax, in place for over 100 years, is intended to address inequality and wealth concentration, why it hasn’t done so?

I suppose some would counter that the tax on large estates needs to be higher than 40% to make us more equal. The great mystery to me is how that can be accomplished by merely sending more money into federal coffers? Exactly how has 100 years of an estate tax made anyone better off or reduced inequality or shrunk the number of super wealthy families? Does anyone know where the tax money has gone; how it was spent? Of course not!

The tax is estimated to raise about $26 billion a year or less than 1% of federal revenue (about 55 hours worth of federal spending). The US has one of the highest estate taxes in the world while many developed countries have eliminated theirs.

The truth, in my opinion, is the estate tax is just another tax that sounds appealing to average people because it is a tax on the wealthy; on somebody else. It’s a gotcha to make progressives feel better, what can be fairer than soaking the richest among us … but it accomplishes absolutely nothing in terms of lofty goals for society.

One comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s