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Permanent Elimination Of The Estate Term Paper

It falls on savers, not spenders; 3) Early and naive advocates of death taxes thought that such taxes would not distort behavior because they fell only on wealth that decedents left behind by accident. Now very strong evidence supports the common-sense idea that people are strongly motivated to leave wealth to their heirs. Death taxes distort the behavior and investment decisions of this important class of "intergenerational" savers;

Not only does the income tax not need a "backstop," the income tax is actually a bad tax precisely because it falls on savings, in effect double taxing saving as opposed to immediate consumption. Death taxes compound the error by adding a third tax on savings. A fair tax system should consistently tax spending, not work or savings, and should use progressive rates to meet whatever liberal or redistributive objectives it has;

Death taxes have not contributed to greater equality in America. In fact, the death tax has so many gaps, loopholes, and problems -- and the motivation to pass on wealth to heirs is so strong -- that the current death tax allows precisely the kind of wealth transmission it is designed to prevent or limit;

The tax is an extremely costly, cumbersome, and indirect way to assist charities. Charitable giving can be helped or subsidized within the constraints of any tax system, so the unfair and inefficient death tax is not needed for that end." (McCafferey, 1999)

SUMMARY and CONCLUSION

While the estate tax is in terms of economics inefficient in nature resulting in distortion to decisions in economics and while this tax results in depression of capital stock and results in less-long run growth this tax has driven charitable contributions noted by NBC Evening News on December 19, 2007 to be down by 50% for the 2007 Christmas season. While...

The bottom line is that this tax is inequitable in that the tax falls upon the shoulders of the wrong individuals taxing those who manage to save instead of those who are the spenders. The estate tax greatly supports and discourages the very elements that a tax system which is sound in nature should encourage which are "works, savings, thrift, and intergenerational altruism..." (McCafferey, 2007)
Bibliography

The Effects on Government Revenues from Repealing the Federal Estate Tax and Limiting the Step-up in Basis for Taxing Capital Gains (2003) CONSAD Research Corporation, Pittsburg Pennsylvania. Online available at http://www.sirote.com/Menus/BioLinks/HIA-Estate-Tax-Final-Report-Consad%5B1%5D.pdf

Kamin, David (2004) New CBO Study Finds that Estate Tax Repeal would Substantially Reduce Charitable Giving. Center on Budget and Policy Priorities. 3 Aug 2004. Online available at http://www.cbpp.org/8-3-04tax.htm

Herman, Tom and Silverman, Rachel Emma (2005) Republications Consider Keeping Estate Tax Alive for the Very Rich. Wall Street Journal 19 Jan 2005. Responsible Wealth Project. Online available at http://www.responsiblewealth.org/press/rwnews/2005/EstateTax_WSJ.html

McCaffery, Edward J. (1999) Grave Robbers: The Moral Case Against the Death Tax. CATO Policy Analysis 4 Oct 1999. Online available at http://www.cato.org/pubs/pas/pa353.pdf

Permanent Elimination of the Estate Tax: Policy Feasibility Analysis

Sources used in this document:
Bibliography

The Effects on Government Revenues from Repealing the Federal Estate Tax and Limiting the Step-up in Basis for Taxing Capital Gains (2003) CONSAD Research Corporation, Pittsburg Pennsylvania. Online available at http://www.sirote.com/Menus/BioLinks/HIA-Estate-Tax-Final-Report-Consad%5B1%5D.pdf

Kamin, David (2004) New CBO Study Finds that Estate Tax Repeal would Substantially Reduce Charitable Giving. Center on Budget and Policy Priorities. 3 Aug 2004. Online available at http://www.cbpp.org/8-3-04tax.htm

Herman, Tom and Silverman, Rachel Emma (2005) Republications Consider Keeping Estate Tax Alive for the Very Rich. Wall Street Journal 19 Jan 2005. Responsible Wealth Project. Online available at http://www.responsiblewealth.org/press/rwnews/2005/EstateTax_WSJ.html

McCaffery, Edward J. (1999) Grave Robbers: The Moral Case Against the Death Tax. CATO Policy Analysis 4 Oct 1999. Online available at http://www.cato.org/pubs/pas/pa353.pdf
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