Bring 'Death' Tax Back to Life (6/11/02)
by Dean Hartwell
***UPDATE (6/13/02) -
Kudos to the United States Senate for stopping the permanent repeal of the
estate tax!!!
No one likes taxes. But, since we need them to fund necessities for the public,
such as streets and freeways, the cleaning of air pollution and defense, we
have no choice but to pay taxes.
One tax that President Bush has worked to abolish is the estate tax. This tax
only applies to estates of the deceased that are worth close to $1 million
dollars.
President Bush and other Republicans call it the "death tax." Perhaps
they imply that the government levies a tax on dying. But very few people, dead
or alive, actually pay this tax. In fact, various studies show that it only
affects about two percent of the population.
Last year, the President persuaded a majority in Congress to phase out the
estate tax by the year 2010. The wording of the law calls for the estate tax to
return at 2011. So, Bush has asked Congress to phase the estate tax out
permanently.
Whom does this tax hurt?
The wealthiest individuals get hurt. The United States Department of Treasury
says that the wealthiest five percent of people in the United States pay 91% of
all of the estate taxes.
As these are people who earn $200,000 a year or more at the time of their
death, they are also the ones most able to pay it. Interestingly, much of what
their estate pays are capital gains not previously taxed. Furthermore, the
estate tax rate is typically lower than other tax rates.
President Bush wants to add another category of people who suffer from this
tax: farmers and small, family-owned businesses. That is why he has gone to
state with a high percentage of farmers, such as Iowa, to promote his plan to
eliminate the estate tax.
But the United States Department of Agriculture tells a different story: only
about six percent of all farms are subject to the estate tax each year. As for
family-owned businesses, they receive a tax break and have a larger amount of
their value exempt from estate taxation than individuals.
Who benefits from this tax break?
The United States budget does. The Joint Committee on Taxation believes that
President Bush's plan to eliminate the estate tax will cost us almost $300
billion dollars per each ten-year period.
If we are going to have taxes, let them be like the estate tax. It affects a
handful of people and brings in steady revenue.