Tags: time | kill | death | tax

Time to Kill 'the Death Tax'

Time to Kill 'the Death Tax'
(Dollar Photo Club)

By    |   Monday, 16 October 2017 02:01 PM

The reasons to kill the federal estate tax (also known as the "Death Tax") are simple:

  • The estate tax was enacted for a specific purpose which long ago was fulfilled.
  • Historically, all previous estate taxes were repealed when they fulfilled their function.
  • The Death Tax is a net revenue loser for the federal government.
  • The effect of the estate tax is the creation of a fictional valuation on which to base the tax. It is a tax on phantom wealth.
  • The Death Tax is oppressively complicated for taxpayers to comply.
  • The Death Tax is extraordinarily contentious and complex for the government to administer.
  • The Death Tax facilitates the means to create a huge hoard of unaccountable money easy to use for corrupt purposes.

On the flip side the reasons to keep the Death Tax are also simple:

  • It facilitates class-warfare politics.
  • It enables Congress to easily raise boodles of campaign contributions.
  • It allows an entire industry of estate tax avoidance professionals to be highly paid.
  • It provides a conduit for large amounts of money to be used tax-free in secret.

The United States enacted four estate taxes in its history. All four were passed as temporary taxes to pay off war bonds.

The previous three estate taxes were repealed when the bonds were paid off.

The current estate tax was passed to pay off World War I bonds. There are no more WWI bonds in existence, but the tax has not been repealed.

Instead, it has taken on a life of its own.

The mechanics of the estate tax are so complicated and convoluted that even after being around for 100 years Death Tax experts cannot agree on how to comply with it; and the government has great difficulty in its administration.

Just the thought of this tax terrorizes taxpayers.

They understand that it could easily wipe-out a lifetime of hard work. Sometimes, it does just that.

It forces taxpayers to hire expensive Death Tax experts and related service professionals to bend and twist their lives and businesses hoping to leave their legacy intact.

All while living in fear of potential criminal prosecution.

The Death Tax is based on the hypothetical concept of the taxable estate.

This is determined by having experts figure out what a buyer and seller who do not exist would pay for assets not for sale, and which the taxpayer has no intention of selling. Then the government disagrees with the valuation.

The government wants to know every asset the taxpayer owns or even has some notional interest. Right down to the value of the ashtray in the living room. Nothing is private from the government.

It’s true, as some claim, that the estate gets for income tax purposes a step-up in the taxable basis of an asset.

But so what?

The taxpayers want to pass down their assets to their family and not sell them.

And what about the problem of phantom income in respect of the decedent?

When the family ever sells the assets, they will be liable for paying the capital gain.

But is capital growth the same as income?

Meanwhile, the effort that goes into planning the estate to avoid the Death Tax rules results in legal structures nobody would ever want as an estate plan.

Does any taxpayer understand the terms of a credit shelter trust, marital trust, generation skipping transfer trust, and all the other legal creatures to which they sign their name?

If public policy is concerned with the concentration of wealth in just a few hands, then the distribution of wealth to kids and grandkids is a much more efficient way of solving that problem.

Do taxpayers want to distribute their money according to government dictates?

How about those tax-exempt monster foundations?

The estate tax forces billions of dollars into these foundations which then avoids Death Taxes and income tax.

This results in the concentration of wealth in perpetuity.

Effectively operating in complete secrecy and run by people with no accountability to public scrutiny.

It’s about the worst thing possible for a democratic republic and the free-market.

Some foundations, like Clinton’s or Soros’s, easily use the tax-exempt foundation structure to surreptitiously route millions of dollars for all kinds of nefarious purposes.

Should the Death Tax be continued because it only hurt the people who are successful and productive?

Is it worth keeping so politicians can raise huge amounts of campaign contributions?

Wouldn’t the United States be better if its best lawyers, accountants, and other financial professionals did something economical, productive and socially useful?

Should taxpayers live and die in fear of the government?

I say it is time to kill the Death Tax.

Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.

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The United States enacted four estate taxes in its history.  All four were passed as temporary taxes to pay off war bonds.
time, kill, death, tax
Monday, 16 October 2017 02:01 PM
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