Forbes contributor Louis Woodhill isn't too enamored with the estate tax, which is now imposed on those with wealth of more than $5.43 million and can total 40 percent at the federal level.
"The death tax is an economic and financial disaster, not only for the nation as a whole, but also for the federal government," he writes in an article for Real Clear Markets
"In fact, if you owned the federal government, and you got to keep all of the revenue that federal taxes bring in, you would eliminate the death tax. This is because the death tax costs far more in reduced economic growth than it is worth as a source of tax revenues."
Estate taxes account for only $6 billion, or less than 0.5 percent, of the present value of real federal tax revenue — $1.46 trillion, Woodhill argues.
But at the same time, "it depresses economic growth by forcing the liquidation of existing assets, and by discouraging investment in new assets," he argues.
"A conservative estimate is that eliminating the death tax would increase real GDP growth by 0.1 percentage point." That equates to about $17 billion.
"America can't afford the death tax. It's time to eliminate it."
But Washington Post columnist Robert Samuelson
doesn't share Woodhill's sentiments. Samuelson is critical of Republican efforts to abolish estate taxes.
"Maybe congressional Republicans really are nuts, suicidal or both," he writes. "The latest evidence is House approval of legislation abolishing the estate tax. The chances of this soon becoming law are slim. . . . Meanwhile, they've handed Democrats a priceless campaign gift: a made-for-TV (and Internet) video depicting Republicans as lackeys of the rich."
The tax is barely relevant, Samuelson argues. "It affects almost no one. In 2013, 2,596,993 Americans died, but there were only 4,687 taxable estate returns filed. That's 0.18 percent of deaths."
Of course, that lessens the significance of repealing the tax too.
"The truth is that the estate tax has become a political ping-pong ball, whose symbolism — for liberals and conservatives — dwarfs its economic significance," Samuelson explains.
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