Death Tax / by kevin murray

I just love calling the Estate Tax, the Death Tax, it just sounds so much more dramatic and somewhat sinister.  Benjamin Franklin said it best:  "In this world nothing can be said to be certain, except death and taxes."  The thing is for some of us death and taxes are in fact, synonymous, and since we know that we can't take our material wealth into the spiritual realm with us, and subsequently that taxes are a form of wealth redistribution and an agent used to help run government entities a tax upon our death seems on the surface to be quite fair.


As a reference point, in 2001, the Estate Tax exclusion was $675,000 with a tax rate of 55% above that amount.  After the passage of the American Taxpayer Relief Act of 2012, the Estate Tax exclusion was not only indexed to inflation but for 2013 the amount excluded was $5.25 million with a tax rate of 40% above that amount.  This is an increase of 777% since 2001 which is incredible, especially considering the massive deficits the federal government has been running over these same years.  To put it in further perspective, according to the WSJ Blog as reported by Robert Frank, in 2011, there are: "1,078,000 households worth $5 million or more." So the estate tax will not be affecting in aggregate very many households at all and certainly those that are subject to the tax can definitely afford to pay it and it would take a tremendous amount of imagination and outright distortion to state that somehow this Death Tax which doesn't even come into play until after $5.25 million has been excluded to imply that this tax is thereby "unaffordable" or "unfair" or "unmerited".


The biggest argument against Death Taxes is that since you have already been taxed on the money as you earned it any additional taxation is unfair.  While you could call it double-taxation when the monies that you have earned through a payroll-deducting salary are then taxed again upon death, there are other assets that are not taxed at all, until they are sold.  For instance, real estate and equities, if unsold, are untaxed, yet these are assets that can appreciate significantly over time so the only opportunity to tax them is upon your death when you are no longer the living owner of these assets.


Additionally, when it comes to taxation of your assets upon your demise, I would just say that during your life on earth, you were allowed to spend your money pretty much as you pleased, to get whatever value out of it, to utilize it any way that you desired, to appreciate it for what it got you, to increase it because often money makes more money, and perhaps you also showed great stewardship with it.  You've had your day with your money, but when the bell rings and your time here on earth is at its end, you should gratefully relinquish a portion of those monies to the country that you have called home. 


Ultimately, the Death Tax should be looked upon as if hitting the reset button on the computer of life.  Politicians, CEOs, Presidents, will come and they will go to be replaced by a new generation of leaders, so shall money be like the tides of an ocean.  Further, Frederick Lundberg warned us of the dangers of concentrated wealth in his seminal book, The Rich and the Superrich as follows: "So, concentrated asset-wealth not only brings in large personal incomes, but confers on the owners and their deputies a disproportionately large voice in economic, political and cultural affairs. Thus the owners may make or frustrate public policy, at home and abroad."


Therefore the Death Tax is an important and fair tax to ensure us that this doesn't become a country of the few and the privileged but a country that embraces life, liberty, and the pursuit of happiness to all those who yearn to breathe free on our shores.