Taxed To Death: The Death Tax

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TAXED TO DEATH: NOW LEFT DYING FOR YOUR INHERITANCE

House Republicans launch effort to fully repeal estate tax

By Greg Corombos

Calling it an “immoral” burden on families, farms and small businesses, Texas Rep. Kevin Brady is leading the latest House Republican effort to fully repeal the estate tax, which critics deride as the death tax.

The estate tax levies penalties of 40 percent on the inheritance of certain estates. The 2001 tax cuts phased it out over 10 years, and there was no estate tax in 2010. Over the past three years, Congress engaged in fierce debate over the tax rate and how large an estate must be to meet the threshold for taxation. As part of the “fiscal cliff” deal in January 2013, the estate tax was permanently applied to individual estates valued at $5.25 million and assets of couples of more than $10 million.

Those rates lead Brady’s critics to allege this latest legislation only benefits the very wealthy, but Brady said the facts tell us otherwise.

“There’s something wrong and immoral about the government swooping in upon your death to take more than a third of the nest egg you’ve worked a lifetime to build. I think this is the wrong tax at the wrong time, and it really lands hard on families and farmers and small businesses,” said Brady, who elaborated on why farms and small businesses often end up in the estate tax cross-hairs.

“They may have land passed down from their family. They may have a building. Equipment can add up very quickly. Technology is very expensive. So you think this is for the wealthy, but for the most part, these are families building up wealth, sometimes for the very first time. In fact, more and more women and minority-owned businesses are getting caught up in the death tax,” Brady said.

Democrats regularly raise two other arguments. First, they allege Republicans are trying to eliminate another source of revenue at a time America can least afford it. Brady not only contends that’s false but insists the opposite is true.

“It really hinders entrepreneurial activity,” he said. “It breaks up family farms and businesses. It’s the No. 1 reason businesses aren’t passed down to the next generation. By eliminating this, it encourages people to put money and investment toward that business. They don’t have to spend money on expensive life insurance and other estate planning, and they can invest that back in their business.

“Because it grows the economy and encourages more investment in these local businesses and family owned farms, it actually grows the economy without the death tax in place.”

Republicans routinely refer to the estate tax as a form of double taxation because the government taxed it once as income and wants another bite at the pie after a person dies. Democrats see it differently. They argue that the decedent paid taxes once when the money was earned but the heirs are taxed the second time around.

Brady not only disagrees with the Democrats, but he believes the GOP characterization of the tax is too kind.

“Look at family farms that have had to sell off their property to have to pay this death tax,” he said. “In part of my community, families are taking out their third death tax loan because their grandfather and their father had loans outstanding. Now they’re taking out another one just to keep the family farm and paid taxes on their whole life.”

“I don’t think they’re merely double-taxed. In some cases it’s tripled and four times just to keep the business and the family farm that they worked and created. I don’t think the government has a claim over this nest egg at all. I think the sooner we end that the better.”

On the other hand, Brady said Democrats not only want to block his bill. He said they are actively trying to change the estate tax laws in the opposite to direction to force more people into even higher rates.

“Democrats and the president are going exactly the wrong way,” he said. “Within weeks of that permanent exemption of the death tax and that permanent rate, the president was calling for fewer people to be exempted. More people would be caught by it and paying higher taxes, which would make us, effectively, the highest death tax in the world. That’s why we believe we need to push for ultimate repeal. If we don’t, my worry over time is that they’re going to continue to wage this war on our family owned businesses and farms, and we simply can’t afford to lose it.”

My comments; Like Scripture says of the grave, the Democrats are never satisfied--they can never tax enough--they want to control everything--they know best. The basic question is: Is America better off in mostly Private Hands or in the hands of Government? The Founders thought it was best off in Private Hands. And they were correct.