Death Tax Refuses to Die
Like a cat with nine lives, the Death Tax just will not go away. I believe it's incredibly unfair that after a lifetime of building up your farm or small business, the federal government taxes you one last time when you die.
The current estate tax was enacted in 1916 to help pay for World War I. Like many taxes, it was meant to be temporary. Initially, the top rate was just 10 percent, but it never did go away.
In 2001, Congress started down the long road of eliminating the death tax. The taxable rate was reduced each year until 2010, when it was phased out completely for one year. However, instead of ending it once and for all, Congress allowed the rates to increase to 35% for 2011 and 2012.
As a part of the fiscal cliff deal, the Death Tax exemption was raised to $5 million for an individual or $10 million for a couple. The tax rate was set permanently at 40%. At the very least, this provides certainty for those who need to do estate planning.
According to a study by the Joint Economic Committee, the Death Tax is the number one reason family businesses do not survive from one generation to the next. Many small businesses or farms do not have cash to tax, but assets, like machinery or land. Many of those assets have already been taxed once in life.
I believe we should get rid of the Death Tax completely. Death should not be a taxable event.