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Most favor repeal of federal estate tax

More than 60 percent of respondents to this week’s RBJ Daily Report Snap Poll favor repeal of the federal estate tax.

On April 16, the Republican-controlled House of Representatives approved the Death Tax Repeal Act of 2015. It was the first time in a decade the House has voted on legislation to repeal the federal estate tax. The Senate has yet to act on the legislation.

Enacted 99 years ago, the federal estate tax hit a peak rate of 77 percent from 1941 to 1976. A law passed by Congress in 2001 gradually lowered the top rate from 55 percent to 45 percent while increasing the amount exempted from $675,000 per individual to $3.5 million. The current law, passed in January 2013, has a maximum rate of 40 percent. The exemption, which is indexed for inflation, this year is $5.43 million for individuals and $10.86million for married couples.

Opponents of the estate tax contend it is unfair “double taxation,” saying the income already has been taxed. They also argue that it hurts small firms and family farms because heirs sometimes must sell the businesses to pay the tax.

Proponents argue that most of the wealth in large estates is unrealized capital gains that have never been taxed. They also maintain that few small businesses or family farms actually are impacted by the estate tax.

According to a recent report by the Congressional Joint Committee on Taxation, 4,687 taxable estate returns were filed for 2013, when 2,596,993 Americans died—or 0.18 percent of deaths that year. The average share of an estate’s value paid in taxes was 16.6 percent, the Urban-Brookings Tax Policy Center says.

Repealing the estate tax would add an estimated $269 billion to the federal deficit over the next decade. The Heritage Foundation estimates, however, that repeal of the tax would boost U.S. economic growth by more than $46 billion over that period and generate an average of 18,000 private-sector jobs annually.

Roughly 680 readers participated in this week’s poll, conducted April 27 and 28.

Do you favor or oppose repeal of the federal estate tax?
Favor:  61%
Oppose:  39%

For information on how the Snap Polls are conducted, click here.

COMMENTS:
In order to reduce the wealth disparity in our country, we need to depend less on income tax to working people and permit working people to save more of what they make. Estate taxes are necessary to make up the difference and would have far less negative impact on our economy. We need each generation (to have) an opportunity to make their own fortune rather than depending upon their inheritance.
—Ray Hutch, chairman, Synergy Global Solutions

If it matters, the true issue here is moral: double-taxing assets that have already been taxed once is nothing more than theft, in this case by the government. The proponents are nothing more than wealth redistributors seeking to take from those whose benefactors have created or maintained property and/or money, and turn that money over to the government, which is already shown to be enormously wasteful and profligate. In the scheme of things, too, the amount $269 billion over 10 years will not make a dent in the federal deficit. Maybe the Congress should just not spend so much.
—Charles Genese, Webster

I think it’s fair to carry the original basis of the investment forward to heirs who should pay capital gains taxes if and when they choose to liquidate inherited assets. However, I don’t see the logic of taxing wealth that has already been taxed when it was acquired by the deceased. Those who complain that this is grand theft by the government have a good case.
—John Calia, Fairport

The only sure things are death and taxes. Neither are particularly desirable. So why are we compounding them?
—Jim Weisbeck, Bloomfield

The federal estate tax was intended to reduce the amount of wealth passed on so as to provide more incentive for the next generation to work and pass on the values of their predecessors. The facts are it affects such a small number of taxpayers it is really irrelevant. To favor or oppose is strictly an ideological choice.
—Hal Gaffin, Fairport

Repeal a tax that impacts 0.18 percent of taxpayers, and this is going to create jobs! Are you kidding? Can’t the supposed deficit hawks in the Republican Party come up with a better plan? We’ve heard this before—in W’s administration: tax breaks for the “job creators.” Where were all those jobs created by that tax break when the economy lost 8 million jobs due to Bush’s 2008 Great Recession? Unfortunately his economic policies and this repeal of the estate tax will not provide prosperity for the other 99.82 percent of American taxpayers.
—Michael Harf

Most small businesses are subchapter S, which means that taxes have already been paid. Taxes flow through to the individuals that own the business and onto their individual returns.
—Mike Hogan, Information Packaging Corp.

Forty percent and $10.8 million for married couples is quite fair. Repeal would only benefit the extremely wealthy families who most likely have not paid taxes on all of the assets that make up their total net worth.
—George Uschold

I am a small business in N.Y. More than the federal estate tax, the New York estate tax needs to be reformed/ That’s what hurt me and my sub S corp. So unfair; at least the federal allowance was raised to a “fair” limit. New York is ridiculous.
—Rae Mastro, CEO and owner, Mastro Graphic Arts

Our society is getting ready to experience the greatest intergenerational transfer of wealth in history. In light of this fact, a few questions come to mind. 1. Do the inheritors of this wealth deserve to keep all of it? For example, did they actually “earn” this wealth, or was it the sweat of their parents or grandparents that earned it? And if they truly did not earn it, should it not be a shared resource to level the playing field and to bolster other social structures? 2. Who are the real “takers” in our society, the folks working two or three jobs to make ends meet or the legitimate folks on disability who might need some public assistance to get by, or the privileged few who will be the takers of this tremendous resource with no moral or social obligation to share it? 3. And finally, what kind of society do you see for your future, a democracy where everyone has a voice in our government regardless of their background or social status, or a plutocracy, which is a government commanded by the wealthy?
—Greg Reynolds, East Rochester

The state estate tax drives many seniors out of New York State to Florida and other states without an estate tax. While repeal of a federal estate tax is important, repeal of the state estate tax is more important to keep seniors’ wealth in New York.
—Bruce Anderson, Alpha & Omega Parable Christian Stores

If it’s double taxation, so what then is sales tax, gas tax, property tax, etc. after I paid taxes on my salaries? The exemption level and indexing and overall rate is fine. It keeps lawyers and accountants in business who know how to dodge it.
—Dave Giambattista, Fairport

This will never be repealed as dead people can’t vote and some of these people deserve to be taxed to hell.
—Ian Cunningham

We are already taxed on almost everything. And, we really have no voice on what the taxes go for! Billions to our enemies? Enough is enough!
—J.A. DePaolis, Penfield

Repeal the estate tax! Absolutely! It’s not about the size of someone’s estate. It’s about the government confiscating private property. If it’s OK to confiscate a rich man’s estate, well, pretty soon we’ll all be rich by the government’s definition. The estate tax is the law. Who is to say some president doesn’t decide, by executive action, to just lower the limits from $5.4 or $10.8 million to something lower? But really, whose property is the estate anyway? If someone saves, invests wisely or owns a successful business, why does the government get first dibs on the person’s success and efforts? I know there are those that argue we need to finance government somehow and that this only hurts the truly well off and mega rich. But look at all the hidden taxes everywhere. Look at your utility and phone bills. What do you think all those excise taxes and fees are? But this is about government that is too large and a government that thinks “we the people” work for them. It’s the other way around. They work for us—or they should! One way to control the government is to control the purse. Repeal the estate tax!
—Keith Robinson, Diamond Packaging

As a conservative who believes in smaller government, lower taxes and a stronger military, I believe in no federal estate tax. As you mentioned above, there has already been taxes paid on the estate. All the ways to get around or out of paying the taxes came from example after example of the government playing favorites. Cut the taxes and get out of the way and watch the economy take off.
—Clifford Jacobson M.D.

Since taxes have already been paid along the way of accumulating wealth, there is no defensible reason that taxes should be levied again on what you have to pass on to your heirs. Estate taxes border on government theft from industrious hardworking people.
—George Thomas, Ogden

Nothing says, “Why should I make this entrepreneurial effort?” if I get to take 100 percent of the risk in exchange for being able to leave my family only 40 percent of the effort after taxes. Nothing says, “Get me the heck out of New York—and let me take my future productivity with me” like New York’s estate taxes. How many Tom Golisanos are we going to lose before Albany figures that out?
— Jay Birnbaum

5/1/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

One comment

  1. My wife and I’s accumulated wealth are the result of hard work, thrift, saving and luck. It is our personal property – not governments. That’s the trouble with the income tax – by force of law it confiscates personal property. We do not want to leave wealth to our kids but to a trust for charitable worthy causes. We should be able to do that without government taking a cut for wasteful spending. Let’s get rid of not only the death tax but the income tax which taxes production and investing. Let’s go to a consumption tax which is called the FairTax (FairTax.org). Under the FairTax® you voluntarily pay taxes when you spend to meet your wants and needs.

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