KILL DEATH TAXES

They’re Unfair and Don’t Really Work

“The estate tax punishes years of hard work and robs families of part of their heritage by imposing a huge penalty on inheritance after death - a tax on money that has already been taxed.”

Mike Fitzpatrick, US Representative

Nothing could be truer than the above quote and yet, Progressives still seem to find ways to tax us to death.  They lead with the old trope— “so the rich will pay their fair share.”  There are two problems with that.  The richest 1% of the population pays 42% of all income taxes in the country.  That’s higher than in most other countries.  What exactly is a fair share?  And who decides?

Stephen Moore wrote a piece on the immorality of death taxes in the Washington Examiner.  He makes several points which are worth sharing with those who vote for politicians who feel they are only hurting “the rich.”  And this is only considering the laws on the books; you can be sure they are considering more ways to gut your savings and inheritance.

Point 1 – Wealth taxes don’t work the way Progressives claim they do.  The rich have all kinds of clever ways to hide their assets.  After all, as Moore  says in his article, “The rich don’t generally get rich by being stupid.”  Who actually has to pay the death taxes?  Those who have small businesses and family farms.  These are the people who can’t afford the fancy lawyers and accountants to protect them.  Moore notes that, after all, ALL businesses began as small businesses.

Point 2 – The estate tax was initially proposed by Karl Marx to have the government play Robin Hood and redistribute wealth.  But who is entitled to the labor of your hands?  Moore notes that in the past 50 years, the money seized by the government via the death tax has never exceeded 3% of total federal revenues.  If it was working so well, it would have been able to get “the rich people’s money.” 

Point 3 – The estate tax is a greed and envy tax.  People who don’t have much want those who worked hard to acquire more to give it up and thus, become poorer.  This is ever popular at election time. The more people who are on “the dole,” the more who vote to steal money from the rest of us.

Point 4 – While you can protect your home upon your death with a trust, you cannot protect your business or your family farm.  In a large percentage of cases, surviving family have to sell the business or farm to pay the taxes.  Does that really benefit anyone?  Certainly not the employees at the farm or at the small business.  Forcing people to sell their treasured business is not who we are as Americans.  (I know the Dems love to trot this idea out to justify their bizarre policies, like open borders, but in fact, having control over your wealth and who gets it IS the way we were founded).

Point 5 - Progressives love to follow the European model (except on things like limits on abortion).  But our taxes on estates and gifts are nearly 3x as high as in most other nations.  Sweden, the icon of Bernie Sanders and his ilk, got rid of the estate tax years ago.

Point 6 - We used to celebrate those who created businesses that not only fed us and delivered products and services; these businesses also hired us, enabling us to earn a good living.  What are we doing trying to take down businesses that all of us rely on?  Remember that Apple and HP started in garages.  Would we have seen them deliver so much value had they been gouged early on?

California likes to be a leader in emptying people’s pockets on their death.  Frustrated with Prop 13, the legendary tax initiative that limited increases in property tax, they passed Prop 19, which sought to steal value from heirs.  While there were a few good items benefiting taxpayers, the government saw a chance to wrest more money from certain heirs.  Here’s what it says:

“Prior to the passage of California Prop 19, parents could transfer property to their children, and the transferred property would retain its tax basis despite the change in ownership. But now with Prop 19, inherited property used as a primary residence will be reassessed for its ad valorem tax basis.

A slight upside in the matter is that up to $1 million can be excluded from the property’s assessed value, but this isn’t much use to a resident inheriting a home with a property value less than seven figures. Moreover, residents inheriting homes with market values more than $1 million are likely to see a bigger tax bill.  Additionally, the $1 million exclusion is only for an inherited primary residence.  Rental properties, vacation homes, or investment properties are subject to this exclusion. They will be reassessed at their market value up ownership transfer, resulting in bigger tax bills.”

When they pushed the proposition, they led with the benefits, but tried to hide the costs.  Mostly they succeed.  Reach every item in the bill, not just the skewed summaries provided.  And vote.  Even if you like something in a bill, look at each item and weigh them for their impact.  It’s hard to start a business in America (and particularly California).  Let’s not cripple the ones we have, nor discourage the ones that might fail to start with an unfortunate vote.