It’s time to kill the death tax

Matthew White

Of all the ways hardworking Americans are taxed — and there’s quite a few of them — the tax levied against them directly after they die is the most offensive.

This tax is officially known as the estate tax, but it is commonly (and unaffectionately) referred to as the “death tax” because it’s paid by a person’s descendants directly after he or she dies. It’s a tax against everything a person spends his or her life saving and earning.

According to the Internal Revenue Service, the estate tax is 45 percent at the federal level. Adding an insult to that injury, most Americans are forced to pay a second time. Ohio — like most other states — has its own estate tax.

If a person dies and leaves an estate worth between $200,000 and $300,000 to his or her children — not uncommon if he or she is a homeowner with a retirement account — they will see barely half of their inheritance.

Of an estate worth $250,000 in 2001, the federal government will take a hefty $112,000 right off the bat. The state government will take an additional $9,100. That means, in total, the person can expect to pay $121,000 of the $250,000 in taxes. Yikes.

This tax intrudes upon the healthy and important function of family inheritance, and is a major barrier to the American dream. Most parents would like for their children to have a better life than they had, but that’s something increasingly difficult to accomplish when they’re able to pass so little along after they die.

For many small business owners, including family farmers, the death tax hits very hard because the family business is part of their estate.

U.S. Rep. Neil Abercrombie, a Democrat and self-described liberal, wrote the following in The Honolulu Advertiser in 2000:

“Too often the result is that when the owner of a family business dies, the heirs have to sell the firm or liquidate the assets to pay the inheritance tax. Usually it’s not just the family who suffers: Employees face pay cuts, shorter hours or even the unemployment line. No wonder 70 percent of family business don’t survive into the second generation, and nearly 90 percent don’t make it to the third.”

It’s also important to keep in mind that this is not just a tax levied against the wealthy elite — although taxing them shouldn’t be any different from a moral perspective — it’s a tax levied against average Americans who are seeking to make a better life for their family. These are the Americans who can least afford to be taxed.

With everything else wrong with the death tax, there’s at least one more thing — it taxes a person twice for things.

As Abercrombie wrote, “Even people who won’t be affected by the inheritance tax think it’s unfair. Why should assets be taxed a second time when they’ve already been taxed as income during the owner’s lifetime? And why should a family be hit with a tax bill when they’re still in grief and shock from the loss of a loved one?”

Abercrombie’s right. And all true believers in the American dream should agree — it’s time to kill the death tax.

Matthew White is a senior magazine journalism major and a

columnist for the Daily Kent Stater. Contact him at [email protected].