A new study came out by the Tax Foundation ( a Washington DC based think tank) which theorizes that getting rid of the death tax may increase economic output and employment by as much as 150,000 jobs. Did you know that some states have their own estate taxes that you may be subjected to if you own property outside of the state of Florida? How much does an estate have to be worth for the US Federal Estate tax to take effect? Wasn’t the estate tax supposed to be phased out by now anyways?
- estate tax is levied on property’s value when an owner dies and the inheritance tax is levied on the heirs’ share of the deceased’s wealth.
- The Foundation claims that EIT (Estate and Inheritance Taxes) are extremely in efficient for both revenue collection and economic growth.
- The United States has a very high exemption rate of $5 million thus although we have the fourth highest tax in the world at about 40% there has been a steady decline in income generated from this source. To put it into perspective, in 2001 the EIT generated $38 billion dollars but only $15 billion in 2014.
- Keep in mind with the decreased income has come increased administrative costs as well.
- The Foundation also argues that taxing inheritance is taxing wealth accumulation, which they claim, is the real drive of economic growth. Arguably savings pays for machines and tools that increase productivity. They make an analogy that taxing this wealth is like chopping down a fruit tree for lumber, but you can make your own decisions on that argument.
- In addition the Foundation noted how skilled lawyers and accountants have made it so that people can escape these taxes with more and more ease each year and that the administrative cost of enforcing the tax continues to grow as a result.
- The Tax Foundation closes this new report by simply arguing that although the government will lose billions, this money will be back in peoples pockets and that they can then invest it into the economy.
- They argues that the increased economic output will generate an estimated $8 billion dollars for the US economy.
- Will the US be better without a “death tax?”