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NOTHING CERTAIN BUT DEATH AND TAXES
by
Rod D. Martin, 15 July 2004
"Now my advice for those who die
Declare the pennies on your eyes
'Cause I'm the taxman, yeah, I'm the taxman
And you're working for no one but me."
--"Taxman," by the Beatles
Everybody remembers the old saying: there are but two things certain in
life -- death and taxes.
Each does obvious injury. When any government combines the two (or so
implied the Beatles), it adds insult to this injury.
Make no mistake about it. America's
death tax is insulting as well as
injurious.
It's a national disgrace. When a loved one dies, Uncle Sam should not even
be in the line of vultures -- let alone the chief vulture -- poised to
devour the estate.
But it is.
And that must change.
In my continuing series
<http://www.thevanguard.org/thevanguard/columns/040109.shtml>
on the need for a flat tax system for America, I've identified five essential
reforms
<http://www.thevanguard.org/thevanguard/columns/040213.shtml>
to help us break away from our current system of tax oppression and wealth
confiscation.
Freeing ourselves from the clutches of the death tax monster is clearly one
of the most important of these changes.
The death tax is a form of double -- and often even triple -- taxation.
First, you're taxed on the income you earn. Next, you're taxed on the
savings you accumulate from what's left. Then, after you die, your money
may be taxed yet a third time before your kids have a chance to mourn.
Do the math and see: when you add all these taxes together, the money you
make could easily be taxed at rates approaching 75%.
Seventy-five percent.
If that's not wrong, then nothing is.
But it gets worse.
Once the death tax is triggered, your heirs don't merely pay the taxman out
of your liquid assets. They also pay him up to 55% of all your other
assets, including land, buildings, equipment, and more. If the valuation on
these assets is high enough the taxes are frequently unaffordable. That
forces your heirs to sell off the assets to make the payments.
Translation: Goodbye, family business.
More than 87% of America's
family businesses don't survive the third
generation, and 70% do not even survive the second generation.
Since 91% of businesses in America are family owned, that's a slew of failed
businesses. But why?
According to a December 1998 U.S. Congress Joint Economic Committee Report, "The
Economics of the Estate Tax," the death tax is indeed a leading culprit in
family farm and business failure. In one survey, nearly one-third of black
business owners say their heirs will have to sell the business to pay
the death tax while over 80% say they lack the assets to pay.
The death tax is supposedly aimed at the richest Americans (as if stealing
from the rich somehow makes stealing okay). But in fact, it isn’t. Most
death tax victims are the little guy, typically small businesses, just
trying to get ahead. In 1995, for example, 89% of all taxable estates filed
were $2.5 million or less, and 54% of all death taxes paid came from net
taxable estates of $5 million or less.
That¹s the very Mom-and-Pop corner grocery that wealthy trial lawyer John
Edwards pretends to care about when he talks about two Americas. He fails
to mention that he’s the one keeping the poorer America down.
To add insult to injury, the death tax is costly to administer, and a
miserable failure at raising revenue. Fully 65 cents out of every death-tax
dollar goes to collection and compliance costs. And in 1998, it produced
barely over 1% of federal revenue.
And for all this cost, this sacrifice, what do we get? According to The
Center for the Study of Taxation, had the death tax been repealed in 1971,
by 1991 there would have been 262,000 more jobs, $46.3 billion more in GDP, and
$398.6 billion in added capital. Nearly 60% of business owners say that without
the death tax, they would be able to add more jobs. And according to a Gallup
poll, 68% of businesses report that the prospect of death taxes makes them less
likely to invest in new projects.
As a result, the death tax actually reduces total government revenue. As
the Heritage Foundation found, the higher economic growth triggered by
repealing the death tax would produce significantly increased revenues,
easily exceeding those lost by its abolition.
In other words, if you're worried about budget deficits -- or even just jobs
-- help us abolish the death tax.
You won¹t be alone. Over 89% of Americans agree that it's unfair to tax
incomes and then tax the same money after we die. And 96% of manufacturing
firms feel the death tax threatens their long-term growth.
Thankfully, President Bush and the Republican Congressional leadership
agree. Having enacted a gradual but temporary repeal, they now need support to
end this wretched tax once and for all. My Vanguard PAC has taken the lead as
an organizational member of the Congressional Abolish the Death Tax Caucus for
this very reason.
It’s time we help every American provide a better future for their children,
instead of sacrificing their children to the governmental beast.
Copyright: Rod D. Martin, 15 July 2004.
** DID YOU ENJOY THIS COLUMN? READ MORE IN ROD MARTIN'S SERIES ON TAX
REFORM AND THE FLAT TAX AT
http://www.VanguardPAC.org **
-- Rod D. Martin is Founder and Chairman of Vanguard PAC
<http://www.VanguardPAC.org>.
A former policy director to
Arkansas Gov. Mike Huckabee and Special Counsel to PayPal.com
Founder Peter Thiel, he is a member of the Board of Governors
of the Council for National Policy, a Vice President of
the National Federation of Republican Assemblies (NFRA), and
author of the forthcoming "Visions of America".
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