Tax reform: Trump proposal to end estate tax renews wealth debate
Opponents decry the estate tax as a wealth-sapping "death tax," a form of double taxation that punishes hard-working Americans for their financial success. Proponents say it's an appropriate way to tax the wealthy, and a useful barrier to creating a new American aristocracy.
President
Politically, killing the estate tax is a tough sell because it's paid only by the rich: It applies exclusively to individual taxpayers who die with a nest egg of
Fewer than 1 in 500 Americans who die in a given year are wealthy enough to pay the tax, according to the nonpartisan Tax Policy Center. It estimates that just 5,460 Americans will owe the estate tax in 2017.
Few Americans pay the estate tax -- imposed at a rate of 40 percent -- because few manage to accumulate millions. Those who are wealthy enough to worry about the estate tax often hire teams of accountants and estate-planning attorneys to create trusts, buy life insurance policies and employ other strategies to minimize the bill.
"It's an optional tax," said
Rampell said his client has issued a standing order to reduce the estate tax bill to zero -- an antipathy toward the death tax that's common among wealthy taxpayers.
"They don't like it," Rampell said. "They feel like they've worked really hard, and they want to keep it in the family."
Rampell acknowledges mixed feelings about the estate tax.
"It's a hard question whether you think this is good for society," Rampell said. "As a revenue raiser, it does not raise a lot of revenue. But should there be aristocratic families that are able to hand down their wealth from generation to generation?"
"I sure don't think it's good for society, where there's a ton of inequality to start with," Buffett said during an interview with
The estate tax last came under attack when
The estate tax generates an estimated
"It's possible some people work a little less hard," said
Even before
Charities fret that the end of the estate tax would remove a powerful incentive for wealthy donors. Philanthropists often time major contributions to coincide with their deaths, a move that eases fears of outliving their money. As an additional incentive, donations aren't subject to the estate tax, essentially creating a 40 percent discount on large gifts.
"With no tax benefit," Speiss said, "you'll truly have to be reliant upon benevolence."
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