The estate tax was established in 1916, the result of a populist movement which was touted by such people as Theodore Roosevelt as a way to preserve the nation from the idea of an inherited aristocracy.

The estate tax affects less than 2% of all estates in America, yet generates some $30 billion in revenue each year.

Under the 2001 cut, the amount of wealth exempted from the tax rises from $1 million ($2 million per couple) to $3.5 million in 2009 ($7 million for a couple). As a result, the number of estates subject to the estate tax will shrink from 50,000 to about 6,000 per year. Those who are subject to the tax rarely pay the highest percentage, and are given a 14 year repayment plan.

Investor Warren Buffett argued in the New York Times that repealing the estate tax would be comparable to "choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics…Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit."

Over 1,200 wealthy individuals, including William Gates, Sr., Ted Turner, and George Soros have signed a petition to keep the estate tax.

I have some more data, but I'll save it for later...


What do you all think? Does the estate tax make sense? Or should it be permanently repealed?

Well there is good reason Gates etc. voted for it. They know what most of us know. The Estate tax is easily circumvented.

So keep it or dont it doesnt really matter anymore. There are many ways to pass on my inheritance to my children without paying estate taxes. Everyone of them legal.

I do agree with raising the limit a million bucks aint what it used to be. They should at least keep current with inflation.

GBYA

Aahz

I do not like inheritance taxes in principle. I can not see why transfering large amounts of money from one individual to another should have its own tax category. So far your data has not changed my mind.

I like the estate tax. One of the flaws of democratic capitalism is that it does allow for the accumulation of large amounts of the nation's wealth into the hands of a very few. Societies fall apart when there is too wide a discrepancy in wealth. In the past twenty years the percentage of money owned by the very wealthy has risen. So why is there a need to provide relief.

Also, when my boss transfers wealth to me I have to pay taxes and I have to work for the money. Income should be considered income. I don't see why it is considered good tax policy to tax income based on work, but it is somehow immoral when income is taxed that is the result of a large inheritance and no work.

Tax it.

The estate tax is double taxation. It also interferes with wealth accumulation. Inequality of wealth is neccesary in a capitalistic society, it provides capital for business investments. Inheritance taxes unfairly penalize those who save. Let me give an example; three men with a net worth of $200,000 each are given 4 years to live, the 1st one uses the money to educate his son at a university so his son will be better off.The 2nd man saves his money and wills it to his son so his son will be better off. The third man spends his money on women and whiskey. Why should the second man be penalized?

How many times does a dollar circulating around the economy in a year get taxed. When my boss pays me a dollar it get taxed. When I take that dollar and pay my plumber it gets taxed. Etc.

The inequality of wealth is not necessary in a capitalist society it is a result of it.

Why can't we tax the income of the student who benefited from the university education?

The second man is welcome to pay his son a big inheritance, and his son won't have to toil and sweat for the money, but he should pay taxes on that income just as if he won the lottery.

I hope I am reading this wrong.. But are you saying we should tax the student more than normal once he gets a job because his wealthy father paid for his education?


Sleeper

You are reading my intent wrong. Hopefully you are reading the words wrong to. I was trying to point out that we do in fact tax the income that results from the paid-for education in the case of spending money on an education instead passing it along later as an inheritance.

The second man's son will be taxed when he either spends the money or earns extra income from investing it. The estate tax penalizes he who is thrifty while leaving the womanizer and the drunk alone. Inequality of wealth is neccesary to have a healthy economic environment. Without rewards for risk taking, education, work, etc these neccesary parts of all economic systems remain feeble. A man who chooses to "spend" his life savings on his children should not be punished vs. the individual who spends it on whiskey and women.

First, hugo, the second man in your example would not have the inheritance taxed. It's not a large enough amount. Also, at the amounts where the estate tax comes into the picture, this hypothetical person could easily do all three!

Second, why does the child of a wealthy person deserve the wealthy person's money tax free? How is that his or her right? The child did nothing to earn the money. To the child, this money could certainly be viewed as "income."

In 1998, only 776 estates where family-owned business assets represented over 50% of the value of the estate were "taxable" under estate tax rules, out of 47,482 total taxable estates, and 2.3 million individual deaths. So the great majority of estates taxed under the estate tax are not estates built on family-owned businesses and farms, but other forms of wealth - stocks, nonproductive assets, extra homes, art collections, yachts, etc.

As far as double taxation, there is also the issue that these vast fortunes are often in large part made up of the appreciated value of stock portfolios - money that has not been taxed.

And hugo, it's not really fair to equate thriftiness with this. Since this tax affects 2% of Americans (with half of the estate tax paid by the top 0.0001%), are you saying that 98% of us are not thrifty? That we do not work hard? Let me ask you this: why prioritize a tax which affects so few, at the expense of everyone else? And it is at our expense - where is that $30 billion going to be made up?