So the Rich Get Richer?
But wait, the gift to the super-rich is even bigger than it seems at first blush. The effective tax rate wouldn't be 47 percent. It would be much less. Why? Because the tax would be levied only on the amount above the exemption, combined with state tax payments and charitable bequests. In 2003, the Internal Revenue Service reported, the actual inheritance tax rate averaged just 18.8 percent.
Those who would abolish the estate tax contend that it represents a double tax. An individual is taxed, these worthies would have us believe, on assets built over the course of a lifetime and then again at death. This is, to put it charitably, specious. First of all, the tax doesn't kick in until the assets exceed $1.5 million. Second, much of the wealth transferred at death has never been taxed at all, not even once, let alone twice. The largest estates are basically made up of stocks, business assets, and long-held property. Since taxes aren't assessed until such assets are sold, no taxes have been paid on them. The repeal of the estate tax would mean that the heirs would also never pay a dime in taxes.
How, in the face of our increasingly dire fiscal problems, can Congress even think about giving away so much money to this handful of wealthiest Americans? And how dare it add to our national debt in this way when it is cutting so many other vital social programs while forcing the middle class to pay still more in taxes!
Eliminating the estate tax would widen the gap between rich and poor and deepen the divide for generations to come, passing wealth on to those who never earned it, creating a plutocratic leisure class. We would do well to remember that the current estate tax dates to a Republican president named Teddy Roosevelt. It was TR who, among his many other memorable utterances, stated that a "man of great wealth owes a particular obligation to the state because he derives special advantage from the mere existence of government." Amen.