There is no more vivid or offensive example of the “you didn’t build that” philosophy on the books than the federal death tax, which supposes that when you die a hefty portion of everything you built up over a lifetime ought to go to government. It’s a vestige of the feudal days when all property was owned by the king.
That’s probably why the death tax is the “worst tax — that is, the least fair” according to polling by the Tax Foundation. And it’s also why our founders thought the idea of seizing an estate at death so outrageous that they prohibited it as a penalty for treason in the U.S. Constitution (Article III, Section 3). And yet now, seizing more than half of it as a penalty for accomplishing the American dream is the preferred policy of Democrats in the United States Senate.
You’re born. You work hard. You pay your taxes all your life. Maybe, you build something along the way. But when you die the IRS can tax you again.
This year, they can take 35 percent of everything above $5 million. Senate Democrats announced yesterday that as of January 1, they want to raise that to 55 percent of everything above $1 million. And because the $1 million is not indexed to inflation, over time this confiscatory tax would hit almost everyone who achieves some success and wants to pass it on.
That means family farms and businesses will be forced to shut down when the founder dies just to pay the tax bill.
Former Congressional Budget Office director Douglas Holtz-Eakin estimates that the Democrats’ 55 percent death tax would destroy as many as 1.5 million small-business jobs, walloping an already weak economy. That’s the problem with taxing “the rich” — even after they die — the real pain is suffered by the people they employ, who lose their jobs.
Unfortunately, rather than seize the moral high ground by advocating full repeal of the death tax, Senate Republicans have included a compromise position in their alternative tax package: they want to keep the tax at its current 35 percent rate. The study from Holtz-Eakin found that would destroy 857,000 jobs — which can only be described as “less bad” than the economic damage Democrats are proposing.
Daily Caller: Senate Dems Outrageous Death Tax Hike
Phil Kerpen, President/American Commitment
July 22, 2012