Summary of the Estate Tax
The estate tax is a tax placed on the assets of a deceased person as the estate is passed to the heirs. This should not be construed as a tax on the heirs but a tax on the total holdings of the estate, both tangible and intangible. The gift tax and generation- skipping taxes are taxes developed by the government to reduce the loopholes that the estate tax created to ensure the taxation of all eligible estates. Since its inception, constituent opinion has been that the estate tax is essentially double taxation. People pay tax on their income throughout their lives, then upon their death the remaining assets are again taxed as their estate is passed to their heirs. In recent months Congress passed legislation that will repeal the federal estate, gift, and generation-skipping tax by the year 2010. The repeal of the estate tax mainly affects only the country's wealthiest families, since these are the only families that pay the tax. For example, a little less than 2 percent of the people who died in 1997 faced an estate tax. Therefore, 98 out of every 100 estates of the people who died faced no estate tax. Before the repeal in 1999 eac
There are several reasons for this unbalanced tax rate. This can force the heir to liquidate the business or farm to pay the taxes. This again may stunt the growth of the economy, by reducing the amount of capital produced. In 2000 this exemption rose to $675,000 per member, or $1. Both of these changes would feed more capital into the economy thus creating more taxable revenues. For every $1,000 given to a charity a $5!50 deduction is credited to the estate. In times of hardship the value of estates drop with the rest of the economy, this results in a loss of the estate tax base which results in a loss of revenue. The 23 billion dollars in revenue that the estate tax was accredited in 1998 was actually only 1. First, it adds another tax layer to a society that already pays multiple taxes. Many people believe that the estate tax also leads to the break up of small businesses and farms. This level of revenue has remained relatively stable in the past five decades. As stated earlier, less than 2 percent of the people who died in 1998 had estates large enough to pay an estate tax. A recent study done by the Treasury Department stated that people with middle incomes paid almost no estate tax. Many tax analysts also believe that the estate tax hurts the economic growth of the economy. They are taxed on items that appreciate through capital gains tax.
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