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It's Not About Economic Equality
In the New York Times’ Room for Debate, Roberton Williams discusses the estate tax and why, despite its shortcomings, it still has an important role in federal tax policy.
The text below is an excerpt from the complete document. Read the entire commentary in PDF format.
Response to New York Times Debate:
Congress created the estate tax nearly 100 years ago in an effort to increase economic equality by preventing the rich from passing all of their wealth to subsequent generations. But the tax never achieved that goal.
Few estates pay any tax: Just under 8 percent paid in 1976 and that percentage has fallen steadily. In recent years, it has dropped from 2.3 percent in 2001 to zero this year as the levy's exemption rose from $675,000 to $3.5 million. And in spite of being the most progressive federal tax with rates ranging as high as 55 percent, the levy has never claimed even a quarter of decedents’ wealth in a given year because of the exemption as well as smart estate planning.
Given the estate tax’s failure to meet its original goals, why not let it rest in peace?
End of excerpt. The entire commentary, is available in PDF format.