Chapter

Death to Death Taxes

in Fair Not Flat

Published by University of Chicago Press

Published in print April 2002 | ISBN: 9780226555607
Published online March 2013 | e-ISBN: 9780226555669 | DOI: http://dx.doi.org/10.7208/chicago/9780226555669.003.0005
Death to Death Taxes

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Inheritance is a terribly inefficient way to pass wealth to others. The final piece of the tax-base puzzle concerns gifts and inheritances. Current law taxes these to the donors under a distinct federal tax—the gift and estate tax. This tax serves as a companion to the income tax, which never has included gifts or inheritances within its definition of taxable income. Conservatives call the gift and estate tax the “death tax” and adamantly support the repeal. The Fair Not Flat Tax eliminates both the inconsistent income tax and the ineffective gift and estate tax, substituting a single, consistent, progressive spending tax for both taxes. Personal spending becomes the sole tax base. Loopholes of questionable legitimacy pose problems aplenty. But as with the inconsistent income tax, even the perfectly legitimate exceptions—the annual exclusion and lifetime exemption amounts—are significant enough to bring the estate tax's very being into question.

Keywords: inheritance; legitimacy; death tax; flat tax; tax base

Chapter.  6121 words. 

Subjects: Political Economy

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