One of the most unjust features of our nation’s complicated tax code is the death tax. During a person’s life, his income and other financial holdings are taxed – sometimes more than once! But the death tax levies a tax on the same money yet again when he tries to pass it on to family or other heirs. That is not only unfair, but it also endangers the small businesses that some people try to pass along to their families, and that can kill jobs.
Fortunately, the federal death tax dropped over the past few years until it disappeared altogether this year.
But among current proposals before Congress is a plan to slap a new 35 percent death tax on estates that are above a certain value.
Not only is that wrong, but the way the proposal is being described is deeply dishonest. It is bizarrely being called a “tax cut.” How can that be? How can going from “no” death tax this year to a 35 percent death tax next year possibly be a “cut”?
Well, here is how the people who call it a “tax cut” justify that label: They say that since a 35 percent death tax is lower than the 45 percent rate that many Democrats would prefer (or the 55 percent that will be imposed if Congress does nothing), that counts as a “tax cut.”