Sensible Tax Reform--Simple, Just and Effective

Estate Taxes

(1) Sensible Tax Reform
(2) The Impact of Sensible Tax Reform upon American Families
(3) The Impact of Sensible Tax Reform upon American Businesses
(4) The Impact of Sensible Tax Reform upon Social Security and Medicare
(5) The Impact of Sensible Tax Reform upon Very High Incomes
(6) The Impact of Sensible Tax Reform upon Estate Taxes
(7) A Federal Consumption Tax
(8) Table of Contents

(6) The Impact of Sensible Tax Reform upon Estate Taxes

Estate taxes are the most progressive taxes imposed by the federal government (that is, they fall much more heavily upon the wealthy than upon the poor). Most American have the impression that the estate tax is oppressive. However in truth, that is not the case, as a result of a very aggressive and well-financed disinformation campaign. Only about 3/4 of 1% of estates pay any estate taxes at all. Those estates that do pay textes only pay on average about 17-18%.

However the estate tax has been jerry-rigged in such a convoluted fashion that it is too progressive. The rules are so incomprehensible and conflicting that planning for estates is incredibly complicated and expensive. Also, they tend to favor very large estates over smaller taxable estates. That is clearly unjust. A just tax system simply and clearly treats all taxpayers the same. The system should automatically provide all taxpayers the most reasonable protection of the tax law. That justice and reasonableness does not exist under our present estate-tax system. It will exist under Sensible Tax Reform

STR removes the entire tax burden from the estate. The inheritors, not the estate, will pay the tax--an inheritance tax, not an estate tax.

  • The estate will be allowed unlimited charitable deductions.
  • The remaining inheritance will be distributed as defined in the will and added to each inheritor’s total income under STR, all income will be treated exactly the same. Each inheritor will benefit further from the $500,000 million annual income-tax exclusion.
  • The remaining net taxable income of each individual inheritor will be taxed at the appropriate marginal income-tax rate (15%, 25% or 35%) if it exceeds the deduction.
The net impact will be a very significant reduction in the taxation of most bequests compared to today’s estate-tax system--inheritors will receive more income. The system will also be much simpler and much more just.