INSTRUCTOR DISCUSSION NOTES:
Death to the "Death Tax"?

1. Write a paragraph to state your position on the inheritance tax. How would you vote on this tax?

Just as democrats and republicans generally disagree on this issue, expect the same results from your students. The positions stated in the article are good samples of the two sides of the issue. It is most likely that students with less wealth will oppose the elimination of the tax because many of them see taxing the wealthy as a way for them to pay less tax. Ask your students to visit http://www.ombwatch.org/estatetax/ for an example of the opposition's view of the tax.

Wealthy people who have worked hard to accumulate assets over their lifetimes see it as unfair to tax their heirs. Small businesses and farmers generally support the repeal on the grounds that they want to pass their assets on to their children without losing a significant amount to the inheritance tax. Have your students visit http://www.fb.org/issues/backgrd/deathtax06.501.doc for a position paper from the Farm Bureau on the tax issue.

2. Proposed question: visit http://www.afscme.org/action/l060606.htm and review the democratic position on increasing the deficit if the death tax is eliminated. Make special note of lost revenues and additional costs of the repeal.

In addition to some numbers on lost revenues, the students will find the following paragraph:

While it would affect very few Americans, total elimination of the estate tax would impose enormous costs on everyone else. It would reduce federal revenue by nearly $1 trillion over the next 20 years, adding to the already enormous and growing federal deficit. This revenue loss will be made up by raising taxes on lower- and middle-income taxpayers and/or by cutting essential services. Moreover, repeal of the estate tax would have a devastating impact on charitable giving to colleges, hospitals, museums, land conservancies, and organizations that assist the poor and disadvantaged.

Remind the students that this information is not from an unbiased source and discuss the difference between positive economics and normative economics.

Multiple Choice/True False Questions

1. The "death tax" does not apply to the spouse of the deceased person.
  1. T
  2. F
ANS . a

2. The compromise bill discussed in the article will eliminate estate taxes for most Americans, but increase the tax on those still facing an inheritance tax.
  1. T
  2. F
ANS . b

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