|Death to the "Death Tax"?|
|Topic||Taxes, Spending, and Deficits|
|Key Words||Taxes, Estate Tax, and Death Tax|
|News Story||When a person dies, all of the property and assets they leave behind are called an estate. The estate must be evaluated and (possibly) taxed before the property and assets are transferred to the deceased's heirs. Current tax codes allow an exemption for estates valued at less than $600,000 and for transfers between spouses. For estates over 600,000, assets are taxed at a rate of 46 percent. President Bush and other Republican leaders wish to completely repeal the tax. Referring to it as the "death tax," they portray it as an unfair burden on small business owners and farmers who want to transfer the fruits of their life's work on to their children.
"I've never thought that every trip to the undertaker should be accompanied by a trip by the I.R.S. to your family," said Republican Whip Representative Roy Blunt of Missouri. "Do I have to sell the corner grocery store or the service station, just to pay the inheritance tax?"
Democrats respond that less than 1 percent of estates are subject to any tax and that a further rollback would benefit only the very richest of families while increasing the federal deficit because of lost tax revenues. "This Congress has bent over backward to take care of the wealthy, the strong," said Democratic Representative Stephen Neal of Massachusetts. "Who do we neglect? The people who do the menial work".
Senate Republicans concede they cannot line up enough votes to pass a full repeal of the estate tax, but are hoping to pass a compromise measure before July 4th. The compromise bill would eliminate the estate tax for any estate worth less than $5 million - $10 million for estates owned by couples. Although the compromise bill falls short of repeal, it will eliminate the death tax for abut 99.7 percent of all families and reduce the tax rates on those families who still have to pay the tax.
|Source||Edmund Andrews, "House Votes to Sharply Curtail Estate Tax", The New York Times Online, June 23, 2006.|
|Instructor Discussion Notes|| Discussion
These notes are restricted to qualified instructors only. Register for free!
Return to the Taxes, Spending, and Deficits Index
©1998-2006 South-Western. All Rights Reserved webmaster | DISCLAIMER