For those of you that do not know what the estate tax is: “The estate tax is one part of the Unified Gift and Estate Tax system in the United States. The other part of the system, the gift tax, imposes a tax on transfers of property during a person’s life; the gift tax prevents avoidance of the estate tax should a person want to give away his/her estate” Much more information can be found on it here: http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States .
Essentially it works much like the gift tax does except it works on the transfer of property that occurs when a person dies. The tax is not often applied to when the property is left for a spouse or child, but in any other circumstance.
I personally feel this tax, along with the gift tax in general, are simply absurd. A person should be free to give whatever to whomever he pleases, without giving to the government as well. Now I do understand that if not for this tax, people could easily take advantage of this free flow of property and money in order to avoid certain taxes, and that should be illegal. However, if a grandfather just wants to give 10000$ to a grandchild, they should be allowed to without incurring a tax. After all, that money got taxed when it was earned.. And it will still get taxed when it’s spent. There is no need to tax it when it goes from family member to family member.
When looking at the estate tax, it’s even more outlandish. At least in the scenario of the gift tax, the donor has the option to hold onto the money… aka, not give it to someone. But in the scenario of the estate tax…. The person dies!! They have to do something with the property that they once owned. Taxing a deceased person passing on his legacy seems about as nuts as taxing a person on buying food. At this point, it is taxation on a necessity.
A common argument used against the estate tax is that it is a form of double taxation on the same property. It is taxing property that has been earned or purchased with taxes already having been paid on them. By taxing them again, it’s like claiming that the inheritor is purchasing these items from the deceased for free.. Which again, I fine to be silly. It should be well within our rights to pass on our legacy free of charge.
Again, there is always a way to take advantage of any rule, especially in taxation, but these are the things to look out for. Don’t just have all out silly taxes because a small portion of the population was trying to beat the system.
Much love
-Steffan
