The estate tax is relatively easy to avoid, and causes a lot of efforts to avoid it rather than a lot of revenue. It also double taxes income which was already taxed when the deceased originally earned it.
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xecutive Summary This analysis examines the arguments for and against the federal estate tax and concludes that the estate tax generates costs to taxpayers, the economy and the environment that far exceed any potential benefits that it might arguably produce. This paper documents the extensive costs associated with the federal estate tax. Specifically, the report finds:
- The existence of the estate tax this century has reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent.
- The distortionary incentives in the estate tax result in the inefficient allocation of resources, discouraging saving and investment and lowering the after-tax return on investments.
- The estate tax is extremely punitive, with marginal tax rates ranging from 37 percent to nearly 80 percent in some instances.
- The estate tax is a leading cause of dissolution for thousands of family-run businesses. Estate tax planning further diverts resources available for investment and employment.
- The estate tax obstructs environmental conservation. The need to pay large estate tax bills often forces families to develop environmentally sensitive land.
- The estate tax violates the basic principles of a good tax system: it is complicated, unfair and inefficient.
In addition, a review of the arguments in favor of the estate tax suggests that the tax produces no benefits that would justify the large social and economic costs. - The estate tax is a "virtue tax" in the sense that it penalizes work, saving and thrift in favor of large-scale consumption.
- Empirical and theoretical research indicates that the estate tax is ineffective at reducing inequality, and may actually increase inequality of consumption.
- The enormous compliance costs associated with the estate tax are of the same general magnitude as the tax's revenue yield, or about $23 billion in 1998.
- The deduction for charitable bequests stimulates little or no additional giving.
- The estate tax raises very little, if any, net revenue for the federal government. The distortionary effects of the estate tax result in losses under the income tax that are roughly the same size as estate tax revenue.
house.gov
Capital gains on stock (not all other forms of capital gains taxes, but other than stock the big thing is housing, much of which isn't taxed any way) is double taxation as well (the company, the owner's property, paid, so effectively the owner paid, you could get rid of the corporate income tax instead, in which case I would not support repeal of capital gains taxes).
Zero percent capital gains taxes would also give us a competitive advantage to the US in attracting investment capital.
But my understanding is that the very rich don't get this tax break under Romney's plan. |
