The Estate Tax, known as the ‘death tax’ as well as the ‘anti-birth tax’, has been one of the most controversial parts of the United States tax code since its introduction in 1916 (Cagetti & De Nardi, 85). The estate tax is a tax imposed upon assets transferred at the time of the estate holder’s death. Those opposed have named it the “death tax” as they claim it hurts business activity as well as job creation. However, according to those in favor, the estate tax is an effective way to tax the richest few, and redistribute their wealth, thereby narrowing the gap of inequality. For those in favor, an abolition of the estate tax would impose a “birth tax” of sorts onto the majority of Americans who have not inherited a large sum of money (Cagetti & De Nardi, 87). The controversial estate tax in the United States is often questioned by many and has been challenged time and time again. However, more emphasis has typically been put on particular aspects of the tax code where points of dispute are found.
In order to fully understand the positions taken by those in favor of the estate tax, and those opposed, it is important to analyze the generality of the tax, as well as the details within it that have been contended over time. Some of the main aspects of the estate tax are taxability, deductions, and exemptions. These aspects are of importance in the context of the ongoing debate, as they most directly educate the tax to those transferring their estate at the time of death.
Taxable ‘estate’ assets include those passed along through a will, for example (transfer of property), or the payments or insurances disbursed to beneficiaries of the deceased (IRS, Estate Tax). The IRS considers the transferred assets that are federally taxable t...
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... decedent chose to do with their assets. Finally, the very existence of the estate tax puts a significant strain on the overall economy placing undue burdens not only on the rich or on family business, but also those who would be positively affected by the undistorted efforts of those individuals subjected to the tax (Hasset). The federal estate tax, coupled with the local state estate tax have very discouraging and negative effects on not only those taxed, by those that are not (Ebeling).
Estate taxation is a highly controversial issue in the United states tax code, and has been appropriately debated from before and since its introduction in 1916. Wether its existence be referred to as the “death tax”, or its absence as the “birth tax”, those for and those against have long argued its fundamental validity and appropriateness, its effectiveness, and its contents.
Netzer, D. (1973). The incidence of the property tax revisited. National Tax Journal, 26(4), 515-535.
Sixteenth Amendment- Authorization of an Income Tax – Progressives thought this would slow down the rising wealth of the richest Americans by using a sliding or progressive scale where the wealthier would pay more into the system. In 1907, Roosevelt supported the tax but it took two years until his Successor, Taft endorsed the constitutional amendment for the tax. The Sixteenth Amendment was finally ratified by the states in 1913. The origin of the income tax came William J Bryan in 1894 to help redistribute wealth and then from Roosevelt and his dedication to reform of corporations. I agree with an income tax to pay for all of our government systems and departments, but I believe there was a misfire with “redistributing wealth.” The redistribution is seen in welfare systems whereby individuals receive money to live. This is meant to be a temporary assistance, but sadly, most that are in the system are stuck due to lack of assistance in learning how to escape poverty. There are a lot of government funded programs, but there is no general help system to help lift people up and stay up, so there continues a cycle of
Many debates have been waged over the decades on what will be taxed, on who shall be taxed and how taxes are collected. Since the 16th Amendment was ratified in 1913, the debate has intensified, centering on how high to make the income tax rate. Most Americans were not concerned since the Amendment was sold to them as something that would only affect corporations and the rich. With ever increasing fervor these corporations created lobbyists to convince Congress to exempt them from some or all of the income tax. The big breakthrough in this was taxing the worker directly with payroll taxes during World War II. This method of collecting income tax was sold to Americans as temporary, but Congress has extended it indefinitely and the public has become used to it. The next few decades saw the debate revolve around creating tax breaks for individuals in an attempt to modify behavior or spending. This has resulted in over 67,000 pages of tax code and an entire industry devoted to tax compliance and evasion, with the unintended behavioral change of corporations and the rich parking their money outside of the United States in small island nations to avoid taxation. These offshore accounts are estimated to hold $10 trillion dollars, a number approximate to the national debt. The FairTax Act should be enacted because it eliminates all federal income taxes for individuals and corporations, eliminates all federal payroll withholding taxes, abolishes estate and capital gains taxes and repeals the 16th Amendment; thus eliminating the need for offshore accounts.
The “Fairness of Taxation or Wealth Tax” is where taxes are calculated by the net worth of the person or the couple (household). This would be hard for tax collectors to determine each and every component of net worth of a person.
The IRS usually do not need to validate ordinary business transactions since both the involved parties behave on their own self-interests. However, the IRS is skeptic of any transactions when it comes to evasion of estate taxes and international subsidiaries. When two unrelated companies enter in a transaction, they are involved in arm’s length transaction. However, such is not the case for related companies as they may try to distort the price of the transaction to avoid tax burden. As the boundary of tax evasion and tax avoidance is very thin, especially when it comes to estate tax and international subsidiaries, people often tend to topple over to the evasion side. The case of Estate of H.A. True, Jr. v Commissioner of Internal Revenue in 2005 illustrates the difficulty of obtaining the objective of tax avoidance and how expensive the failed effort of tax avoidance can be (Journal of Financial Service Professionals). Numerous cases of tax avoidance and evasion such as XILINX Inc. and H.A. True illustrate the confusion surrounding the arm’s length standards (ALS) and its application to cost sharing agreements (CSAs). In case of XILINX, the court altered its decisions few times considering the uncertainties of the arm’s length standards. Meanwhile the company believed to have satisfied the standards. Due to the complexity of the arm’s length standards, these cases were compared to other similar transactions. However, it is rare to find two identical cases which meet all the criteria. In both of these cases, the court couldn’t pin point what the actual standards of the arm’s length standards were, giving rise to opportunities of tax evasion. To put the arm’s length standards to a simplest form, the standard requires the two related parties to structure their transactions in such a manner as they would if they were two unrelated parties in similar
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
...e, Maxime, and Giuseppe C. Ruggeri. "Flat Taxes And Distributional Justice." Review Of Social Economy 56.3 (1998): 277-294. Business Source Premier. Web. 19 Jan. 2014.
Ann and Bob have created a large sum of wealth in different types of investments and property. They want to distribute their wealth to their children and grandchildren without paying large sum in gift and estate taxes. Some of the methods that Ann and Bob could consider in reducing their taxable estate are:
On May 20th of 1862, President Abraham Lincoln signed, and put into effect, the Homestead Act of 1862. The Homestead Act opened up more than half a million square miles in the Western half the the United States during the Civil War. The Homestead Act was a major turning point in American History. It was a huge milestone for American history because its consequences included implications during the Civil War, but also paved the way for westward expansion within the United States.
Many ponder the idea of federal taxes and whether the wealthy deserve to pay a higher percentage rate of their overall income. That is, they argue that because our society needs more equality and a lower national budget deficit, taxes on the rich must be raised. This specific topic has been discussed for decades, and due to the severely different perspectives, it is unclear whether the two sides will ever come to an agreement. President Barack Obama and much of the Democratic Party strongly lean towards raising taxes on the rich, while the conservatives and the Republican Party heavily lean towards a more balanced flat tax. However, after extensive research and focus on what would be best for the equality of individuals, the nation and its economy, this paper will firmly prove that the top one percent should not be taxed any more than they are today.
Minsker, N., & Ziaja, A. (2008). ACLU of Northern California's Report "The Hidden Death Tax". Retrieved from http://http://www.deathpenalty.org/article.php?id=42
The Family Law Legislation Amendment Act of 2011 and whether it has Reduced Violence and Abuse for Women and Children
Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.
Death is something that no one wants to go through or have to deal with, especially concerning the loss of loved ones. Unfortunately, it is not possible to go through life without experiencing this loss. Throughout the past several decades, the way that we view death and the funeral industry has changed significantly. Recently, it has seemed much more apparent that funeral industries are using death as a means of getting rich. But why?
I would like for you to take a few seconds and think hypothetically. You and a group of friends decide to set aside a day to have a girls night out. During this day, everyone decides to take a stroll through the park, go shopping, and out to eat that night. The weather is warm, but there is a light breeze that keeps lightly brushing your face at the right moments. As the day progressed, it was perfect. There was shopping, laughter, pampering, and socializing. However, while at dinner, you notice a car that is swerving in the parking lot, but you disregard your sixth sense. As everyone walked towards the parking garage, you saw the car once again, but it is heading in your friend’s direction at full