June 14, 2006- The Death Tax is Still Alive

Extreme disappointment...describes my reaction to the Senate vote a few days ago that once again keeps the inheritance tax, or as many people like to call it, the death tax...alive.

Sixty votes were needed to make the repeal permanent; Republicans could muster 57 votes and the immediate reaction was that put an end to any further votes on the issue this year. Senate leader Bill Frist said, however, "This won't be the last time this year the Senate votes on this important issue", so perhaps there is still hope. Since it was pretty much a party line vote, ( four Democrats voted "for" and two Republicans voted "against") it means Senator Frist will have to convince at least three Senators to join him to end the tax that is due to revert to 55% in 2011.

I have listed my objections to the death tax several times, but let me repeat my biggest objection. Families who own farms, ranches and other businesses work hard and pay taxes on their property and business every year of their life. Why should their estate be taxed when they die? Many of them want the business to continue in the family after their death, but with an inheritance tax reaching nearly 50%, heirs are faced with a tax bill that forces them to sell much of the business to pay the Federal Government. That just isn't fair!

In an editorial entitled "Taxes Everlasting", the Wall Street Journal made some interesting points..."The super-rich or their kin are some of the loudest voices opposing repeal. Yet, they are able to shelter their own vast wealth by creating foundations or via other crafty estate planning." The editorial went on to say "The real people who pay the tax are the thrifty middle-class and entrepreneurs who have built up a modest nest egg or business and are hit by a 46% tax rate when they die. Americans want family businesses, ranches, farms and other assets to be passed from one generation to the next. Yet, the U.S. has one of the highest death tax rates in the world".

Another argument used by opponents is that it affects just a few of the wealthiest Americans. However, the Tax Policy Center says 12,600 estates will be subject to estate taxes in 2006, which means one in every 200 people who die this year will owe estate taxes. The House has passed permanent repeal legislation several times, but it always dies in the Senate. We need to remind our Senators, particularly those up for re-election in November, it is time once and for all, to kill the death tax permanently.

My Thoughts on Samuelson Sez.