In this paper, I will reiterate the arguments in favor of the Estate Tax and why it should not be repealed, but rather re-instated. The Estate Tax was enacted in 1916 with the 16th Amendment to the Constitution. Among early supporters of the tax were William Howard Taft, Teddy Roosevelt and Andrew Carnegie -- all men of wealth themselves. In order to be taxed, an estate must be valued in excess of $675,000 for an individual and $1.35 million for couples. Businesses with planning may pass on $5 million in tax free dollars while family farms may pass $8 million. With these figures, it is easy to see that only the wealthiest 2% of Americans actually pay the Estate Tax.
ARGUMENT 1 The Estate Tax will cause rural America to have to sell the family farm in order to pay it.
This cannot be supported through actual documented evidence. In 1998 in rural Iowa, an Iowa State University estate tax expert studied farm real estate involved in taxable estates (a total of 642). The tax on those farm estates amounted to one-half of the gross estate value or 1.35% of actual estate tax payers. The Census Bureau is able to report that only one in 20 family farms will ever reach a wealth structure high enough to pay the estate tax. In most of those cases, with estate planning, most of that 5% could actually pass on their farms to children WITHOUT paying the tax.
ARGUMENT 2 The Estate Tax will Repeal will not affect any but the rich.
The Estate Tax Repeal has immediate and long-ranging effects on non-profit organizations and charities. This tax plays an unobtrusive role in breaking up concentrations of wealth by generating funds for charities that they would otherwise not have access too. In essence, it encourages philanthropy and giving to charity. With the tax protections given to the contributions made to charitable organizations Estate and gift taxes are expected to rise with the re-instatement of the tax. A study by the Trea...