The estate tax is a national tax that is imposed on a deceased person’s money and possessions of value being transferred after death. It is also commonly known as the “death tax.” Not only does the national government impose this estate tax, but many states do as well. The rates at which this estate tax are imposed at are relatively high, ranging from the lowest rate of 18% for gifts under $10,000, to 35% for gifts of $500,000 and over, on top of an already steep base fee for each gift. Additionally, these rates are scheduled to rise from the peak of 35% to 55% next year in some states.
I think it is rather unsettling that death is such a highly taxable event. This high estate tax almost punishes people who have worked hard for the money that they have saved and it is unfair that they are penalized for this with a large tax before passing this money down. This may make some people less devoted to making more money, which would be bad for the economy. If less money can be passed down, there is less potential for economic growth because they money is not being returned into consumer’s hands, but instead the government’s hands. Therefore, imposing a high estate tax is bad for the economy.
Additionally, if some states pass this increase in estate tax, it will make their state less desirable to live in, especially for elderly people. If this is the case and people move to another state with no additionally estate state tax (such as California), then the states will lose other taxable income. An interesting fact that I found was in this article, which highlights the fact that in the big picture, the estate tax is small and it only generates about 2% of government revenue, which would only be able to run the government for a few days at most. The image below is a map showing “where not to die” due to high estate taxes:
I personally will not want the government seizing half of my assets that I intended to pass down, assets that I worked hard to earn. I believe that my hypothetical children and grandchildren have more of a right to the money I earn than the government does.