ANOTHER REASON TO MOVE TO THE FAIRTAX— ELIMINATE THE DEATH TAX
The Death Tax or Estate Tax is eliminated by the FAIRtax. As we all know, the Death Tax is levied on the assets accumulated by people during their lifetime when they pass away. It is attacked by some as a tax on success and it is pointed out that in most cases the accumulated assets were already taxed numerous times.
Many supporters of the Death Tax are believers in redistribution of wealth and the Death Tax is seen as a way to obtain more revenue from the heirs of the wealthy that in turn will be shared with others. Another argument used by these supporters is that it raises revenue for the government that allows lower taxes on the rest of us. Finally, some supporters of the Death Tax believe that it is useful to encourage acts of charity.
History of the Death Tax
In his wonderful book, For Good and Evil, The Impact of Taxes on the Course of Civilization, Charles Adams points out that estate taxes were popular from the Middle Ages. He pointed out that the modern origins of the estate tax dated from the British Stamp Act of 1694.
The U.S. Supreme Court rejected the Death Tax in 1894 but after the 16thAmendment was passed, a Death Tax was included in the Revenue Act of 1916. The Death Tax rates have been as high as 77% and today range from 18% to 40%.
The Death Tax Today
The recently passed tax bill increased the Death Tax exemption to $11,180,000 for each person. A married couple could transfer twice that or $22,360,000 if they did some basic planning and not be subject to the Death Tax.
Howard Gleckman wrote a blogfor the Tax Policy Center and looked at the effect of the increased exemption and concluded that only 1,700 estates of people who pass away in 2018 will be subject to the estate tax and the amount of Death Tax collected would be about $13.9 billion.
While $13.9 billion is certainly a lot of money, it should be compared to the $3.24 trillion of taxes that is expected to be collected by the federal government in 2018—less than .5% of the total taxes collected. So much for the argument that the Death Tax collects a lot of revenue.
Who Fights to Keep the Estate Tax?
Aside from the people who want to punish people who accumulate wealth, there are other groups who favor the tax. One group is composed of accountants, attorneys and insurance agents who make very large fees helping wealthy people minimize their estate tax. Of course, this group has been greatly affected by the shrinking of people subject to the estate tax who will pay large fees. Many of these people are now having to diversify their business to provide different services—which of course they can do and, if we eliminate the Death Tax, will have to do.
Another group that actually lobbied against the increased Death Tax exemption are associations representing charities. These groups believe that most large donations are driven not by the generosity of the donor but by the fact that they can give $1,000,000 from a taxable estate and only reduce the size of the estate by $600,000 because the other $400,000 would have been paid in estate taxes.
Here is the truth about charitable giving as set forth in an analysis prepared by Charity Navigator:
- Prior to the 40-year period 1976–2016, total giving was consistently at or above 2.0% of GDP. It fell below 2.0% throughout most of the 1970s, 1980s, and 1990s. Total giving as a percentage of GDP rose to 2.0% and above through most of the 2000s, but then dropped to 1.9% in the years 2009 to 2011. Total giving as a percentage of GDP was 2.1% for three of the four years, 2013–2016.
- Total giving to charitable organizations was $390.05 billion in 2016 (2.1% of GDP).
- Individuals gave $281.86 billion, accounting for 72% of all giving.
In addition, much of the donations from individuals are not because of tax deductibility because less than 35% of the people filing income tax returns actually itemize their deductions—which is required to deduct them. The number of people itemizing their deductions is predicted to shrink to approximately 10% of income tax filers in 2018.
Interesting, the estimated $13.9 billion that will be collected under the Death Tax in 2018 equals 40% of the value of the estates. This means that the total value of the estates would be about $35 billion. If all $35 billion was donated to charity, the total of these gifts would represent less than 10% of the amount individuals donated to charities.
In an article published by Robert Sharpe at Wealth Management.com, Mr. Sharpe points out some other points that discount even further the impact of the Death Tax on charitable donations. They are:
- Surveys of high-net-worth (HNW) individuals suggest that as many as 95 percent of them will keep their charitable commitments the same or actually increase them if their estates aren’t subject to tax.
- Charitable bequests from nontaxable estates are the source of 99 percent of bequests.
CONCLUSION
The FAIRtax eliminates the Death Tax because, as the analysis above shows, there is little financial benefit to the U.S. Treasury and very little benefit to charitable organizations. Most of us will not be affected by the Death Tax, but this doesn’t mean that it is a good idea.
If we all agree that we want to single out people who have accumulated wealth over a certain amount for more tax, then we should do it but we shouldn’t use arguments that don’t stand up to scrutiny. Since charitable giving grows as the GDP (gross domestic product) grows, why not focus on the things that will most contribute to prosperity?
It is time to have a tax system that actually is directed at collecting tax in the way that harms individuals and the economy the least and raises the most money. If you want to set up some special programs or penalties for certain groups, then pass a law and have the President sign it.
Perhaps a person who unabashedly favored income redistribution, Leon Trotsky, said it well,
“The end may justify the means as long as there is something that justifies the end.”
It is time to PASS THE FAIRTAX!
The truth is the truth. Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:
“If you want a picture of the future, imagine a boot stamping on a human face—forever.”
WHAT CAN EACH OF US DO
Call up the local or D.C. offices of your House Member and two Senators and you can use the following script:
- I am sure that Representative ____ or Senator ____ is in favor of everyone obeying the income tax laws.
- After they assure you that their boss is not in favor of anyone breaking the law, ask if they are aware of the Cebula study showing $9 trillion of evaded income/payroll taxes over the next ten years.
- Since most will say they don’t believe their boss has seen the study, either drop off a copy or get an email address and send a copy to them for their boss.
- Say you are going to call back in a week and ask what the Representative or Senator is going to do to stop this evasion.
- In a week, call back and ask specifically what the Representative or Senator is going to do to enforce the law.
- They probably will say their boss believes that simplifying the income tax will handle the problem.
- Explain that when people evade income taxes, they are also evading the 15.3% payroll/Medicare tax and state income tax. So it is unlikely that they are going to pay 30% or 40% when they were paying 0% because they have already decided it is okay to cheat.
- Say that the only way to reduce evasion is to increase by tens or hundreds of thousands the number of comprehensive IRS audits done each year.
- Point out that Evaders do not self-identify by putting an “E” on their income tax return.
- 80% of the people likely to be audited are trying to comply, but they will be forced to endure these IRS audits as well.
- Ask if the Member is in favor of this?
- If they say no, then ask again how the Member proposes to stop people breaking the income tax laws.
- Then explain that the way to handle evasion without unleashing the IRS audits is the FAIRtax.
If you can see your Member or attend a town hall and ask these questions, you can be even more effective.
FAIRTAX POWER RADIO #106
EVEN MORE REASONS TO LOVE THE FAIRTAX
We can’t stop extolling the virtues of the FAIRtax. There are so, so many advantages of the FAIRtax over the current income tax that it requires three episodes of FAIRtax Power Radio to discuss them all. In Part 3 of this very positive discussion, listen to more important features of the FAIRtax that will improve life in America. Hard to believe that one simple tax bill can do so much, but it’s true. Join The FAIRtax Guys on this positive journey. Then use this information to convince others to study the FAIRtax.
LAST WEEK’S EPISODE As you listen to last week’s episode, you will realize that HR 25 is much more than a tax proposal. It’s a economic boosting bill; it’s a jobs bill; it’s bill that helps us return to the founding concepts of this country. How is it possible that a tax proposal which is only 133 pages long can do all this? If you can’t answer that question, you need to listen to this episode. In Part 2, The FAIRtax Guys continue listing and discussing the many, many ways in which the FAIRtax will make life in America easier and more prosperous while restoring the Bill of Rights for all of us. Good, positive and upbeat message from the guys that love to talk about the FAIRtax.
Telling your friends and relatives about our free weekly podcasts is a great way to help us garner more support. It is the American people who must demand REAL tax reform in Congress. We must inform America about the FAIRtax! Please help us.
Telling your friends and relatives about our free weekly podcasts is a great way to help us garner more support. It is the American people who must demand REAL tax reform in Congress. We must inform America about the FAIRtax! Please help us.
You can listen to FTPR on any platform - Mac or PC, iPhone or Android. And it’s 100% free.
Listen on Spreaker.com (http://bit.ly/2oesbk7), iTunes (http://apple.co/1Te8VdF) or iHeart Radio (http://bit.ly/2eqEG7y) on your computer or smartphone. The easiest way to listen to FTPR on your smartphone is by downloading the free FTPR app. Just search for “FAIRtax Power Radio” in your app store, download the app and start listening.
We post a new episode every Friday morning. Please listen and tell everyone you know about the FAIRtax Power Radio.
The FAIRtax: Once You Understand It, You’ll Demand It!
THE ELECTRONIC INTRODUCTION TO THE FAIRTAX - AMERICA’S BIG SOLUTION
America’s Big Solution is a basic introduction to the FAIRtax and is meant for people of any age. And you can download it to your tablet or smartphone right now.
Do you know someone who would like an introduction to the FAIRtax and would prefer to read about it rather than search online for Tweets, Posts and Shares? If so, America’s Big Solution is their best choice.
America’s Big Solution is an introduction to the FAIRtax written by Terry Tibbetts, author of A Spartan Game: The Life and Loss of Don Holleder, with help from Ron Maiellaro, President of the Florida FAIRtax Educational Association.
You can buy an electronic version of ABS as follows: AMERICA’S BIG SOLUTION is available for only $2.99 for the Amazon Kindle (http://amzn.to/1WIRHry), the Barnes & Noble Nook (http://bit.ly/1XeG8bH) and Apple iOS (http://apple.co/1tnqK0P).
You can purchase a print copy at the same Amazon link above for $9.25. Regardless of whether you choose the electronic format or the print format, you’ll find AMERICA’S BIG SOLUTION will give someone the boost they need to begin their study of the FAIRtax and the suggested resources to learn more. Buy AMERICA’S BIG SOLUTION now!
LINKS TO MORE INFORMATION
These links will help you promote and support the FAIRtax, make yourself familiar with the links below. We always do our best to keep our AFFT community up to date, and you can stay ahead of the curve using these convenient sites.
- The website of Americans for Fair Taxation (www.fairtax.org)
- Read the Summary of the Evasion Study.
- Welcome to the Online FAIRtax Community (member.fairtax.org)
- The website at which you can help make it happen. (www.bigsolution.org)
- The Facebook page for Americans for Fair Taxation
- The Facebook page for The FAIRtax Guys
- The Twitter page for Americans for Fair Taxation
- PopVox - Connecting people and lawmakers for more effective participation and better governing
- YouTube channel for AFFT
- The Official FAIRtax Logo Store (www.fairtaxlogostore.org)
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Thank you for staying FAIRtax strong!
