Time for lawmakers to kill the death tax

News-Herald

The government usually taxes you on something you do - the income you earn or goods that you buy.

People generally have little control over their death. Yet the federal government has taxed the estates of wealthy deceased Americans since 1916.

The U.S. Senate should repeal the so-called death tax. If it fails to do that, it should duplicate recent action of the U.S. House of Representatives, which voted to significantly lower the impact of the tax.

The estate tax rate has been reduced since 2001 by raising the amount of the exemption every year until 2010. This decreases the pool of people subject to the tax. Unless it's repealed, existing law allows the tax to return after 2010.

Amassing wealth of $1 million, which would be the standard in 2010, seems attainable for a growing number of Americans. But this tax hinders the ability of passing it to heirs.

One year ago, the U.S. House voted to permanently repeal the death tax, but the U.S. Senate didn't follow its lead - and it likely will repeat that this year.

The Tax Foundation reported that to match the death tax's disincentive, income taxes must be raised to about 70 percent, according to the Web site deathtax.com.

So a majority in the House sought middle ground.
Instead of eliminating the tax as of 2010, the House bill would boost the exemption to $5 million for an individual's estate and $10 million for couples. After 2010, the exemption would be adjusted yearly for inflation, the Christian Science Monitor reported.

That's a start. This remains a confiscatory tax, however, which forces heirs to pay taxes on money that was previously taxed for income and probably capital gains.

Federal lawmakers can stop the insanity by mustering the courage to kill this tax.