Jeff Jacoby lays out the argument against the estate tax in "Let's keep the death tax dead":
To class warriors, of course, abolition of the estate tax is a disgrace. The American Prospect's Tim Fernholz wonders why foes of the estate tax are so keen on "lining the pockets of the already-wealthy," and bristles at the thought of not taxing "folks who inherit huge fortunes" when their parents die. "It makes little sense," declaims USA Today in a recent editorial, "to shower tax breaks on a tiny sliver of the nation's wealthiest citizens."Here's my argument against the death tax: the money that everybody earns is taxed once as income tax. If we put it into the bank to save, the interest earned is taxed. If we invest that money, it's taxed with a capital gains tax. And if we spend it, there's a sales tax. (If we stuff it under the mattress, the value is eaten away by inflation, too.) From the moment the money is earned, it is taxed in a hundred different ways: can't we leave it alone in death?
Besides, the "rich" aren't going to pay that tax, unless they've hired particularly inept financial planners:
But the nation's wealthiest citizens aren't the ones the estate tax hurts. The Rockefeller, Buffett, and Kennedy fortunes are secure, shielded from the IRS by flocks of tax lawyers and accountants. As Henry J. Aaron of the Brookings Institution and Boston College economist Alicia Munnell have sardonically observed, estate taxes "are penalties on those who neglect to plan ahead or who retain unskilled estate planners." Populist rhetoric notwithstanding, they add, American estate taxes "have failed to achieve their intended purposes. They raise little revenue. They impose large excess burdens. They are unfair."Then there's the immorality of punishing hard work, thriftiness, and savings:
The estate tax is pernicious because it punishes precisely the kind of behavior society should want to reward - work, prudence, savings - and it rewards behavior that should be discouraged - profligacy, overconsumption, and leisure. The easiest way to avoid all death taxes, after all, is to spend your money before you go. Work hard, reinvest your earnings, and leave your life's savings to your loved ones, on the other hand, and the IRS becomes one of your heirs. As economist Arthur Laffer memorably put it in an essay last year, "Spend It in Vegas, or Die Paying Taxes." That is hardly the message we should want our tax laws to convey.For every spoiled debutante like Paris Hilton waiting to collect on her inheritance, there are a hundred doctors or businessmen who worked or risked all they had to earn their fortunes. Bill Gates, for example, dropped out of Harvard to start a little company called Microsoft. His company then provided livelihoods to thousands of employees and he retired to run a foundation that hands out $1.5 billion a year to causes ranging from HIV research to education reform. But when Bill Gates dies, the federal government will take just a little bit more. Spreading the wealth around, you know.