Re-thinking the Estate Tax

Rep. Ron Paul- House of Representatives

Will the Estate Tax ever be Repealed?


October 24, 2005

Just two years ago, Congress was poised to eliminate the hated estate tax permanently. Today, however, several U.S. Senators are using their own wasteful spending habits to justify retaining the tax. In the eyes of these Senators, budget deficits are never the result of too much spending, but rather too little taxing. They cannot imagine giving up even the tiny fraction of federal revenues raised by the estate tax. Why is a one percent revenue cut unthinkable to these lawmakers, while annual three or five percent spending increases are considered business as usual? To answer this question, look no further than the transportation bill passed last week in the Senate. It is perhaps the most pork-filled, wasteful appropriations bill passed in years. The bottom line is that spending money is what keeps these Senators in office. They won’t stop pork spending because the American voting public rewards them for it.

The estate tax, more accurately known as the death tax because it is levied when a taxpayer dies, confiscates anywhere from 37% to 55% of a individual’s assets. While these rates are unconscionable, the death tax also represents an especially galling form of double taxation. Americans already pay federal and state income taxes throughout their working lives. They pay income and capital gains taxes on money they save and invest. They pay local property taxes on their homes. They pay various sales taxes whenever they buy something. They even pay steep federal taxes on gasoline and telephone use. Yet after a lifetime of burdensome taxes, the death tax punishes Americans one last time simply because they worked hard, saved, and invested to pass something on to their families.

In 2001 the House debated an outright repeal of the estate tax. Political considerations-- based on the false argument that the estate tax only applies to some imagined class of dynastic families-- prevented the passage of an immediate repeal. Instead, a slow ten-year phaseout bill passed in both the House and Senate chambers. Incredibly, however, the Senate added a provision that would cause the tax rules to revert back to the current system after the ten-year period. In other words, the death tax will return after 2011! So a taxpayer dying in 2010 would pay no estate tax, while his unfortunate neighbor dying the next year would get a whopping bill from the IRS. Accountants and tax attorneys might support this crazy system, but it creates an estate planning nightmare for American families. Some doctors even warn it could give elderly people a morbid incentive to time their deaths out of concern for their loved ones.

The tired argument that the estate tax only affects the rich simply is false. Many of my constituents are farmers, ranchers, and small business owners. They are hardly rich, but some of them have built up valuable businesses they would like to pass on to their children. Yet when they die, their children rarely have the liquid cash needed to pay the death tax bill. Often the business must be sold or divided to raise money for the IRS. Many family farms across this country have been bought by large corporations because of the estate tax.

Ultimately, the argument against the death tax is a moral one. People should not be punished for working hard, saving, and building wealth. Our society should respect the most basic property right, namely the right to dispose of one’s property as one chooses. The American dream is based on making a better life for one’s children, despite the empty rhetoric of the class-warfare politicians in Washington. Building wealth is not sinister, it is admirable. Our tax rules should encourage the decidedly American virtue of saving for the future.
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I can assure you one think your right about him having convictions, but he could care less about politics. If he said he holds a moral conviction concerning property and ownership you can be sure there is zero political motivation for his conviction.

I have known him to be a principled man both in and out of office. And I have never known him to hold a view based upon party or politics.

I'm not sure what you are saying by using 'reality' but if you think an estate tax puts a tax burden on the wealthy your mistaken. That is not reality. I am a trustee of a estate for someone who is very wealthy and the very wealthy know just how to get around these taxes. I know for a fact because I meet with their high powered lawyers and accountants who know how to work the system.

Congress is not going to hurt the ones who feed them.

 

Liquidation and selling farmland to raise money or selling farmland to a large corporation are two different things. Liquidation is used when a court orders a sale to pay taxes. That would be a case of someone refusing to pay or their are no heirs willing, able, or available to handle the family matters.
Selling farmland by heirs to pay taxes is different. If you have documentation that no farmer or rancher ever sold property to pay estate taxes please post your source.

I am sending an email to Rep. Paul right now asking him for some proof of his assertions.

I rarely try to defend someone. But since I know Rep. Paul and I respect him so highly I will see what he has to say about his comments.

Thanks

 

I respect that. And I can accept it being true, I would like Rep. Paul to respond also, I have never emailed him that he didn't respond.

Here is a copy of the email I sent Rep. Paul-

Estate Tax

I was sharing your recent article on estate tax repeal and I was challenged that your statements were inaccurate; 'Yet when they die, their children rarely have the liquid cash needed to pay the death tax bill. Often the business must be sold or divided to raise money for the IRS. Many family farms across this country have been bought by large corporations because of the estate tax.' I was told this- "IIRC, the Department of Agriculture has yet to come up with even a single example of a family farm being liquidated to pay the estate tax. " Could you give me examples of what you are saying about farms or ranch land being sold to cover estate taxes? Thank you very much.

 

I also share the heart of Rep. Pauls convictions-

1. Double taxation is wrong.
2. Our children should not be penalized for the hard work of what parents earn, save and own for them. Especially penalized by taxes that go into the pockets of very wealthy elitists that have mechanisms for escaping the tax. Thus it IS the small business owner and the small farmer and the little guy that suffers from this tax.

We are over taxed. The majority of liquid tax money goes to pay interest into the pockets of the very wealthy who control the central banks. Read the book Why Bankrupt America? by Devvy Kidd.

 

I'm not bullish on taxes.

Postpone and lessen is inaccurate, they have financial instruments that get them covered for very low costs. I sign off on annuity contracts, insurance instruments and such that will pay off millions in estate taxes for a very huge estate and at little cost to the wealthy.

They are complex and I don't understand them, I just know I am told that estate taxes don't bother the wealthy.

I believe in the past they hurt the small businessman and the small estate people who don't have the resources or the knowledge to avoid them.

So I remain opposed to them.

I'm glad at least we have some relief at present from them.

And yes anyone with over 1.5 mil to deal with is wealthy. The estate I am connected with has financial instruments in place to pay off several millions in estate taxes. (actually several several) At least they did last year, I haven't heard from them this year? I don't know enough about current law.

When estate taxes comes up I show up at an office and sign my name to a stack of paperwork. Just doing my job.

 

I understand your point and that is a good point.

I think instead of cherry pick I would say that truth is the issue is more for those who work hard for a lifetime and I would say that is the majority of those affected.

And anyways any average citizen who can make $950,000.00 in the stock market legally should be treated as fair as a citizen who legally saved 900,000.00 over a lifetime of hard work.

I remember when my mother in law died. She worked hard raising my wife and 4 other children working long hours in a lab. She was very frugal and deliberately saved for the children. She left most of her estate in bonds and other instruments that were taxable. What she thought she worked hard for to leave turned out to be considerably less- net to the children (estate tax). The good part was she did have life insurance which was not taxable. So what she dreamed for her children came through primarily in that way, just not what she thought she was doing for them.

Those taxes paid to the government are a small liquidity to pay interest on the national debt. And that to private bankers, some foreign. I'm not for it.

I believe everyone should pay a fair share of a fair and necessary tax. But the estate tax issue doesn't even fall into that category.

The rich get richer and the rest of us are getting .....

well you know what we are getting

 

So if no one is paying this tax. Why even have it.

Small business is not hurt at all, farmers are not hurt at all, the RICH I GUARANTEE YOU are not hurt at all.

What's the big deal. Get rid of it.

The point of the article is that the government doesn't need any more tax.

Our government doesn't run off ANY tax money it runs off debt.

Treasury bills- Federal Reserve Checks- Debt. Simple as that.

Taxes go from your pocket into the pocket of filthy rich bankers.

The more we are taxed the more liquid our debt payments are to the bankers.

Wise up and cut taxes. Better yet, CONGRESS stop the DEBT implosion in America.

Government please stop borrowing and spending, you will destroy a very nice nation.

 

I may be crazy but I feel better right now.....