If an asset is left to a spouse or a Federally recognized charity, the tax usually does not apply. In addition, up to a certain amount varying year by year, amounting to $5,250,000 for estates of persons dying in 2013,[2] $5,340,000 for estates of persons dying in 2014,[3] and $5,430,000 for estates of persons dying in 2015,[4] can be given by an individual, before and/or upon their death, without incurring federal gift or estate taxes.[5] Because of these exemptions, only the largest 0.2% of estates in the US will have to pay any estate tax.[6] https://en.wikipedia.org/wiki/Estate_tax_in_the_United_States http://www.cbpp.org/research/ten-facts-you-should-know-about-the-federal-estate-tax?fa=view&id=2655
Why don't you go read the stories of the many family farms that have been destroyed thanks to the inheritance tax. And the small businesses. The stories regularly appear every couple of months in our local papers.
Not to mention the fact that .... (1) income taxes have been paid all along the way as have (2) capital gains taxes on assets. Then... when the owner dies, the government wants to take a big chunk via the "estate tax" such that the survivors are forced to sell their property and legacy? How can anyone see fairness in that??
That the estate tax affects a small proportion of estates is really beside the point, and is a selling point for continuing a confiscatory policy aimed at a few. If the tax is so rare, why employ it at all? Its original purpose was to break up vast dynastic controls of wealth and power, and has since morphed into a tax raising scheme. That is the problem. If someone with a business worth 20 million dies without a spouse, his or her heirs are facing a 40% tax on the amount above the exclusion. If you are in a state with the estate tax, you can get hit with another 5-20%, depending where you reside. This is essentially confiscation. You have to sell the asset, which often is a family business. If you want to conserve the original intent of the estate tax, which was aimed at the Duponts, Vanderbilts, Rockefellers and the like, the exclusion should not be 5.34 million but a multiple of that amount. People are quick to agree to taxes that won't affect themselves.
I think maybe you guys missed the irony that I initially pointed to. The issue has been raised by others before. I just wanted to remind you.
I read that post FF. I don't see any irony or inconsistency in taking the position that the estate tax is too onerous and should be lightened, if not eliminated, and simultaneously taking the position that welfare should be reformed and people should, as a general rule, support themselves and live within their means.
Of course the government took most of it, and forced you to sell the family farm at a loss. You can now drive by the sub-division the developer is building on your family's land but still can't afford to buy a house in.
You"ll have no problem buying a house in that subdivision. The heirs to very large estates will inherit a large amount of money after taxes. In the U.S., because of the large estate tax exemption, we are only talking about exceptionally large estates. It could happen that in very large estates the federal and state governments could combine to tax more than 50% of the estate. This would be extremely rare however. The exemption is high in the U.S. You could be forced to sell while walking away with millions. But again, these would be rare situations. What would be much more common is that a large estate is left to several heirs that can not agree among themselves, and the only way to resolve the situation is to sell the estate. In that situation each heir may have to settle for only a few tens of millions. Tragic. When estates have to be sold for taxes it is because the cash flow and liquid assets are not sufficient to pay the estate taxes owed. The question that arises in that situation is, is it better to walk away with millions or go to the guillotine? Most will be happy to walk. What I mean by that is that if a country allows fortunes to be built up, at the expense of the common man, eventually their will be a guillotine. Sentimentality is an attractive human trait, but it can also be the root of stupidity. I plan to leave a sizable estate when I die. But my heirs will split less than 5 million. If that is not enough for them, then god bless them, because they might have to work for a living.. Personally, I think the French revolution was a good idea. Present day France resulted. I rest my case.