Estate Tax: Is it a Threat to the American Dream?

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by Carson Cederberg

 Growing up I listened to my mom speak about big business and how it relates to politics.  My mother was the vice president of a large tech company and she spent time lecturing me in lessons of economics and politics around the dinner table. One dinner stands out more to me than others and that was the dinner she’s quoted Thomas Jefferson explaining to me that the government shouldn’t regulate an individual’s pursuits of industry. She’s went on to explain that taxes that are accessed on the accumulation of wealth are un-American and in most cases hurt the individuals who are forced to pay these taxes. She then summed up her lecture by stating that you can’t multiple wealth by dividing it. This lecture is what I hold in mind as I examine the impacts of the current estate tax.

Engaging in the idea of gift giving is a fundamental freedom in which people should be allowed to participate in and enjoy, especially the gift of inheritance. The gift of inheritance can greatly enhance the chances of an individual achieving the American dream. The American dream defined by James Truslow Adams, an American writer and historian, explains “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement, regardless of social class or circumstances at birth” (par.1). The current estate tax, or more commonly referred to as the “death tax”, infringes upon that right and diminishes the American dream and should be repealed. The estate tax hurts the middle class, small business owners, agricultural producers, and job creation.

The history of the estate tax can go back to the early nineteenth century when it was permanently codified in the Revenue Act of 1916, the same law that introduced the modern day income tax. Benjamin Franklin once noted that “Two things in life are certain” and those two things were “death and taxes”. Centuries later this still holds true, however death itself was not always a taxable event. The estate tax was originally a temporary tax that was levied to help finance wars throughout the nineteenth century. The estate tax now is used as a source of revenue for our country and according to United States senator, Debb Fischer “it takes its biggest toll on the middle class and job creation” (par. 1). It also creates an enormous amount of bureaucracy and red tape for small businesses and agriculture farmers to go through and as a result, many Americans find that the dream they worked for is being taken right out from underneath them.

If you look at the estate tax from an economic stand point the revenue that was collected from the estate tax in 1999 alone if used for investment over the course of 10 years (rather than just savings revenue for our country) would have resulted in more job creation in 2010. It is estimated by Douglas Holtz-Eakin that if the revenue not collected by an estate tax and was used appropriately for investments it would have resulted in an economy gaining value at more than $1.7 trillion dollars and would result in roughly 275,000 more jobs (3). It is also predicted that small business capitol would be increased by over $1.6 trillion dollars and the probability of hiring would be increased by 8.6% (Holtz-Eakin 3). Payrolls for this small business would also be increased by 2.6% and investments for these business would increase by 3% resulting in more employment (Holtz-Eakin 3). Unfortunately because the estate tax is still in effect small business payrolls have been reduced by 0.9% which has resulted in a reduction of revenue and over 500,000 jobs (Holtz-Eakin 3). The middle class are the largest class of citizens that are affected by these job losses.

The estate tax commonly referred to as the “death tax” originally meaning a tax that is paid at the time of death can be translated to the tax the brings death to the working middle class, small business owners, agricultural producers and job creation. It puts a limit on prosperity, and instills fear in small business owners and farmers. The entrepreneurial spirit should be rewarded carried on as tradition of success rather than being punished by waging an unfair tax that results in displacement of jobs, the death of many small businesses and farming communities, and creating a government to be fearful of.    Thomas Jefferson once said “A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor and bread it has earned. This is the sum of good government” and repealing the estate tax would be a wise and fiscally responsible decision on our governments part.

Works Cited

Adams, James T. “James Truslow Adams Quotes.” James Truslow Adams Quotes (Author of The Epic of America). Good Qoutes, 2013. Web. 06 Oct. 2013.

“Estate Tax.” Www.irs.gov. Internal Revenue Service, 5 July 2013. Web. 23 Sept. 2013.

Fishcer, Debb. “Taxed ‘Til Death.” Editorial. Fischer.senate.gov. Debb Fischer, 19 July 2013. Web. 6 Oct. 2013.

Holtz-Eakin, Douglas, and Cameron T. Smith. Changing the Views of the Estate Tax: Implications for Legislative Options. Washington, D.C.: American Family Business Foundations, 2009. Print.

 

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4 thoughts on “Estate Tax: Is it a Threat to the American Dream?

  1. I agree that estate tax is a threat to the American dream. I don’t know much about taxes, but your paper enlightened my thoughts on the topic. This paper was well written.

  2. I also agree with the fact that the estate tax is a huge threat to the American Dream. Three years ago my great grandpa’s store, Targy’s Auto Parts, was closed down for many reasons, one being that it was too expensive to even run. Eliminating the estate tax would really help our economy and also help keep small businesses afloat.

  3. Very well written article. I certainly agree that the estate tax should be eliminated. Having grown up in the agricultural sector myself I have personally seen how much this tax has taken a toll on both family members as well as surrounding neighbors.

  4. You say that taxes that are accessed on the accumulation of wealth are un-American, but in a truly libertarian system you would be exchanging money all along the way for the services used by the business. As you run a successful business who consume all sorts of publicly financed goods and services and the larger your business becomes, the more you consume when compared to others. The estate tax simply makes an attempt at waiting until the person who earned this wealth no longer misses it before the government takes their “cut”. The American dream involves unlimited opportunity and hard work, not trust funds and tax shelters in the Cayman islands. I would argue that the estate tax is in essence very American.

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