Over the past few months, the federal estate tax has been a popular topic in the news. Also known as the death tax, this tax is applied to the transfer of an estate at passing away of an individual. Generally, said estate includes all assets of the person who passed away, including financial assets like stocks, bonds, and mutual funds; real assets, like houses, land, or other tangible property; and proceeds from life insurance policies. The United States federal government established the estate tax that is currently implemented in 1916. Since then, the estate tax was phased out in 2001, so that the rates dropped until eliminated in 2010. However, this legislation was not lasting, and the estate tax returned in 2011.
The estate tax that
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This tax is only creating more pain at a time when our country should be supporting its citizens who provide jobs and help boost the economy.
Since the inception of our great country, American families have worked hard their whole lives to make the money to support their families and pass a legacy down to their future generations. This hard work is built into the framework of our country. We say that we encourage the citizens to be self-made and work hard because both these actions will pay off. How can we truly be promoting success if our tax code is working directly against our hard-working citizens? In fact, the estate tax is actually a double tax: “income taxes must be paid on earnings that eventually make up the estate's value” (Wood). In 2015, the Supreme Court ruled that the double taxation that the state of Maryland was imposing on its citizens was unconstitutional (Brown). Our government needs to be taking the proper steps to eradicate all forms of double taxation, as it is certainly not fair to the people, the people for whom the Constitution was created to protect.
Another key fact that must be pointed out is the amount of revenue, or lack thereof, that this estate tax makes for the federal government. In 2014 alone, our federal government made over $3 trillion. Of that massive number, the estate tax counted for $19.3 billion, or a mere 0.6
The current tax policy in the United States is very confusing and it is very costly for our government to administer it. It is in the best interest of our country and its citizens to revise or replace our current tax policy.
The top 1 percent of the wealthiest people in the U.S. pay a total of over 40 percent of all federal income taxes, which is more than the entire bottom 95 percent of all tax payers. Government programs are funded through Social Insurance Taxes that are the fastest growing source of federal income though it’s actually counted separately in special trust funds by the Treasury. Both federal and state governments combine these taxes that are used to pay for social programs such as social security, Medicare, and unemployment services. This type of taxation is a regressive tax, since lower income people end up paying more from their income than those with a higher income. Another federal tax is the excise tax, better considered a luxury tax for non-necessities, which include things like liquor, cigarettes, gas, and highways. Taxes that are imposed on imported goods so that there’s less foreign competition on the domestic market are called customs duties.
People do not enjoy talking about taxes because they are too political, confusing, and depressing. It is no secret that the American tax code is a mess and something many economists describe as too broken to fix. Despite this, politicians have never stopped from trying to “fix” the code, yet they have had very little success. The U.S. Government’s tax code currently comprises “more than 67,000 pages of complexities” (Boortz, Linder, & Woodall 14). The Americans for Fair Taxation (AFFT) was founded in 1995 with one goal: create the simplest and best tax reform plan that would work in the modern market and economy. The AFFT’s best solution was a bill which they promptly called the FairTax.
Further complicating that tax scenario is what his heirs will owe in federal estate taxes. Attorneys said that estate taxes can be as high as 40% and will depend on Wilson's final arrangements.
In 1861, Lincoln levied the first federal income tax by signing the Revenue Act. Needing cash with which to fund the Civil War, Abraham Lincoln and the Congress agreed to impose a 3 percent tax on annual incomes over $800.00. The wording of the Revenue Act was broadly written to define income as a monetary gain derived from any kind of property, or from any specialized trade, employment, or vocation carried on in the United States or elsewhere or from any source whatever. (A&E Television Networks, 2014)
Are the taxes you pay for you or for others? Did you know that the average lifetime cost to the American taxpayer is $1.1 million, and that money helps support unskilled workers that come from other countries? This is based on, “the average low-skilled household that received $22,449 more in benefits than they paid in taxes” (York).
Not all government benefits are tax free. For example, you have to pay taxes on social security and lottery winnings. Yet, VA burial benefits are
Our current income tax system today is very complex, unfair, inhibits saving, investment and job creation, imposes a heavy burden on families, and weakens the integrity of the democratic process. It can't be fixed and must be replaced. The U.S. income tax code is a long and complex system. The income tax system is so complex; the IRS publishes 480 tax forms and 280 forms to explain the 480 forms. The IRS sends out eight billion pages of forms and instructions each year. The administrative costs of the tax system far exceed those borne directly by the IRS. Each year Americans devote 5.4 billion hours complying with the tax code, which is more time than it takes to build every car, truck, and van produced in the U.S.
Taxes have always been a contentious issue of debate in the United States; furthermore it is exacerbated by the specific philosophy of individuals, states, and regions. Too be clearer, nobody enjoys paying taxes, however it is the cost we pay for having civilization. Nevertheless, selfishness creeps in to many individuals who feel no particular benefit. Taxes have a real way of polarizing many people from different socio-economic backgrounds, because a tax is inexorably linked to a person’s belief-system. For instance, in the context of social welfare policy liberals are inclined to feel that the tax-burden should be heaped on individuals who have benefited the most from “the system”. On the other hand, we have conservatives who feel they did not receive any support, and all that is necessary is hard work and perseverance to succeed. I am not suggesting either one is correct; it is only a simple illustration to show the relation between pocketbook and personal belief. I hope studying the tax structures of New Jersey and Alabama will give me insight they both reconcile their political beliefs with their individual tax structures.
Did you know that an astonishing 43.4 percent of the people in America do not pay any income taxes" (McCullagh 1)? This is roughly 65.6 million people that aren't paying taxes and this is putting our economy and country at its breaking point. Our current tax system penalizes those that work and save money. People that pay no taxes still get to enjoy the benefits. The United States needs to look at which tax is fairer to the people and easier to administer by the government. Although some may disagree, the Flat Tax should replace the income tax to simplify and bring fairness to the system, increase income, and create jobs.
Throughout history, taxation on United States citizens has proven to be a necessary component of a growing economy as means of generating revenue for the federal budget. The federal budget funds the many government programs implemented to keep the disabled, elderly, and unemployed from falling bellow the poverty level. Unfortunately, this fund is not always available when catastrophic evens, such as an economic recession, deplete the revenue coming in and create a budget deficit. In order to regenerate money coming in and replace the deficit, the government calls on money gained from taxes. What happens when tax money is already appropriated to other programs? A tax reform. A tax increase has many times been the
In place for over one-hundred years now, the estate tax was put into place to do more than just finance World War I. In 1916, there were extremely wealthy families, such as the Vanderbilt’s and the Carnegie’s, that dominated industries and held a large portion of the nation’s wealth. The estate tax was proposed to curb massive amounts of inter-generational wealth that was
We have all heard the famous quote by Benjamin Franklin who stated, “In this world nothing can be said to be certain, except death and taxes.” (“Benjamin Franklin Quotes”) We find this to be true as we begin working and feel the pain of money being taken from our paychecks. Then we face the chore of having to file income taxes yearly. Although there are many taxes we are subject to, most people are referring to federal income tax when they complain about taxes. There has been debate for decades about the current system but there has been no agreement on how to fix it. The United States currently has a progressive tax code which means people pay taxes according to their earnings. This has been in place since the time of Abraham Lincoln. An alternative
The American people are in the presence of the highest tax burden in American history; taxes represent a larger share of the U.S. economy than ever before (Armey 2). After World War II, the average family sent only about three percent of its income to Washington. The same family today gives 24 percent of its income to the federal tax collector (Mitchell 1, 9). Once state and local taxes are added to the federal take, taxes make up the biggest slice of the average family's budget. As Daniel Mitchell of the Heritage Foundation shows in Figure 1, the typical American family now pays more of its budget in taxes than it spends on food, clothing, transportation and shelter combined (Mitchell 1, 10).
In addition to bankrupting family farms, the mere existence of the death tax is unfair. Assets that are liable to estate taxes involve money that is being taxed for the second and sometimes third times. “It taxes assets which have already been subject to the federal payroll, income and/or capital gains