Death Tax Punishes Virtues, Rewarding Vice; Repeal Would Create Over 100k Jobs

On April 13, 2005 the House of Representatives voted overwhelmingly, 272 to 162, to permanently repeal the federal estate tax, also known as the death tax.  But in the ten years since, they have all but dropped the issue.  A stunning 236 of the current members of the House have never had an opportunity to vote on it.

Polls consistently show the death tax is hated by the American people.  A 2006 study by two Yale professors, Mayling Birney and Ian Shapiro, did a comprehensive review of this issue. They said: “Many polls since the late 1990s have shown widespread public support for estate tax repeal, in the range of 60, 70 or 80 percent. Moreover, supporters appear to be spread more or less equally across income groups, contrary to what self–interest would predict.”

The study’s remarkable findings, which confounded the study’s authors, belie the claim that strong public support for repeal depends on misunderstanding or misleading information. They found surprisingly high public support regardless of who asked the questions or how they were phrased.

Most recently, a November 2014 survey by Public Opinion Strategies that asked the neutral question: “Do you personally favor or oppose completely eliminating the estate tax, that is, the tax on property left by people to their family when they die?” found that the public supports repeal by a typically robust 61 to 35 percent margin, with even a majority of Democrats supporting repeal.

Americans fundamentally do not believe that death should be a taxable event. The Founders of our country believed this so strongly that they included a clause in the U.S. Constitution that forbids seizing an estate at death as a punishment for treason. Yet we now have a tax on the books that takes up to 40 percent of everything a person leaves to his or her children as a punishment for success, for achieving the American Dream.

The death tax punishes virtue and rewards vice. It tells older Americans: "You can't take it with you, and you can't leave it to your kids." So it discourages and punishes the traditional American virtues of hard work and thrift, savings, and investment, while it encourages lavish, reckless consumption.

That has serious economic consequences.  A broad coalition of free-market and business groups organized by the Family Business Coalition recently noted in a letter to Congress that multiple recent studies show repeal would create over 100,000 jobs, and that the tax is responsible for the destruction of $1.1 trillion in capital.  A new study from the Tax Foundation finds that the U.S. now has the fourth highest death tax in the OECD and that 13 countries have completely repealed their death taxes since 2000.  They found repeal would boost the U.S. capital stock 2.2 percent, resulting in a net increase in federal revenues.

The bottom line is the death tax is wrong, and advocates of economic freedom shouldn’t be afraid to say so and fight for full repeal.  While liberal editorial pages and cable news talkers will shriek about it, the American people strongly support repeal.  The House has a great opportunity to do the right thing by repealing the death tax, and, with the tenth anniversary of the last vote approaching, they should do so as soon as possible.

Phil Kerpen is head of American Commitment and a leading free-market policy analyst and advocate in Washington. Kerpen was the principal policy and legislative strategist at Americans for Prosperity for over five years.  He previously worked at the Free Enterprise Fund, the Club for Growth, and the Cato Institute.  Kerpen is also a nationally syndicated columnist, chairman of the Internet Freedom Coalition, and author of the 2011 book "Democracy Denied."