It is interesting to examine the logic that is utilized by those who question the fairness of the estate tax. Apparently their arguments made a lot of sense to many people here in Ohio because the estate tax on the state level has been repealed starting in 2013.
There is however a federal estate tax that is still in place, and there are many who would like to see this levy repealed as well.
The central argument that is presented by people who assail the federal estate tax is the contention that it is an exercise in double taxation.
You pay taxes on all of your earnings throughout your life, and in addition to this you pay property tax, sales tax, gasoline tax, hospitality tax, taxes on things like alcohol and tobacco products and any number of additional taxes.
The resources that comprise your estate are going to be the assets that you were able to retain after paying all of these taxes.
While you are alive the assets that you have accumulated are not subject to further taxation simply because they exist. But for some reason your death is considered to be a taxable event.
And, it should be noted that the rate of the estate tax is 35% this year and it is going to be 55% next year. So these after-tax assets are not only going to be taxed again, they are going to be taxed again at an exorbitant rate.
There is also a gift tax in place that is unified with the estate tax, so giving gifts while you are alive is not going to provide any tax efficiency.
Those who feel as though asset transfers should not be taxed make some good points. But as things stand on this day the federal estate tax is alive, well and poised to impact many more American families in 2013 when the exclusion is reduced to just $1 million.
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