Pointing Out Fallacies in Pro-Estate Tax Arguments

A Forbes columnist recently listed seven reasons why the return of the estate tax is undesirable:

1. It is foolish to argue that the government needs revenue now more than ever because by that logic, forms of taxation could multiply without end.
2. The government’s spending will not remain static when additional revenue is available. Instead, the government will increase its expenditures to take advantage of the additional revenue.
3. The estate tax causes people to change their behavior, which is an undesirable quality for a tax.
4. Effects of the estate tax kick in before death when planning devices create a private gain and a social loss.
5. The argument that the estate tax breaks up concentrations of wealth fails to take into account that an estate is taxed the same regardless of the number of beneficiaries.
6. The argument that the government will use the money to improve welfare more than a private individual would is highly improbable and immeasurable.
7. The estate tax has a disruptive effect on small businesses.

See Richard Epstein, Let the Estate Tax Die a Merciful Death, Forbes, Sept. 2, 2010.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.