Imposing an Inheritance Tax

As demonstrated by the recent arguments over the estate tax portion of the new tax bill, people are passionate about why we should or why we shouldn’t have an estate tax. Absent from the debate, however, has been any discussion regarding what taxes heirs should have to pay.

Ray D. Madoff, a professor at Boston College Law School, thinks that without a strong estate tax, there is no reason inherited wealth shouldn’t be subject to income taxes similar to lottery winnings and wages. If President Obama considers an overhaul of the entire income tax code this next year, he should take the opportunity to consider inheritance taxes. Exemptions could still be provided for smaller estates, and taxes on family businesses and farms could be deferred until they were sold.

“Most important, by imposing the tax directly on those who receive the money, Congress could have a more honest discussion regarding the appropriate taxation of inherited wealth.”

Ray D. Madoff, Give Up on the Estate Tax, N.Y. Times, Dec. 14, 2010.

Special thanks to Adam J. Hirsch (William and Catherine VanDercreek Professor of Law, Florida State University College of Law) for bringing this to my attention.