Why Is Death Still a Taxable Event?
By Sen. John Thune
Benjamin Franklin was on to something when he said the only certainties in life are death and taxes. He clearly didn’t live in South Dakota, otherwise “winter” surely would have made his list, too. But he was right. Death and taxes are inevitable, and while a certain level of taxation is necessary for maintaining a strong military and to fund projects like building roads and bridges, I don’t think the government should take one dime more than what it needs to provide the basic functions Americans expect from it.
Defining “what the government needs” is up for debate, though, and it doesn’t take long to learn that it’s a pretty relative idea, particularly in Washington, D.C. I’ve always prided myself on being a small-government fiscal conservative who believes in individual rights and liberties. I think states and local communities, not Washington, are better positioned to make decisions, and I believe taxpayers know how to spend their hard-earned money more effectively than anyone in Washington.
Not everyone agrees with me, though, which is what brings me back to death and taxes. Americans are some of the smartest, hardest working people on earth. Some of them work a lifetime to create a nest egg, buy a home, maybe start a business, and hopefully have enough left over to pass on to their kids and grandkids. The federal estate tax, more commonly known as the death tax (yes, that’s a real thing), runs contrary to the entire idea of the American Dream, which is why I’ve spent more than a decade fighting to bury it once and for all.
The death tax is actually a pretty easy concept to understand. When you die, the federal government assesses the value of what you have left behind, and if it thinks you have too much, it taxes your heirs. So if your farm is “too big” or your business is “too successful,” your children might have to pay extra taxes when you die, which means they might have to meet the undertaker and Uncle Sam all on the same day.
Like I said, I’ve been fighting this fundamentally unfair tax for a long time, which is why I was glad the Tax Cuts and Jobs Act, the pro-growth tax reform bill I helped write, doubled the death tax exclusion level (the estate value at which the death tax kicks in). While this will undoubtedly help protect more families, especially those that have family-run operations like farms or ranches, I think we should eliminate the death tax once and for all, and I’ve again introduced a bill that would do just that.
Death tax supporters say it’s a way to collect more money from the wealthy, but it’s sometimes used to tax farmers, ranchers, and small business owners, the people who I’m particularly concerned about in South Dakota and around the country. Nearly all of South Dakota’s farms are family-run, and many of them are multi-generational. These operations are often land rich and cash poor, which means they have a lot of money tied up in land, infrastructure, machinery, and crops or livestock, but these investments aren’t necessarily reflected in the family checkbook.
The taxman doesn’t make a distinction, though, which is why operations that might look bigger on paper than they are in reality have the potential of being ruined by an untimely death. The last thing families should be worrying about after they’ve lost a loved one is whether or not they might lose a farm, ranch, or other business, too, which is why I won’t stop fighting until death is no longer a taxable event.
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Thune says government should not get more than they need. That is true, but begs that question “where should it come from?”. Currently a lot of it comes from our grandchildren because of Trump doubling of the rate our federal government borrows money that our grandchildren will be saddled with. The other possibility is to raise taxes on the money that people earn though hared work. Most people are opposed to these methods.
The third method is to get it from people that have money dumped in their lap that they have never earned.. Thune is opposed to this method.
Obummer doubled the national debt in his 8 failed years, so he bears a lot of responsibility, but, like most Democrats, he won’t take responsibility for his actions.
Fair, to a point. Recall that a huge spend during that time was when the economy was going through the largest recession since the great depression. Trump is meeting those same spending levels in one of the longest bull markets in history. Context matters.
Trump doubles the debt? The great O is the one who invented that! Basically, the govt needs to shrink and live within its means. We as individuals must and so should the government.
You can tell Mr. Thune that death is not and never has been a taxable event. The transfer of a sizable estate on the other hand is. The estate tax (not the death tax) is a way to prevent the accumulation of wealth. How about we take these misguided efforts and put them to use attacking a real problem that affects regular Americans? How about we tackle healthcare and nursing home funding. Let’s work on affordable access to higher education such a vocational schools. Don’t waste our time on this.
The role of government is not to “prevent the accumulation of wealth.”
Because not having to spend $10 on a gun permit is so much more important.
Hold on – I thought we were supposed to hate people who don’t work for their money – welfare queens, SNAP recipients, illegal immigrants getting healthcare and education…. But we’re totally fine with trust fund babies inheriting megabucks only by dint of whose loins they plopped out of? Something seems sketchy here…
So the people who earned the money shouldn’t decide who will get it? I would rather my kids get anything I have left when I die rather than have it go to a government that supports Planned Non-Parenthood and has the likes of Pelosi and Schumer calling the shots.
So I guess in answer to your question, yes, we are fine with people inheriting money, and no, we don’t hate your list of people “we were supposed to hate”; we simply think that people who can work should, and if people would take more responsibility for themselves we would all be better off; however, I understand that Democrats want people totally dependent on government.
“So the people who earned the money shouldn’t decide who will get it?”
Sure – do that before you die then. After you’re dead, it’s a moot point. You’re dead. You no longer have any rights on this earth. Besides…
“I would rather my kids get anything I have left when I die rather than have it go to a government that supports Planned Non-Parenthood and has the likes of Pelosi and Schumer calling the shots.”
So about the taxes you currently pay… I’ve not seen your tax returns, but mine don’t ever seem to come with check boxes that allow me to dictate where my tax money is spent. You must be a very special case.
“…we simply think that people who can work should, and if people would take more responsibility for themselves we would all be better off…”
So somebody that inherits billions and then spends the rest of their life loafing and living the high life is somehow exempt from the work requirement? What “personal responsibility” comes with daddy handing you a fortune? That the ultra-rich have duped so many poor and middle class people into believing that the rich are somehow more important is one of the greatest swindles ever perpetrated on mankind.
Now, all of this is not to say that people shouldn’t be able to keep most of what they earned, or that they have no say in its disbursement, instead, I think there is an amount somewhere between zero and all-of-it that we can agree is enough. I think we can also agree that fiscal and financial responsibility should be expected of everyone – rich or poor – so that they best spend their $ or $$$$$$$$$$$$$$ in the best way possible. Letting the government swipe a couple billion from you after your rich pappy kicks the bucket just means pappy was a moron and should have done something with that money. And isn’t that what all of us have been brainwashed into believing? That rich people create jobs and make investments that benefit the little guy? Transferring billions to Jr. isn’t helping anyone but Jr. Maybe Sr. should have built another factory or something? Donated to charity?
But I digress. Henry Ford did alright. His kids did too. Somehow they managed to survive a top rate of 70%, so the whole argument seems rather silly to me.