Death Tax Musings

by S.M. Oliva, Mises Economics Blog
Jul. 20, 2010

I was reading a Beltway columnist’s cry this morning over the can’t-return-quickly-enough federal death tax. The tax does not apply for deaths in 2010 -- but it will for deaths in 2011 and beyond -- which means George Steinbrenner’s sons were spared one heckuva tax bill. This upset the columnist greatly, not because she had anything against George, but because her beloved government was deprived of badly needed revenue.

It occurs to me, however, that it’s not the loss of death-tax revenue itself that supporters mourn; it’s the idea that any tax could simply vanish, even if it’s just for a year. Taxation is supposed to be permanent. If we can eliminate the death tax, why not other taxes? The moment people get it into their head that taxes are not an absolute -- like death -- the foundation of the modern welfare state risks collapse.

As for the death tax, I think it’s a great quick-test of one’s love of the state. The tax is so gaudy and intrusive that only the true statists can support it without reservation. It’s not just a matter of the high marginal rates, but the amount of paperwork a grieving family is expected to produce at the government’s demand -- to say nothing of the massive invasion of privacy inherent in disclosing a loved one’s entire estate to prying IRS eyes.

I speak from experience. As a paralegal, I’ve worked on estate tax returns, and even for relatively simple estates it’s a cumbersome process. Not that I mind the work. But I suspect most death-tax lovers -- like our Beltway columnist friend -- don’t appreciate the collateral burden imposed by the government’s insatiable need for revenue. Of course, if they could appreciate it, they wouldn’t support the state in the first place.