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Death Tax

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The inheritance tax, or estate tax, is a tax which the United States levies on the total taxable value of the estate of a deceased person. The amount of tax is calculated regardless of the method in which the assets of the estate are transferred to the person's heirs: assets included in a will, transferred automatically because the person died intestate or as an insurance benefit or account payoff. Inheritance tax is paid by the executor of the estate or by the person in charge of its assets.
The United States has a consolidated policy on inheritance and gift tax so that a person cannot give away his or her estate to potential beneficiaries shortly before death in order to avoid taxation; beneficiaries would simply pay gift tax rather than inheritance tax in this case. The federal government makes a distinction between the "gross estate" (all assets) and the "taxable estate" (assets less a certain number of allowable deductions such as funeral expenses, some charitable contributions and various other deductions).
In most cases, if the estate is left to a charitable organization or a surviving spouse, no inheritance tax is due. There are also exclusions for a certain portion of the estate; however, these have been frequently changed by recent tax legislation, and usually, it is worth consulting a professional to determine what amount of the estate is not taxable under current federal law. In part because these complexities make it possible for some wealthy people to establish shelters that let them avoid estate tax; the estate tax debate has been going on for years.
Opponents of Estate Tax
Opponents of inheritance tax typically refer to it pejoratively as "death tax." They argue first that concern over burdening their children with this tax may lead elderly to make unwise investment decisions late in life, and that it may also discourage entrepreneurship earlier in life. Opponents also claim that morally it should be only the choice of the person who earned the money what should be done with it, not the government. They see taxing wealth at death as a kind of forced income redistribution that goes against free-market capitalism. Also, studies suggest that the expense to the government of collecting the estate tax is almost as high as the funds received from it, thus making it a highly inefficient way to get revenue.
Proponents of Estate Tax
Proponents of the inheritance tax say that it helps prevent consolidation of wealth in the hands of a few powerful families and is a basic building block of the nation's system of progressive taxation. They also feel that inheriting large sums without tax undermines people's motives to work hard in the future and, thus, undercuts the principles of capitalism, encouraging people to become idle and unproductive, which hurts the country overall. Those in favor of the inheritance tax also point out that, contrary to claims, it taxes the same earnings twice; within the structure of US estate tax, much inherited money is in the form not of prior salary for work, but of unrealized capital gains, money on which no tax has ever been paid before. Finally, proponents also make the point that transfers of wealth from generation to generation have often been limited, and the amounts that are currently being transferred are so high as to have very little historical precedent, thus making taxing them less onerous. The controversy that has raged over inheritance tax in the United States shows little sign of abating.

The estate tax in the United States is a progressive tax on the estate of a deceased person before their property (real estate, stocks and bonds, business interests, etc.) is transferred to their heirs. In 1906, President Theodore Roosevelt proposed a federal estate tax, saying, "The man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government." The estate tax was passed in the Emergency Revenue Act of 1916 in preparation for WWI. The first estate tax was imposed on the value of an estate over $50,000 (roughly $850,000 in today’s dollars) at a graduated rate of one to five percent. In 2009, the estate tax was imposed on estates valued above $3.5 million at 45%.

The debate surrounding the estate tax has existed in many forms since Teddy Roosevelt's proposal. It has become especially heated in recent years with the rise of an anti-estate tax movement. This movement really began in 1993 when a group of wealthy families, under the lead of the Mars family, began a Washington lobbying campaign against what they would soon term the "death tax" because of its political advantages. According to the Washington Post in 2006, "The effort caught fire when small-business groups such as the National Federation of Independent Business and agriculture groups led by the National Cattlemen's Beef Association joined in." While the debate is often framed only as a class-war debate (with the wealthy being seen as the potential benefactors of a ban and the poor the losers), it also encompasses other questions that are unrelated to class and wealth. The effect on the US fiscal budget is one consideration that is particularly heavily debated with some estimating the costs in the hundreds of billions of dollars and other estimating much lower costs. This question is particularly sensitive in the context of another debate on the extent of any fiscal problems in the US (See the Fiscal Crisis? debate) which would also effect thinking on the ability of the US to absorb tax revenue losses of any kind. Another question surrounds the extent of economic impacts. One particularly extensively debated topic among scholars and politicians alike is how estate taxes affect wealthy savings rates and corresponding levels of consumption and economic

The Negative Effects Of Estate Tax On Farmers Of Illinois

Across the world, governments raise revenue through various types of fees. For instance, in the United States estate tax is one of the common taxes. It is a tax levied on the transfer of properties such as land, real estates or other assets upon the death of the owner. In Illinois State, the estate taxes are levied on property whose value is more than $ 4 million. This paper explains why estate taxes are bad for farmers in Illinois.
Illinois is among the most populous states of USA with many industries concentrated on agricultural productivity. Farm products such as soybeans and corn are widely grown in large-size farms with most citizens doing farming on a large scale as the primary economic activity. Agriculture accounts for much of the output of the state of more than 76,000 farms covering an approximate area of more than 28 million acres. Generally, Farmers and owners of large tracts of lands are usually more likely to be subjects of the federal estate tax or rather still the Illinois estate tax.
Considering the nature of farming and ranching, most of the assets are illiquid such as land and barn as revealed by a USDA survey in 2010. In addition, most farms are family owned and the estate tax bills always cause “the break-up of multi-generational family farms”(Scholl Jon) and consequential loss of their farmlands to developers through sale. With this fact in mind, it is evident that there are lasting negative consequences for the farmers in Illinois caused by the estate taxes. The taxes, therefore, make it difficult for family members to inherit the farm-lands and even continue with the productive exploitation of such farms since some of them end up selling such farms to cater for the estate taxes.
Once one has accounted for the Gross Estate, various deductions are usually done in order to arrive at the taxable estate value of the farms. These deductions may include estate administration costs, debts and processing fees. These deductions have an effect of reducing the value of the farms and consequently discouraging the inheriting farmers who resort to the sale of such lands to avoid subsequent estate tax in the future.
Therefore, estate taxes in Illinois have an adverse effect on the farmers, from reducing value of their farms, making it difficult for inheritances and finally leading to the collapse of family farms doing more harm than good to the farmers.

The estate tax is a tax placed on the assets of a deceased person as the estate is passed to the heirs. This should not be construed as a tax on the heirs but a tax on the total holdings of the estate, both tangible and intangible. The gift tax and generation- skipping taxes are taxes developed by the government to reduce the loopholes that the estate tax created to ensure the taxation of all eligible estates. Since its inception, constituent opinion has been that the estate tax is essentially double taxation. People pay tax on their income throughout their lives, then upon their death the remaining assets are again taxed as their estate is passed to their heirs. In recent months Congress passed legislation that will repeal the federal estate, gift, and generation-skipping tax by the year 2010.
The repeal of the estate tax mainly affects only the country's wealthiest families, since these are the only families that pay the tax. For example, a little less than 2 percent of the people who died in 1997 faced an estate tax. Therefore, 98 out of every 100 estates of the people who died faced no estate tax. Before the repeal in 1999 each member of a married couple was allowed a $625,000 exemption. This would allow a married couple a $1.25 million exemption from the estate tax. In 2000 this exemption rose to $675,000 per member, or $1.35 million per couple. This exemption is scheduled to continue to rise till the year 2006, when the exception will be $1 million per member, or $2 million per couple. Eventually, the total estate tax will be repealed in 2010, along with its' counterparts the gift and generation-skipping taxes.
As stated earlier, less than 2 percent of the people who died in 1998 had estates large enough to pay an estate tax. This tax earned nearly $24 billion in tax revenue in 1998. Of this amount, the largest 5 percent of the estates eligible to pay the tax, paid more than half of all the estate taxes. This means that around one out of every one thousand of the wealthiest people in the country paid more than half of all estate taxes. A recent study done by the Treasury Department stated that people with middle incomes paid almost no estate tax. This simply means that the people that pay an estate tax still have large incomes at their time of death. The statistics state that most people with estates eligible to pay the estate tax have incomes of more than $190,000 at their deaths.
There are several other exemptions that may be made against the federal estate tax. One is the small business and family farm exception. The ownership of a family business or farm grants the estate special treatment under the curre

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