Grave Robbers:
The Moral Case against the Death Tax
by Edward J. McCaffery
Edward J. McCaffery is Maurice Jones, Jr.,
Professor of Law, University of Southern California Law School;
visiting professor of law and economics, California Institute of
Technology; and author of Taxing Women (University of Chicago Press,
1997).
Executive Summary
The federal gift and estate tax has come to be known
as the “death tax.” There are several proposals to reform or
repeal the tax pending before the current Congress, and at least
some death tax changes are expected soon. Supporters of the tax
continue to maintain, however, that the tax is necessary for the
sake of fairness, clouding prospects for ultimate change.
This study is a primer on the basic issues
surrounding the death tax. It finds that the tax fails to achieve
most—and quite possibly any—of the objectives its supporters
promote. The tax raises barely over 1 percent of total federal tax
revenues, and when revenue losses from other tax sources are
accounted for, its overall impact on tax receipts is smaller still.
Studies indicate that for every dollar raised from the tax, roughly
another dollar is lost because of avoidance, compliance,
administrative, and enforcement costs. Because the death tax is a
tax on savings, it also almost certainly suppresses economic growth.
Some recent studies even suggest that the cost of the tax falls
disproportionately on women, minorities, and owners of small
businesses.
The main defects of the death tax, however, are not
matters of dollars and cents alone. Unlike other recent studies,
this one does not focus on the economic aspects of the case against
the tax. The biggest problem with the death tax is a moral one. The
death tax rewards a “die-broke” ethic, whereby the wealthy spend
down their wealth on lavish consumption, and discourages
economically and socially beneficial intergenerational saving. The
tax does not promote traditional liberal ideals of redistribution,
equality of opportunity, or fundamental fairness. It turns out that
certain appealing and attainable comprehensive tax reform
options—moving toward a progressive consumption tax, which would
fall consistently on spending, not work or savings—far better
serve the goals of tax fairness and common sense.
Reducing or eliminating the death tax and its
absurdly high rates should thus have broad bipartisan appeal
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