Ron Paul's Texas Straight Talk - A weekly Column

June 12, 2000

Repeal of Un-American "Death Tax" Passes House

On Friday, the House of Representatives cast a historic vote and repealed the immoral estate tax, better known as the "death tax." Of all the outrageous taxes Americans are forced to pay each year, the death tax is the most outrageous of them all. It amounts to government confiscation of American citizens' property when they die, instead of allowing them to pass a legacy on to their families.
The death tax confiscates anywhere from 37%-55% of a person's estate when he or she dies. That is not only the highest tax rate in the tax code. It is also double taxation, a tax on already taxed items. People pay federal, state, and local taxes out of their paychecks for their entire lives. What estate is built then gets taxed at their death, and their family is forced to pay the federal government again.
The death tax was originally created as a temporary tax for the purpose of raising funds for war-related events. It was first enacted in 1797 to pay for the creation of the navy. After the goal was met, it was repealed in 1802. This happened several more times to pay for the Civil War and the Spanish-American War, but was repealed when the conflicts were over. However, in 1916, the death tax became a permanent fixture in the tax code, and it has been a thorn in the side of hard-working Americans ever since.
The entire concept of the death tax is not only destructive to families, but is also extremely harmful to the economy. It gives people less incentive to save and more incentive to spend because of the relatively high rate at which estates are taxed. Thus, it results in a disincentive to parents to leave their children a family business, family farm or their savings. A recent study from George Mason University found that within eight years of eliminating the death tax, the gross domestic product would be $80 billion larger than expected, resulting in 250,000 new jobs.
There are some who argue the government would lose too much revenue if the death tax were repealed. First, I object to the notion that money collected from the death tax is, in fact, the government's money to lose. The money belongs to American citizens who worked hard to earn it. And another thing that jumps out at me is the inefficiency of government with regard to collecting this tax. Three years ago, the death tax raised $20 billion in government revenue. However, the cost to government of actually collecting the money, combined with the cost of compliance, amounts to $12 billion. That means the $20 billion collected by the IRS actually required a $32 drain on the economy. On the other hand, repealing the tax would cost the government $20 billion, but it would inject $32 billion into the economy.
In a word, the death tax is simply un-American. People should not be punished for working hard their entire lives, creating jobs and wealth for others, and then trying to leave some of it so their children can have better lives. I applaud the members of the House who had the courage to cast the historic vote today to repeal the death tax. Now, I call on the members of the Senate and the President to support this legislation. The time has come to create a government that is supportive, not oppressive to the small business owner and the family farmer. If we put our faith in the American people, instead of the government, we will increase individual savings, promote job creation and, most importantly, support the family structure.