Future of the Federal Estate Tax

Davies and Yakovlev write another opinion against the federal estate tax

Antony Davies (an associate professor of economics at Duquesne University) and Pavel Yakovlev (an assistant professor of economics at Duquesne University) have written another opinion arguing against the federal estate tax.  Their latest opinion was published by the Philadelphia Inquirer: 'Death tax' should stay dead (2/17/10).  This article is similar to the one that appeared last week in the Pittsburgh Post-Gazette.  See my earlier post, Two economists opine that the estate tax concentrates wealth (2/12/10). 

Two economists opine that the estate tax concentrates wealth

Antony Davies (an associate professor of economics at Duquesne University) and Pavel Yakovlev (an assistant professor of economics at Duquesne University) wrote an opinion piece for the Pittsburgh Post-Gazette, The estate tax, R.I.P.: Contrary to popular belief, the estate tax concentrates wealth.  They argued that “[t]he estate tax provides a clear case study in the law of unintended consequences and deserves to stay dead.”  They boldly assert,

We have studied the impact of this tax and have found that the claim that the estate tax helps prevent the rise of a "moneyed aristocracy" is dead wrong. The tax in fact contributes to wealth concentration by making it harder for the non-wealthy to accumulate wealth.

Their support comes from two observations:

• “It has these effects because the death tax reduces the number of small businesses and increases the market share of large corporations, further concentrating wealth in the hands of the powerful.”
• “In addition to causing as many as 6,000 businesses to be liquidated or absorbed by larger corporations, the estate tax also reduces government revenues. For every dollar in revenue the tax raises, state and local governments lose almost $3 in other taxes, we found.”

For more on a study by these economists, see WSJ: Let the Estate Tax Expire in Three Weeks (TaxProf Blog, 12/11/09).  Another study by these economists, Myths and Realities Surrounding the Estate Tax, was published by the anti-estate tax group, American Family Business Foundation.

More posts and articles on the federal estate tax

Here are some more of the many recent posts and articles on federal estate tax:

• Paul Caron, Economists in Favor of Estate Tax Repeal, TaxProf (1/2/10). 
• Curtis Coleman, The Death Tax Needs to Stay Dead, ARRA News Service (1/3/10). 
• Jerry Cooper, U.S. Federal Estate Tax Repealed for 365 Days, Trust Advisor Blog (1/1/10). 
• Good News on Federal Estate Tax, but Possible Side Effects, Hodgson Russ, LLP. 
• Michael H, Die Now for Once in a Lifetime Estate Tax Savings? Congress Creates a Quagmire., As Good As News (1/3/10). 
• Kevin Hassett, Democrats Ride Into Sunset, Your Wallet in Hand, BusinessWeek (1/3/10).
• Jeff Jacoby, Let’s keep the death tax dead, Boston Globe (opinion) (1/3/10).
• David Saltonstall, With estate tax dead for 2010, now is time for rich to kick the bucket tax free, NY Daily News (1/3/10). 
• taxing the deceased, Thought du Jour (1/3/10). 
• Thornstein Veblen, More Reasons to Abolish the Estate Tax: Think of the Baby Seals, Economists for Firing Larry Summers (1/2/10).  
• Jason Walser, Don't let estate tax limbo be an excuse to do nothing, Salisbury Post (opinion) (1/3/10). 

Debate regarding the death of the federal estate tax

In Death Tax Debate Brought Back to Life (the Atlantic Wire, 12/30/09), John Huddson pulls together a number of opinions from "economists and business writers" regarding the fate of the federal estate tax in 2010. 

WSJ Editorial and study by economists, Antony Davies and Pavel Yakovel of Duquesne University

On December 11, 2009, TaxProf provided two very interesting links regarding the estate tax -- a link to a recent Wall Street Journal editorial and another to a study by Anthony Davies and Pavel Yakovel of Duquesne University.  See WSJ: Let the Estate Tax Expire in Three Weeks (TaxProf Blog).

MSN Money: Is 2010 the best year to die?

Jeff Schnepper begins his article, 2010: The best year to die? (MSN Money 10/1/09), by relating a charming conversation with his children:

My kids had just sat me down and given me the bad news: I was going to die. They couldn't tell me what was going to do me in. But I was clearly a goner.

The upshot of this conversation is that he is now "scheduled for a nondeductible chariot ride into the sky."

Schnepper points us to a study that shows that people are more likely to die before a tax increase:

In fact, in the 2001 paper "Dying to Save Taxes" (.pdf file), economists Joel Slemrod of the University of Michigan and Wojciech Kopczuk of the University of British Columbia studied 13 changes in the U.S. tax code from 1917 forward. They concluded that taxpayers died in greater numbers just before tax increases and just after tax cuts.

A 2006 study in Australia reached the same conclusion. More than half of those who ordinarily died in the week before the abolishment of the Australian inheritance tax survived into the next month and escaped with their estates untaxed.