Redstate

Why can't we ask Congress to cut back on spending, say cut all earmarks from all appropriations bills this year, and then cut most appropriations bills by 5 percent or whatever is necessary to pay for the emergency spending that will be needed?  Exempt defense and programs related to disaster relief, but why not cut money out of the Farm Bll, out of the Education Department, out of the Commerce Department?

For example, the Education portion of the Labor-HHS-Education appropriation bill has approximately $1 billion in earmarks.  The Labor and HHS side have similar amounts, if not more.  Track that across 13 appropriatons bills and we're talking serious money.

While I don't disagree that we need to be smarter fiscally, it's not the tax cuts that are bad, it's the spending.

Plus, don't forget that the 3.5 million exemption goes back down in 2010 unless a new bill is passed.

I totally agree on the spending side (I've still not let up railing on the transportation and energy bills, and completely agree that the earmarks ought to be stripped from the approps bills). We should do that too. But I can't see how you justify repealing the estate tax completely right now - it doesn't make any sense.

I have no problem holding the $3.5 million exemption past 2010 - that would be fine ... I'd prefer it come back down toward where it is now, but I'll take $3.5 million into the future. But repeal? Doesn't make fiscal sense.

Cutting pork-barrel spending is a must. But being smart about tax policy is a must too, and reflexive tax-cutting just for its own sake isn't any better than spending like druken sailors.

Guess which folks are particularly interested in permanently repealing the estate tax?

It is not fiscally responsible to repeal the estate tax at this time.

I'll tell you what's fiscally irresponsible: it's letting these people continue to live! We should kill them now, and take their money.

Our need for revenue has never been greater. That these people refuse to die so that we can grab their estates is an outrage! How dare they even breathe when hundreds of thousands are homeless in the wake of this terrible hurricane?

We not only need the death tax, we need death! What good is the tax if the rich don't die? Let's just grab Bill Gates, John Kerry and his lovely wife Evita, George Soros, the Waltons, the Kennedys, Warren Buffet... shoot them all and take their money! Viva la revolucion! Why, with that much dough, we could probably run the entire United States government for four, maybe five minutes before it was gone.

The Uber-Rich as victim imagery.  It has such an Antoinetteish ring to it.

Monday's USA Today (pg 6a) had an article regarding the estate tax.  It included an ad from United for a Fair Economy that was incredible in its dishonesty.

The ad said:

Should we fire 1,000 more teachers? Cut health care? Slash Social Security? And give the money to a few millionaires?

This was accompanied by pictures of 4 people including Paris Hilton (who couldn't agree with taking money from Paris?).

Since when is the govenment not taking my money misconstrued as the government giving me money?

So great.  Thanks for a bit of levity in a dark day.

-TS

I have one major beef with the Death Tax, it costs jobs.

The death tax itself carries hidden costs. Heritage Foundation economist William Beach estimates that the federal estate tax alone costs the U.S. between 170,000 and 250,000 potential jobs each year. These jobs never materialize because the investments that would have created them aren't made. By repealing the death tax, we'd allow the economy to create even more jobs, which would make all of us better off.

All of those people who would have employment would pay taxes on their wages. Even the most conservative of estimates put the Death Tax as revenue neutral meaning the government takes in the same amount of money Death Tax or No Death Tax. So the question becomes, why have the Death Tax? More jobs and same amount of revenue collected argue for the total repeal.

Minor beefs:

There are also moral reasons to oppose the Death Tax. People have worked and saved their whole lives, and paid their taxes, only to have the government come in and take half of everything that they have saved. Double taxation without respiration indeed.

The Death Tax discourages savings and investment. The government should be encouraging savings and investment (especially since it won't cost anything). The Death Tax promotes a Paris Hilton lifestyle, spend it now because you can't take it with you and when you go the government will take it anyways.

The rich can already circumvent a lot of the Death Tax with trusts, life insurance, gift transfers, and other instruments.

So let's rid ourselves of this obnoxious tax.

http://www.tallahassee.com/mld/tallahassee/news/opinion/12417916.htm

excerpt:

Death of estate tax really means we'll pay more taxes

Neil Skene

My View

A majority of Americans support repeal of the estate tax, according to the polls, but I wonder if they understand that the repeal will actually increase the taxes everyone pays on inherited property.

Less than 2 per cent of the American population pays an estate tax now. Anyone with assets of less than $1.5 million (that's $3 million for a couple) can pass on their estates free of tax. The exemption rises to $2 million per person next year and $3.5 million in 2008.

If you know how to manipulate the tax laws, the tax-free amount is even greater.

But when the estate tax is completely repealed, along with it will go a little feature called the "stepped-up basis," which basically forgives, at death, the capital gains tax on all profits accumulated during a person's lifetime.

As a result of the repeal, every American who leaves appreciated property to children and grandchildren will send their descendants a 15-percent tax bill as well.

Nobody mentioned that? Darn, they forgot.

We're talking about all kinds of things people routinely inherit - a house, stocks and bonds, vacant land, rental property, family homes and farms, and small businesses. Today, the person who inherits the assets starts fresh, because the tax basis for measuring taxable gains is "stepped up" to the value at the owner's death.

Suppose back in 1955, Aunt Sadie had a little money saved up. She bought 100 shares of stock in, say, the Tampa Electric Co. She paid $26 a share, or about $2,600 plus a commission.

Over the years, the stock split and split and split again. Today Sadie has about 2,000 shares of what is now called TECO Energy, worth about $18 apiece, or $36,000. She made a profit of $33,400, about 14 times her original investment, plus her dividends every quarter.

Suppose Aunt Sadie dies and leaves you her TECO stock. Sadie pays no estate tax, because estates of less than $1.5 million are exempt. And you, her heir, get a "stepped-up basis," as if you had bought the stock yourself for today's price of $18 a share.

Now suppose the stock price keeps going up and you sell it a year from now for $22 a share, or $44,000. You'll pay a 15-percent tax on the $4 profit since Aunt Sadie's death - about $1,200 in tax on the $8,000 profit Ð and have $42,800 left.

Now comes the Bush plan to repeal the estate tax permanently. (Under current law, the estate tax disappears for one year, 2010, then comes back. I'm not making that up.) If that happens, nobody will pay any estate tax, not even Bill Gates and Warren Buffett or, for that matter, George Herbert Walker Bush. But you will owe taxes on all the profits from the time Aunt Sadie bought the stock, back in 1955, until it is sold a generation or two later.

On a $44,000 stock sale, the tax would be $6,210, not $1,200. Instead of having $42,800 left from the inheritance, you'd have $37,790. About $5,000 is lost under the Bush "tax cut."

Substitute Bill Gates for Aunt Sadie. At his death his $36,000 in TECO stock is subject to estate tax - about $20,680. With repeal, Gates won't have to pay that tax. His heir who later sells at $22 would pay the same $6,210 on the gains that you paid on the profits since 1955. While your tax went up 500 percent, Bill Gates' went down by two-thirds.

And don't even get me started on the need to dig out Aunt Sadie's 30-year-old records documenting how much she paid.......

I hadn't seen that line of argument before ... but I suppose it's possible.

He's giving a terrible explanation of it. The problem isn't with the repeal of the estate tax, but (1) with the way the law was written (2) the sunsetting of the repeal so it comes back in full force. That is, it isn't the repeal that is the problem, but not repealing the estate tax that is the problem.

The "basis" is how to determine the capital gains. If you buy 100 shares of stock XYZ at $10 and seel it at $15, you pay capital gains on only the $5 gain, not the $15 sale price. (If you had to pay taxes on the gross sales value of $1500, nobody would want to own stocks). Your basis in this example is $10/share.

Let's say you die while still holding those 100 shares of XYZ that you bought at $10, and the price is now $15. With the current estate tax, your heir would pay taxes on that $500 gain, the $5/share spread. Now, your heir's new basis would be "stepped up" to $15/share for when they actually sell the share.

Now a couple years later your heir decides to sell those shares of XYZ, and the stock is now at $22. With the stepped up basis, he would only pay capital gains taxes on $7 gain. This prevents somebody from getting taxed on that $10 to $15 gain twice.

When the estate tax is set to be eliminated for a year, this needs to be changed. Since your hier will no longer be paying taxes when he inherits those shares, the basis shouldn't change either. All capital gains taxes should be calculated against the original $10/share price.

Because of quirks in Senate budget rules and a little careless drafting, the lack of stepping up the basis will go into effect and the next year the estate tax comes back in full force. Without an estate tax, the basis shouldn't increase obviosly. However when the estate tax comes back after the stepped up basis goes away, then it will result in a double taxation. Your hier will not pay taxes on that $10 to $15 a share gain, and their basis will not change though. Then when he wants to sell those shares of XYZ later, he will pay taxes on the $10 to $22 gain instead of from a $15 basis.

It's not the death of the estate tax. Is ithe estate tax. The guy is completely backwards.

Has he persuaded you? Are you now in favor of repealing the death tax?

I do think, however, that we need to do something to avoid the silly sunsetting thing that happens in 2010, which seems likely to just cause unnecessary problems. What say something like keeping the $3.5 million exemption level (affecting just .2% of Americans)? Or lower the exemption level to $1 million and decrease the rate significantly. And make the levels permanent there.

Look I know for a fact this isn't going to affect the average "small business" or "family farm." That's just nonsense. A $3.5 million (or even $1.5 million) exemption affects people much, much richer than small business owners and family farmers.

All I'm saying with this is, we can't afford more tax cuts right now. If the ecomony picks up, we spend down the deficit, we can get Congress to quit spending like there's no tomorrow - then heck yeah, lower taxes (and spending). But right now? It doesn't make fiscal sense.

"we can't afford more tax cuts right now"

repealing the Death Tax is revenue neutral

Then you reject Neil Skene's claim that repealing the tax would result in higher collections (for all the reasons he outlines in the post above)?

If you count those "uncreated jobs" that potentially, but not necessarily, could result from its repeal. What's to say those with the money won't just keep it? It certainly isn't revenue neutral based solely on the collections costs.

Jjayon's comment just below speaks to this. The problem is with the "sunsetting moment" - if we evened things out, that blip wouldn't occur.

I think he referring to the research that has been done showing that the estate tax doesn't generate revenue, but instead just shifts it around. The taxes generated from the estate tax, according to these reports, would get paid in other forms.

An easy example is the capital gains tax. If the estate tax didn't exist, then the capital gains tax would still get paid when the stock was sold. The estate tax just moves the payment around a little: it gets taxed now (at death) instead of the future sale date, and it gets counted under the estate tax column instead of the capital gains tax. (This example ignores the dead weight loss of forcing the sale of securities to pay for part of an estate. This is a considerable loss, but basic static analysis doesn't even attempt to take it into account.)

This would be saying that if you eliminated the estate tax, even without trying to dynamically model labor and capital market changes, you would see other taxes take it what the estate tax used to take in.

I'm sure somebody here can dig up the papers on this.

If it's "really" revenue-neutral, and I don't believe that it is, then what good does it do to repeal it?

economically neutral.  The money gets cycled through the economy once before the feds get their hands on it.

B/c the estate tax has tremendous dead weight loss. It reduces the capital stock by causing capital to be canabalized to pay for large holdings. You'd rather raise the money from the income tax or delaying the capital sales until it makes economic sense instead when it is needed to pay the tax bill.

Also if it make eactly zero difference to have or not have the tax, you would rather not have it since you still get savings in time and resources spent in compliance costs or trying to avoid it. Estate planning is a huge business and not a very economically beneficial one when its main purpose is just to avoid the tax.

As a CPA, I can tell you that your interpretation of the loss of the step-up in basis is categorically wrong.

Inherited property is not taxable to the recipient whether the property was taxed with an estate or not.

The nature of the inherited property will not change if the estate tax is repealed.  Unless Congress changes the law in the future, there will be no tax on property inherited in 2010 (the one year that currently promises no estate taxes).

In the law as currently written, you would still receive a full step-up in basis on any and all property you inherit.

The scenario you painted with aunt Sadie's stock would only be true if she gifted the stock to you before she died.  If you inherit the property, whether there is estate tax on it or not, you get the full step-up in basis.

I hope you were just misinformed and not trying to mislead anyone, but you would be better served to leave the taxes to the professionals in the future.  Check with your CPA.  He's worth every cent you pay him.

I was asking if his opinion is accurate.  So thank you for clarifying.

You are much closer to reality than Jasmine, but still need a slight correction.  You wrote:

Let's say you die while still holding those 100 shares of XYZ that you bought at $10, and the price is now $15.  With the current estate tax, your heir would pay taxes on that $500 gain, the $5/share spread. Now, your heir's new basis would be "stepped up" to $15/share for when they actually sell the share.

Your heir would not pay the taxes on the $500 gain, your estate would pay the taxes.  Maybe that is what you meant, but someone might infer the heir would pay those taxes on their tax return, while they are really paid with the estate tax return.  If no estate tax is due, (because the estate is under the limit or estate taxes are repealed) the heir would receive $5/share step-up in basis with no tax being paid because it is inherited property.  

See my additional corrections to Jasmine's post below.

There was a good discussion of this on the Becker-Posner Blog back in May.  It is well worth reading and you can find it by going to that blog and navigating to entries for May 15, 2005.

Posner makes the interesting point that there has been a traditional concern about dynastic wealth.  Specifically, the concern has been that large inheritances reduce social mobility and place disproportionate political power in the hands of those who have not demonstrated their merit by their own efforts.

This raises an interesting question for me as to whether a person does have a moral right to exercise any ownership control of property after their death.    

Wow, the author is an attorney, but obviously not a tax attorney. I hope a CPA in Tennessee sets him straight on this.

He is either uninformed or being intentionally misleading. The fact that his site says "Tallahassee Democrat" leads me to believe it is the latter.

Posner makes the interesting point that there has been a traditional concern about dynastic wealth.  Specifically, the concern has been that large inheritances reduce social mobility and place disproportionate political power in the hands of those who have not demonstrated their merit by their own efforts

I've had a bit too much Sangria tonight but this is EXACTLY my problem with the elimination of estate taxes.

People should be able to provide for their children.  That doesn't mean that those children should become semi-royalty.

Posner may be correct. History is full of examples of many inheritors of wealth drifting into politics.

These inheritors of wealth may not have demonstrated their merit by their own efforts, but some still may be good leaders due to having been reared by the original generator of the wealth.

IMO, generally the person who originally generates dynastic wealth knows the value of hard work and teaches it to his children. Such children have generally known wealthy times and not-so-wealthy times. They also work hard and many times generate even more wealth. But they tend not to expect their children to work nearly as hard as they worked.

The third generation, which did not learn the value of hard work, were born to priviledge and spend more than they earn. In many cases the dynastic wealth is mostly spent by the fourth or fifth generation. This spending helps the economy and shifts the wealth to others who are willing to work hard.

Similarly, in politics, the children of original dynastic wealth may have learned the lessons necessary to be good leaders. However, the younger children and grandchildren don't always learn the same lessons, and don't make as good of leaders. By the fourth and fifth generation, it is likely that they learned none of the lessons that made their ancestor so successful.

Heritage Foundation economist William Beach estimates that the federal estate tax alone costs the U.S. between 170,000 and 250,000 potential jobs each year.

Well, that's a splendid claim, but where does it come from?  

There appear to be some missing steps between the estate tax and a quarter of million jobs.  How much money is collected?  What else would be done with that money?  How that alternate use would generate jobs?  How would those jobs amount to 250,000 more than any employment generated by the tax collection?

I'd love to see this demonstrated.  "Everybody knows" and "even the most conservative of estimates" don't cut it.  Where are the numbers, and where is the cause and effect?

And, as an aside, it is not a "death tax".  You are not taxed because you die.  Your inheritors incur a tax when your estate is transferred to them.  The estate is taxed, hence it is called an estate tax.  If you die and leave less than $1.5M ($3.5M eventually), you have no worries.

I'd also be interested to know how many family businesses and farms were actually lost or closed due to the estate tax.

Thanks -

This sounds like Democrat propaganda.  The mainstream press has long referred to Republican tax hikers as "responsible."

I don't see how it's smart to have the government swoop into families that have suffered a loss, using death as an occasion tos swipe money.

That's not smart, that's ghoulish.

>it exempts all estates worth less than $1.5 million (an exemption that is scheduled to rise to $3.5 million by 2009)

But recall that it also will go back to the $600,000 per person level in 2011 unless some amendment takes place before then.

Which is why some amendment should be made to correct that. Absolutely. Keep it at $1.5 or $3.5 million, that would be fine.

So it's "smarter" to keep cutting tax after tax after tax even while we continue to allow Congress to pass behemoth spending bill after behemoth spending bill and this president to keep signing them? I hardly think so.

Amos is right on point here. I'd too like to see how Beach came to that conclusion, and as I mention downthread, what's to say that money "used" to create jobs wouldn't just sit in a bank account or trust funds instead?

In answer, Amos, to your question about "small businesses" and "family farms" I don't know, but I'd like to. Normally those definitions include things that you and I wouldn't recognize as either "small" or "family" in any reasonable sense of the term. But I'll look around and see what I can find. In my personal experience, most true family farms tend to fail not because of estate taxes, but due to low prices paid to them by the commodity processors (milk, corn, beef, what have you), as well as a lack of next-generational interest.

Oh, that poor straw man.  You knocked his head clean into the next county.

I didn't say a word about spending, did I?  I think if you want to switch priorities, you need to do it entirely on the spending end.

Need more money for your pet project?  Cut something else, don't go grave robbing.

I wasn't arguing a straw man, I was saying you can't argue fiscal responsibility by talking tax cuts as far as the eye can see while we're spending ourselves into oblivion. I've been railing against pork for months, I don't like "pet projects" any more than you do.

Like I say downthread, if there comes a time when the economy improves, we have a responsibly-spending Congress and president, we don't have to clean up an entire coast and aren't fighting a war, then sure, get rid of every tax we can. But we're not there right now. It just doesn't make sense!

I'm sure everyone will be shocked to hear that, as it turns out, very few family farms and small businesses are impacted.

Well hunted. And even of those few, I'd be surprised if any of us would consider them "family-run."

It seems to me that you're arguing that two wrongs make a right.  Spending is high, therefore we must keep this horrid tax in place.

Or perhaps the better analogy is the bartender who keeps serving the obvious drunk.  If we let Congress keep drinking until they decide they'll quit, we'll be waiting a long time.  We need to cut them off, and cutting taxes is a good way to do that.

And I doubt there's a tax more deserving of total elimination than the death tax.  We shouldn't be vultures, picking at the remains of people to fund the Sentator Robert C. Byrd Park Bench.  You're painting the spending in the best possible light by mentioning the hurricane and the war, but all the government's money is fungible.

we shouldn't be vultures, picking at the bread on people's plates as they try to feed their family, but somehow we all still pay taxes come April 15. Frames are fun, huh?

You aren't taxing the dead, you are taxing the heirs on the massive wealth they inherit.

Spending is high, and some of that is pork to be sure, and that should be cut. Some is necessary: funding the troops, and disaster relief. That's not negotiable, and we should pay for it now rather than pass it on to our kids.

Why should we make it a priority to legislate new rules for the uber-wealthy few, if right now that will come at the expense of ordinary Americans?

If the Republicans retain control of Congress and the Presidency through the 2006 and 2008 elections I predict that the estate tax exemption will be extended. It will be somewhere between the $3.5 M allowed in 2009 and the infinite amount allowed in 2010.

If, OTOH, the Democrats prevail in those elections, I would be willing to bet we will never even see the $3.5 M in 2009. The Democrats won't actually have to raise taxes with this one, they will just repeal or revise the exemption.

No, two wrongs don't make a right.

First of all, I don't find this particular tax nearly as detestable as you seem to, and I think your images of it ("ghoulish," "vultures," etc.) are rather overblown. As Amos points out below, you're not being taxed "because you die," your (multi-million dollar) estate is being taxed when it's transferred.

You're quite correct to say that no taxpayer should be paying for Robert C. Byrd Park - or more accurately these days, Don Young's Way, since our current Republican leadership has a dismal record on holding down spending. We need to cut out the pork. And as you say, tax cuts may not be a bad way to mandate that ... but that only works if the president and Congress aren't willing (as they have been in recent years) to spend the country deeper and deeper into deficit.

In an ideal world yes, wasteful pork-barrel spending would be eliminated, taxes could be cut, and we'd have plenty of funds for all the necessary programs. But that requires more than just cutting taxes! Especially right now.

If you were one of those 138 who did not have enough liquid assets available to pay the estate taxes without selling the family business or farm would your opinion be different? It's easy to mock the low numbers when they are just numbers.

Why should anyone have to lose the family business or farm because of this unfair tax?

We need tax cuts and spending cuts.  We're not getting the latter, but we should continue with the former.

Especially with the likelihood of a recession blown way up by the hurricane, now's the time to reduce what the government takes from people.

We don't tax people on money they have come April 15th, we tax them on money they earn. That's a critical difference.

So since we're not getting reduced spending, we should just keep piling deficits on deficits on deficits? I can't buy that.

And the heirs don't have that wealth until they inherit. It's a net gain for them, not a continuation of the status quo.

Whether or not they earn it I leave to you.

If I give some money to my wife to go buy a shirt/boat/whatever while I'm alive, has she earned it? Should it be taxed?

What about when I'm dead?

generally exempt (with some caveats) I'm not sure what your point is.

Gifts over a certain amount are certainly taxable.

a "family" farm worth more than $1.5 million dollars, that didn't happen to also come with enough liquid assets to pay the tax, I'd personally be ecstatic.

But ok, fine, let's exempt the actual farms. You don't seriously think that's gonna satisfy everyone else, do you? The farm thing is just convenient political cover, as shown by the low numbers.

The uber-wealthy don't pay the inheritance tax unless they are stupid or lazy.

The uber-wealthy set up foundations, non-profit corporations, find tax shelters, and shift their money around so that they can avoid the estate tax.

The estate tax falls on the moderately wealthy, the small businessman, and the few remaining 'family farmers' that we have left in this country.

Let's also not forget that every aspect of the estate tax is already taxed.  Income when it comes in, property when it is bought and sold.  Why does the government deserve more just because Granny died?

Look, "family farmers" (at least by any reasonable definition of "family farm") aren't going to end up with estates worth millions of dollars. It doesn't happen. I've got more than more family farmer in my family, and I can testify to the basic facts - they're not rolling in dough, and they're certainly not going to have to worry about "estate taxes." Saying family farmers and small businesspeople are affected by this is just inaccurate.

The government isn't getting more because "Granny" dies - as brandon and amos have been saying, the inheritance is what's being taxed. You could (and I'm not) make the reverse argument and say why does Junior deserve granny's money - he didn't earn it, she did.

"more than one family farmer" that is, not "more than more". Sorry.

Add up the value of land, equipment, and any livestock.  That's the value of the estate and the amount which the estate tax uses to calculate what is owed.

How exactly does the family who inherits that farm figure out how to come up with the cash to pay the tax?  A small business, a small farm, doesn't have the cash on hand to pay 55% of the value of the estate.  Even if the rate stays at 1.5 million or 3.5 million, you still have to pay 55% of the amount over that, in cash.  So you have to sell off inventory, take out a loan, or sell off the whole thing (especially when there are multiple heirs) at a loss.

The point is that it is not the government's money.  It's yours.  You earned it, you invested it, you paid taxes on it from beginning to end.  You should be able to do with it as you see fit.

When you die, the second person showing up at the door should not be the tax man looking for his share.  As I've said before, the uber-wealthy already get out of paying this confiscatory tax (look at Heinz-Kerry, she barely paid a fraction of what she should have paid because they set up their money very wisely).  What you're asking for is to tax those that aren't canny enough to get good lawyers (or can't put out the cash upfront) or are too stupid to set up their estate in a crafty way.

That's not good tax policy, it's not good social policy.

If you want to raise taxes, fine, argue for it.    But to say that we shouldn't get rid of an unfair, badly applied, confiscatory tax because of the disaster (or the children, or the environment, or the elderly, or whatever cause de jure to rationalize the continuation of spending) is just silly.

I share your disdain for the spending, and will advocate long and hard about the need to trim much of the fat from the government, but we shouldn't say 'oh well, we can always get the rich'

Please, if you want to argue in favor of the repeal of the estate tax, do so without cloaking yourself in family farms rhetoric.

Are you also against gift taxes?

Your preferred method of fixing estate tax loopholes is to eliminate the entire thing?

the 55 percent figure? My understanding is that the maximum rate is currently at 48 percent. Not a big deal, just curious.

I'm happy to exempt every single one of the handful of family farms that would owe estate tax. You define a reasonable criteria, that doesn't allow anyone to just run out and buy a farm to avoid taxes, and I'll sign off on it. We'll propose a bipartisan bill!

But I guarantee you that won't be good enough for the people pushing to repeal the estate tax. Because it's never been about the family farms, and we both know that.

It was only supposed to be a general example, and I could have been more precise in who technically pays the tax.

My suggestion is not the elimination of the estate tax but a reduction: set the exemption at $3 million, and limit the tax on estates over that amount to 15%.

I haven't followed the intricacies of the percentage that the government takes when someone dies for a while.  When a family friend died in the 90s and they settled her (farm) estate it was 55% , iirc.

She worked for years to establish a modest farm with a modest income.  When she got ill, she wanted to leave it, intact, to her nephew.  The property, dairy cattle, and equipment came to about 3-4 mil.  She had no cash assets beyond a small money market account.  He had a $600,000 estate tax bill (or thereabouts between state and Feds) when she died.

She didn't leave him with enough cash, and he didn't want to go into debt, so he had to sell.  It hurt him deeply that he couldn't keep the farm, but he didn't want to carry that much debt.

Yes, it's an anecdote.  Yes it's not common.

I get all that.

But the point remains.  Why exactly does the government get to come calling at the same time as the funeral director?

Regardless of who exactly died, I don't see why we should tax people when they die.

Tax income, tax property, tax transactions, and whatever else.  But to tax someone when they die is just insult to injury.

Especially when we see that most of the really wealthy don't pay the estate tax.  They establish foundations, donate to charity, manuever their money around to avoid it.  

So the estate tax becomes a compliance tax, a tax on the moderately wealthy, or a tax on the less savvy but still wealthy.

I think it's unfair and unreasonable.

As for the gift tax, I see no real value to it other than to give the accountants and lawyers something to do.

I'm not a big fan of the tax code as it is currently constructed.  I'm not sure where I fall on the flat tax, fair tax, or whatever. But it's all a big stinking game.

I've been around wealthy people and they spend more time and energy trying to find ways to avoid taxes, they'll go to absurd lengths.

Again with an anecdote (which is NOT the singular of facts, I understand that).  I knew this guy who was significantly wealthy.  He was told by his accountant that there was a way to legally avoid paying about $500,000 in taxes.  But it would cost about $450,000 in legal, accounting, and administrative fees.  This guy went ahead with it 'for the principle' he said.

As a country we spend hundreds of millions, or maybe billions, on accountants, lawyers, tax preparation, procedural compliance, tax shelters, tax dodges, and whatever else.

Politicians add dozens or hundreds of pages to the tax code for favored projects, preferred behaviors, policy inducements, and whatever else.

It all serves to make things more and more complicated, more and more difficult to comply with, and more and more scams to avoid, defer, deny taxes.

What was the question again?  :)