Ideas for the Estate Tax

The late, great Milton Friedman once said of our tax system, "We have a system that increasingly taxes work and subsidizes non work." Today, the federal government taxes estates of people who are worth over $2 million at a rate of 55%. Now, I agree with Oliver Wendell Holmes', Jr., sentiment that taxes are the price we pay for civilization, but the way our government taxes those who have led successful lives is imprudent and unfair. The estate tax exists (or should exist) to tax capital accumulation over one's life (i.e. earnings that come from sources that have not been taxed already). It is entirely possible to be worth $2 million at the time of your death and to have accumulated most of that wealth through income, which, I believe, is already taxed at an exorbitant rate (more on that another day). It would be more prudent for Congress to raise the estate tax deduction to $25 million (the point where, today, one begins to earn more money from dividends and capital gains, which are virtually untaxed), and to lower the rate of taxation of estates to one closer to the highest tax bracket on income (which, if I remember correctly, was around 35% in 2006). This solution is, I believe, not only the best for our nation, but also a good compromise between those who wish to completely eliminate the estate tax and those who wish to maintain the current and harmful status quo. Let's hope incoming Ways & Means Chairman Charles Rangel can make this a higher priority in the new Congress than reinstating the draft.