Death Tax is a burden none can afford

In a recent letter to the editor of the Daily Pilot, Wallace Wood

of Costa Mesa wrote that the Death Tax “is simply the income tax

levied on huge inheritances, and rightly so.” That’s a common

misconception, and it deserves a response.

In fact, the Death Tax is a property tax -- not an income tax. One

needn’t have any income at all to owe it. And because it is levied on

an individual’s after-tax life savings at rates far in excess of

income taxes, it amounts to both confiscation and double taxation.

Typically, the people who wind up owing Death Tax are small

business owners, family farmers and ranchers who have land, assets

and inventory, but no cash. They’re the ones who can’t afford an

estate plan to avoid the tax, the way the super-rich can.

When the owner of a cash-poor but asset-”rich” small business or

family farm dies, the heirs are forced to sell off all or part of the

family business to pay the tax man. When the business is liquidated

in this way, many or all of its employees lose their jobs.

The tax rate the workers pay exceeds even the top rate of 60%

that, prior to my reforms in 2002, had to be paid by the estate. The

tax rate for laid-off workers is 100%, for they have lost all of

their income.

The Death Tax raises barely one percent of federal income tax

revenues, yet it takes up 88 pages of the Internal Revenue Code and

thousands of pages of complex regulations. It is the most expensive

federal tax to administer, with over 65 cents of each dollar eaten up

in administrative and compliance costs.

For many of these same reasons, we repealed our state Death Tax by

an initiative of the people with over 60% of the vote, back in 1982.

We should do the same in Washington. It’s time for the Death Tax to

die.

* CHRISTOPHER COX is Newport Beach’s U.S. Congressman, who

represents the 48th District.