This morning I read an interesting article on the Washington Post about the Death Tax. I thought this article was particularly interesting because it focused on an aspect of the Death Tax that I hadn’t thought of before: its effect on family-owned businesses. If you know who Grover Norquist is, then you already know about his organization, Americans for Tax Reform, and why the death tax is evil. However, this article’s novel take on that tax makes it well worth reading.
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Summary of Why We Should Abolish the Death Tax
The article, called “Kill the Death Tax, the Grim Reaper of Family-Owned Businesses” talks mainly about the benefits of small businesses to the economy, and how they are hurt by the tax. For instance, the article states that over 70% of all new jobs are created by small businesses. It stands to reason that any tax that removes the amount of capital going into small businesses will be counterproductive. More taxes will be paid in the long-term if the initial capital can go into expanding production and job opportunities.
Instead of that capex spending, however, small businesses are stuck having to pay out a large portion of their free-cash to pay the tax. In some cases they even have to liquidate assets to pay it. That is extremely counterproductive. It takes money out of a productive sector and redistributes it. Socialism is always evil, but it is especially heinous when it is paid for by death and is ruinous to “the backbone of the economy.”
Finally, the article describes the advances that have been made in this policy area. Thanks to tax-reform under the Trump administration, the Death Tax is no longer quite as onerous. It still can pose a challenge, however. That challenge is particularly severe in the agriculture sector, where inherited farms can count as a taxed inheritance. Because land is very valuable, but farming often isn’t a free-cash-flow intensive industry, the tax can be extremely harmful to family-owned farms. As the article states, farming is already a difficult activity. It should not be made even more difficult by a greedy government.
My Analysis of the Death Tax:
I think this article is excellent because of its narrow focus. It isn’t overly broad, as many tax policy articles are. Instead of focusing on everyone hurt by the tax, the article focuses on a specific group: small-business owners. That focus allows the author to describe in detail how the tax is harmful. It also gives the author room to make narrow policy suggestions based on direct evidence from the article. I think that narrow focus on a specific problem, followed by policy advice to fix the problem, is extremely interesting and is exactly what America needs to dig itself out of the hold our self-serving politicians have dug it into with economically stifling higher taxes.
I agree with the author that the Death Tax is unjust. It hurts families, farms, and small businesses. Furthermore, I think it shows the short-term thinking of the government. Instead of allowing capital to flow into small businesses and then later collect taxes on all the jobs created by that, it removes the capital and redistributes it. I doubt the money is better spent on welfare than it would be by productive business owners. For that reason, I think the death tax should be repealed entirely. I see no reason why it hasn’t been already.
Enjoy reading the article! Most of my content has been focused on economics this week, so I thought it would be a good fit and help you see why taxes such as the death tax are bad for the economy!
By: Gen Z Conservative
More articles of mine on the negative effects of taxes: https://genzconservative.com/the-affluent-society/ and https://genzconservative.com/the-magic-formula-of-economic-success/
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