Federal Estate Tax - Essay Example

Sociology of E tax The Federal E Tax in the United s, otherwise known as a death tax which is enforced on property transfers made at the holder's death, has given rise to a significant topic of debate in the political sector from the time it was first established in 1797. There have been quite a lot of researches and analyses on the arguments for and against the federal estate tax which result in evidences in favor of as well as against the Federal Estate Tax. Whereas the various political and economic arguments for and against the death tax magnetize popular attention on the issue, a sociological perspective on the question gives a more complete and supreme argument against the Federal Estate Tax. Through the history of mankind, there have been several social issues which fail to attain the justified attention in sociological research, despite the fact that nobody gravely questions their implication for society, and the inheritance of private wealth from one generation to the following forms one such crucial sociological issue in the modern time. An awareness of the fact that about 550 billion dollars, which is more than 4% of the American GNP, are transferred per annum in the United States also suggests why the bequest of wealth and the Federal Estate Tax forms some central topics of sociological scholarship. "Estate taxation, one of the crucial areas of conflict in the regulation of the transfer of property, has become a topic of substantial political debate in the United States in recent years, and this has also prompted scholarly interest in the issue... One of the more interesting questions about the estate tax is why it is such a controversial tax..." (Beckert, 522) In fact, a sociological analysis of the Federal Estate Tax provides the most effective conclusion on why the arguments against the death tax have a superior point against those in favor of it in the essential controversial debate of the day, and there are important research evidences suggesting that the death tax has several limitations from the sociological point of view. Commendable researches on the topic of the Federal Estate Tax have concluded on the various arguments for and against the law which ultimately point out that it creates several issues to the taxpayers and that the limitations of the law concerning the economy and the environment far surpass the latent advantages of the law. The strong protest against the death tax in the current circumstances has been the result of several economic, sociological, and political considerations which prove significant to the entire system of the society. The economic perspective on the question argues that the Federal Estate Tax holds back the accumulation of capital and the growth of the economy. Important economic assessments on the topic conclude that the estate tax proves to be most detrimental to the economic growth of the federation. The taxes on the transference of property reduce the capital value of the property and diminish the finds intended for the preservation of labor. Taxes such as the Federal Estate Tax are unthrifty taxes which may enhance the revenue of the government, but rarely contribute to the good of the people affected, and they prevent the distribution of the national capital in the way most beneficial to the community. "For the general prosperity there cannot be too much facility given to the conveyance and exchange of all kinds of property, as it is by such means that capital of every species is likely to find its way into the hands of those who will best employ it in increasing the productions of the country." (Ricardo, 108) Therefore, the economic arguments against the Federal Estate Tax substantiate the sociological arguments against the same. The fact that there have been significant moves in the Congress to permanently repeal the federal estate tax also point to the limitations of the tax. Though there are ongoing debates on the repeal of the death tax, it is often assessed at a higher rate on the accumulated savings of deceased persons than the basic exemption amount. Except for the few financial pundits who argue against the repeal, there are several significant evidences against the tax. "Many public finance experts believe that the estate tax causes broad harm to the economy by suppressing investment and generating unproductive tax avoidance activity. In addition, the estate tax might not raise any revenue for the government when all its effects are taken into account." (Edwards) Therefore, the economic and financial impact of the tax as it relates to the people and the government cannot be neglected at any rate. "The economic case against the tax is pretty simple. Being able to pass on wealth to one's children is a strong incentive for wealth accumulation. By reducing that incentive, the estate tax reduces saving and investment." (Ponnuru) It is important to consider the arguments in favor of the federal estate tax which argue that the tax is in the best interest of the nation and that it helps the economy. Whereas the opponents of the estate tax argue that these taxes will not increase the revenue of the state but will harm the economies, the supporters hold that the recent studies on elderly migration challenge the assumptions of the former."At most, recent studies find that estate taxes have a small effect on the residence decisions of the very wealthy elderly - few people are likely to be affected and the size of the effect is small. This suggests that the impact, if any, on a state's economy and revenue collections is also likely to be small." (McNichol) However, the basic arguments of the supporters of the tax fail to attain wide acceptance as they many often do not have scientific research evidences to substantiate their arguments. The supporters of the estate tax do so because they think that it breaks up concentrations of wealth among the few and prevents the heirs from attaining the unearned property. However, they conveniently disregard that the real estate tax fails to achieve what its supporters wish it to do. "It doesn't keep wealth out of the hands of subsequent generations. In fact, it can do just the opposite - it prompts many people to give to their children early, often, and in trust... The estate tax has so many loopholes in it that it encourages exactly the kind of second-generation wealth accumulation that it was designed to prevent." (McCaffery, 76) The sociological perspective as well as the question concerning justice has outstood the economic arguments against the federal estate tax, and there has been great public opinion in favor of this move to repeal the death tax. The question of justice rightly summarizes the sociological aspect of the debate and substantiates the arguments against the death tax, and the economic case comes next. Accordingly, "it is unfair to tax the wealth that a person has accumulated over a lifetime, especially since he paid income taxes while earning it. The economic impact of the tax is at best a secondary issue." (Ponnuru) While the attempts by the supporters of the federal estate tax want to check the concentration of the wealth among the rich forever, it is unfair not to make the distinction between the hard working, prudent, and high saving rich and the luxurious, comfy, and flaunty rich. The federal estate tax tend to fall short of its original goal when there is an unjust treatment of the citizens before the eyes of the law, and this gives rise to the social issue of the question. "Our current system with its inconsistent income and porous estate taxes spares spenders and scorns savers." (McCaffery, 77) Therefore, the federal estate tax has proven to have several limitations which give rise to the social issues connected to the debate. In conclusion, the several arguments against the Federal Estate Tax have scientifically proven correct through different research conclusions, and the sociological perspective of the issue precisely augments these arguments. Works Cited Beckert, Jens. "Why Is the Estate Tax so Controversial" Society. Vol. 45. Iss. 6. 2008. P 521-528. 11 Dec. 2008. < http://www.mpi-fg-koeln.mpg.de/pu/mpifg_ja/Society_45-06_Beckert.pdf>. Edwards, Chris. "Repealing the Federal Estate Tax." Tax and Budget Bulletin. Cato Institute. 2006. 11 Dec. 2008. < http://www.cato.org/pubs/tbb/tbb-0606-36.pdf>. McCaffery, Edward J. Fair Not Flat: How to Make the Tax System Better and Simpler. Chicago: University of Chicago Press. 2002. P 76. Nichol, Elizabeth. "Research Findings Cast Doubt on Argument that Estate Taxes Harm State Economies." Center on Budget and Policy Priorities. 2007. Ponnuru, Ramesh. "Death and Taxes: The Political Fortunes of the Estate Tax." National Review. Vol. 54. Iss. 22. 2002. 11 Dec. 2008. . Ricardo, David. Principles of Political Economy and Taxation. Cosimo, Inc., 2006. P 108. Read More