The House Finance committee voted to repeal the estate tax yesterday. The repeal will benefit less than 123 estates in North Carolina and make our tax system more upside-down and less able to invest in educating children, updating the state’s infrastructure and supporting community health and safety.
Proponents relied on common myths about the estate tax to support the repeal. The reality is far different from their claims as this important piece from the Center on Budget and Policy Priorities shows. Among the key facts about the estate tax:
1. Everybody dies, but only the richest 2 in 1,000 estates pay any estate tax.
2. The few estates that pay estate tax generally pay less than one-sixth the value of the estate in tax
3. The costs of complying with the estate tax are relatively modest and are consistent with the costs of complying with other taxes.
4. Only a handful of small, family owned farms and businesses owe any estate tax at all, and virtually none would have to be liquidated to pay the tax.
5. Large estates consist to a large degree of “unrealized” capital gains that have never been taxed; the estate tax is the only means of taxing this income.
6. Eliminating the estate tax would not substantially affect private saving, and it would greatly increase government dissaving (i.e., deficits); as a result, it would more likely reduce the capital available for investment than increase it.
7. The estate tax affects only those most able to pay, and the funds it raises help support a range of programs that benefit the nation.