- The Washington Times - Friday, March 9, 2001

Washington insiders are amused by President Bush's apparent habit of assigning nicknames to many members of Congress and other D.C. power brokers.

I like nicknames because they stick in your mind. We all know "Chubby" Checker, but who knows Ernest Evans, though they are one and the same.

So let me make a suggestion to the president, as he attempts to sell his tax plan to the American people and Congress: Whenever you refer to the "estate tax" use one of its more memorable nicknames. The death tax, for example. Or the exit tax. Or the grim reaper's tax. Or the grave-robber's tax. Or the cadaver tax or the cruelest tax. The American people will quickly get the picture.

Call it what you will, the death tax is one of the least fair taxes of them all, and President Bush is right to call for its elimination.

Under the president's plan, which was sent to Congress on Feb. 8, the tax would be phased out over several years. We would like to see it killed outright, as proposed in legislation originally introduced by Rep. Chris Cox, California Republican, and Sen. Jon Kyl, Arizona Republican. Either way, the tax has got to go.

It doesn't take a rocket scientist to understand the essence of this tax. If you work hard all your life, are conscientious about saving for your retirement or a rainy day, buy a house, and invest a bit along the way, chances are very good that when you reach a certain age, typically 60-plus, you'll be a target for the death tax. If you started a business or own a family farm even a modestly successful business or a relatively small farm you'll really be coveted by the IRS grave robbers.

But don't fret: The tax collector doesn't come banging on the door until after you die. Then, amidst all their other concerns, your family has to worry about the taxman, who demands an inventory of everything you have managed to accumulate over your entire lifetime cash, stocks, bonds, the net value of your house, your car(s), a boat, the summer cottage, your business, your farm, your collection of rare baseball cards, that Tiffany lamp you inherited from your parents, the antiques, the Rolex you treated yourself to on your 65th birthday. The IRS adds it all up and everything above a certain amount is taxed, with the exception of the assets you specifically leave to your spouse.

But don't worry. They get a second shot when your spouse dies; then, everything is considered fair game by the IRS. No ifs, ands or buts.

The current exemption is $675,000, increasing to $1 million in 2006. But if you live in a typical urban or close-in suburban area these days, your house alone may be worth that much. A small business or farm, with its assets and inventory, is probably worth far more.

The death tax was established with a specific purpose in mind: to prevent the transfer of large Kennedy-sized fortunes from one generation to the next.

But it is not the people with large fortunes who pay. They hire estate planners and lawyers and establish trusts and other legal entities that enable them to dodge the tax collector. So the burden of the tax typically falls on small business owners and family farmers and others who were disciplined enough to save and invest over many, many years. According to recent IRS data, 53 percent of all the estates that filed tax returns in 1996 had assets under $1 million, and 96 percent had assets under $5 million. Internet billionaires, oil barons, and wealthy New England Brahmins were rarely to be found.

In the grand scheme of things, the death tax raises very little money for government. According to at least one recent study, the costs of compliance and tax collection actually outweigh the total receipts to the Treasury.

Regardless, dying should not be a taxable event. In my nearly 40 years working on or near Capitol Hill, I have seen a lot of taxes come, but not many go. In this era of budget surpluses, this one's time to go has come.

James L. Martin is the president of The 60 Plus Association, a grass-roots seniors group headquartered in Arlington.


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