- The Washington Times - Thursday, March 28, 2002

Taxes are like termites: You're never quite sure if you've gotten them under control, and they may reappear at any time. It is, therefore, no great surprise to discover that officials in states around the country are looking for ways to impose or expand the so-called death tax at the state level, now that the federal death tax is being phased out. Alarmed that the monies kicked back to them by Washington may soon evaporate, they are determined to find a way to recoup their "loss."

Of course, the "losses" at issue are derived entirely from monies extracted by the assets or estate of a person upon his death before they are transferred to his designated heirs. Proponents of estate taxes love to cite the supposed "progressivity" of the taxes i.e., that they only soak the rich. "Most of the tax is paid by multimillionaires," crowed The Washington Post on Monday. However, death taxes often mean the death of family owned businesses that cannot afford to continue after being socked with taxes that often require survivors to sell assets, such as real property. There is also the fact that estate/death taxes represent double, triple, even quadruple taxation. Almost everyone pays income taxes at the federal level. Then, there are state and local taxes. And then there are taxes levied on the purchase of all real property and business equipment not to mention taxes on investment income and so forth. Thus, estate taxes are taxes levied on the remaining 50 cents or less of every original, pre-tax dollar. The outrageous nature of such multi-tiered taxation is precisely why President Bush sought to repeal the federal death tax.

However, the phase out could "cost" states such as Maryland and Virginia some $80 million to $130 million annually. The District stands to "lose" around $50 million each year. That means one of two things: Either these governments will have to reduce their operating costs, or taxpayers can expect to get socked to make up for the shortfall. "Some hard choices will have to be made," D.C. Mayor Anthony Williams said the other day. "The states got screwed," said Virginia Finance Secretary John M. Bennett.

Well, not so. Actually, it is the people who produce everything the maw of the state consumes that "got screwed" by estate taxation, and it is the very same group that stands to lose again such as the owner of the corner Chinese take-out store, or the guy who runs an auto-repair shop, or the farmer or landowner whose property has been in her family for generations.

So, it seems, as with termites, getting rid of the death tax finally and forever will require concerted effort and constant vigilance.


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