The Controversy of Estate Tax You Must Know

The Controversy of Estate Tax You Must Know

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The Controversy of Estate Tax You Must Know
There are many that argue that an estate tax or the inheritance tax prevents families from continuously passing on their wealth tax free. Arguments on both sides say that an inheritance tax and an estate tax are progressive taxes. Because the inheritance tax is a progressive tax, the tax burden is equally distributed according to a percentage of wealthy. In contrast, regressive taxes tax those with lesser wealth at a higher rate as a percentage of income.  
The Federal inheritance tax can be as high as fifty percent, when it is active. That means that benefactors only actually leave beneficiaries half of what they intended to leave them. Individuals that work hard all of their lives, with the intention of leaving their wealth to family members, often find that a majority of the accumulated wealth is contributed to a tax burden.
There are those that argue in favor of the estate tax or inheritance tax as a replacement of income tax. Income tax is said to penalize workers and discourage employed from working harder to get a better salary. An increase in salary can put taxpayers in the next tax bracket, which increases their income tax burden, sometimes in large amounts, as a percentage of their salary. If the inheritance tax or estate tax were to replace the income tax, it is believed that employees would be encouraged to work harder so that they could invest more money and save for the future.
Just as in income tax discourages hard work, it is believed that tax free inheritance also discourages work in future generations because they become wealthy from their inheritance. By allowing individuals to keep their entire salary, taxes are only applied to the money that they earn and give away. In addition, some people claim that the inheritance tax and estate tax are simply imposed because nobody has the implicit right to inherit money and enjoy the benefits of inheritance which results form the hard work of others.
In contrast, the inheritance tax and the estate tax are said to discourage entrepreneurship because individuals believe that the money they make will not be given to future generations, but instead be taxed at high rate. The inheritance tax and the estate tax are also said to be costly because of the large percentage of revenue utilized to force taxpayers to comply with the tax. It is actually one of the least effective taxes when one examines the cost of compliance with the amount of revenue generated through the estate tax and the inheritance tax.
Although the inheritance tax and estate tax do not currently apply on a federal level, many beneficiaries are subject to those taxes in their state of residence. The debate as to the fairness of those taxes continues to rage on. Those that are beneficiaries or benefactors tend to be opposed to the tax. In fact, most of the wealthy believe that the tax unfairly places a tax burden on their shoulders. However, the tax is often favored by a majority of employed taxpayers in order to make up for the deficit in the income tax burden which unfairly taxes those with lower salaries.

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