Tax Great Wealth but Protect Farmers and Small Businesses
Tax Great Wealth but Protect Farmers and Small Businesses
This chapter proposes retaining a reformed version of the estate tax. It is argued that the estate tax accounts for a large measure of the progressivity in the current tax system at the very top of the income scale, while affecting very few people. First adopted in the nineteenth century to fund various wartime government revenue shortfalls, it has been on the books continually since 1916. While the rate of tax on large estates has gone up and down over the years, the estate tax was, until recently, generally considered a non-controversial means of raising federal revenue from those most able to pay. The chapter reveals that the estate tax accounted for about 11 percent of federal revenues at its zenith in 1946, but has generally not produced more than 2.5 percent of federal revenue since then. Today, it accounts for about 1 percent of federal revenues.
Keywords: estate tax, tax system, revenue shortfalls, income scale, federal revenue
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