Economic Issues Surrounding the Estate and Gift Tax: A Brief Summary (CRS Report for Congress)
| Release Date |
Revised March 18, 2008 |
| Report Number |
RS20609 |
| Report Type |
Report |
| Authors |
Jane G. Gravelle, Government and Finance Division |
| Source Agency |
Congressional Research Service |
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Summary:
Supporters of the estate and gift tax argue that it provides progressivity in thefederal tax system, provides a backstop to the individual income tax and appropriatelytargets assets that are bestowed on heirs rather than assets earned through their hardwork and effort. However, progressivity can be obtained through the income tax andthe estate and gift tax is an imperfect backstop to the income tax. Critics argue that thetax discourages savings, harms small businesses and farms, taxes resources alreadysubject to income taxes, and adds to the complexity of the tax system. Critics alsosuggest death is an inappropriate time to impose a tax. However, the effect on savingsis uncertain, most farms and small businesses do not pay the tax, and complexity couldbe reduced through reform of the tax.
