THE PROBLEM: The federal estate tax is supposed to contribute to the overall progressivity of the tax system but in reality, it is broken.
- Because of complex loopholes, many very wealthy families are able to avoid or substantially minimize paying estate taxes and have done so for decades;
- The current estate tax structure creates inefficiencies and distortions, threatens the survival of family-owned businesses, and has been described as “harmful to economic growth” by the Congressional Joint Economic Committee.
- Economists have estimated that the costs of complying with the estate tax laws are roughly the same size as the revenue raised for the Treasury.
- Because of the avoidance techniques, on average, over the past 50 years the estate and gift tax have only generated about 1% of all the revenue the IRS collects annually.
THE SOLUTION: Simplify the collection of the estate tax by substituting a new, “pay as you go,” revenue neutral method.
- Eliminate the current structure of the estate tax and substitute a revenue neutral, simpler approach in which the wealthiest Americans ( individuals with the top 1% of Adjusted Gross Income) would pay an annual surcharge on their income (possibly as low as 1.77% according to a Joint Committee on Taxation estimate from 2009).
It is that simple. By collecting from the wealthiest Americans 1.77% of their AGI (the last number on the first page of your IRS 1040 tax form) the IRS would receive the same revenue it gets today. Only the collection methodology is changed.
- Would help eliminate job losses due to business closures to pay estate taxes
- Helps keep businesses and farms “in the family” for future generations
- Increases private capital and reduces legal fees, life insurance purchases, and administrative expenses
- Unlocks trillions of dollars stashed in unproductive trusts to escape the current estate tax structure, which would generate economic growth
The ASSET proposal eliminates estate taxes for 99% of American and the top 1% percent will pay a reasonable amount of taxes during their lifetimes.