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“The estate tax punishes years of hard work and robs families of part of their heritage by imposing a huge penalty on inheritance after death – a tax on money that has already been taxed.”
“We must end the iniquitous multi-taxing of the same money. It is not right to tax people’s incomes, then their savings on that income, to tax the movement of assets through capital gains tax, stamp duty and tax them again through inheritance tax if they have the audacity to die.”
Iowans need relief from excessive taxation—especially taxation based upon an immoral predicate.
Inheritance tax is a pernicious and unjust tax. In the past, I have co-sponsored legislation for its elimination—and I urge it as a priority today. The nature of this taxation is based on abject greed, coveting, and jealousy. It is the “unkindest tax of all”—taxing wealth, instead of income, property, sales, consumption, or vice.
Think about it: the wealth that is taxed, extricated from one more easily because “dead men can’t balk,” ALREADY HAS BEEN TAXED PREVIOUSLY, often at aggregate rates of 60% or so. A dollar earned by a middle-class American in Quarter 4 of any given year has Social Security (or self-employment) effective taxes withheld of 15%, 25% withheld in federal taxes, 8% withheld in State income taxes, 6% in sales tax, up to 6% in real/personal property taxes.
Ergo, this typical hard-working Iowan gets to keep a whole 40 cents on the dollar to spend in December for food, clothing, shelter, medicine, education, and transportation—leaving little more than a few proverbial lumps of coal for Christmas and holiday gifts.
In order to add further insult to nor mere injury, but death, the State of Iowa wants another whack at the 40 cents remaining out of the money previously earned by this Iowa parent—extricated earlier, under compulsion of police power, these rewards of a just man’s labor.
Apart from the justice argument, there is another terrible public policy ramification of this Iowa tax code feature. Inheritance tax actively discourages a) saving of money: b) accumulation of wealth; c) enterprise; d) delayed self-gratification; and e) capital formation itself. These aforementioned five fiscal virtues are inherently needed in a free market enterprise economy—and Iowa tax policy militates against these very foundational bedrocks.
Inheritance tax also robs from the family that incremental, multi-generational wealth building block of savings needed as a proverbial brick in the firewall, in order to promote ongoing economic stability and security for the domestic household family, with what would otherwise be an added layer of emergency protection family savings.
Finally, the State of Iowa will recoup far more in net revenues to its tax coffers by eliminating the Inheritance tax, than the Inheritance tax ever brought in originally. Founded upon Lafferian genius and by virtue of the mathematical science of the velocity of money and the multiplier effect, the addition of discretionary consumer spending will generate that more many sales, needing concomitant manufacturing and employees. In turn, this generates even more sales and income taxes paid to the State.
Juxtaposed with the Biden Administration approach to raise estate tax revenues at the Federal level, at nearly 50% rates, we need to assure Iowans that help is on the way!
In Iowa, Legislative reform would allow brothers and sisters across Iowa collectively to retain approximately $15 million of their own family savings, upon the mournful death of a beloved sibling (accounting for annual statewide death rates), were we to add merely a fraternal exemption to that of a lineal descendant exemption, already ensconced in law.
In deference to the great Dr. Arthur Laffer—Swerve with the curve. Tax cuts now! Let’s make Inheritance tax cuts, to paraphrase Shakespeare—“the kindest cut of all!”