I believe that the US estate tax is reasonable and provides a number of social, economic, and political benefits to the state. Being first introduced in the 18th century, it conforms to the democratic principles of equality and fairness. However, the recent raise of the estate tax exemption is controversial, as the reasons behind the reform are perceived to be mainly political rather than economic.
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The controversy around the estate tax reflects the conflict between individual property rights and democratic notions of equality. The opponents of the tax argue that it implies double taxation of the same property and assets already taxed as income. They also state that the tax is harmful to small businesses and farms because some of them are forced to sell their assets to pay the tax.
I believe that the estate tax should be maintained because it is aimed to reduce the disproportion of wealth and prevent the unlimited transfer of wealth and property within families. The main idea is not that great fortunes should not exist, but that they should not remain in the same hands. The tax is intended to prevent the growth of dynasties and the generation of heirs who own great fortunes but do nothing to make money work.
Other reasons behind the introduction of the estate tax are economical. Although the tax constitutes a comparatively small part of total tax revenue, it still provides a constant flow of money into the budget. Second, in order to avoid the tax, wealthy people tend to donate money to charities. Despite strong criticism, the estate tax provides considerable benefits to the state and society in terms of keeping the wealth balance.
The supporters of the estate tax claim that it helps to battle social inequality, reduce the burden of taxes on the general population, and provides a constant flow of money into the budget and charity funds. It is regarded as an attempt to reduce the concentration of wealth in one’s hands and facilitate the development of a free democratic society.
The critics of the tax call it the “death tax,” claiming that it is unfair, does not provide a substantial amount of money to the budget, violates individual property rights, and leads to the bankruptcy of small businesses. They argue that it penalizes people for being successful, leads to double taxation, takes too much effort to be avoided, and slows business activity.