Hillary Clinton wants to raise the death tax, otherwise known as the envy tax, echoing the cries of Vermont Senator Bernie Sanders.
The Democratic nominee has proposed to increase the top estate tax rate to 65 percent on estates valued at $1 billion or more per couple. This is a revised figure from Clinton’s initial proposal of 45 percent on inherited property.
Clinton wants to then use these funds to fund infrastructure (SEE: Keynesian Myth Debunked – Infrastructure Spending Does NOT ‘Grow the Economy’) and job creation (SEE: 5 random things for Friday (NIRP hurting bank stocks, Tom Woods quote, why is Hillary Clinton yelling at us?)).
This is a far cry from Donald Trump’s suggestion of getting rid of the death tax altogether. Good for him!
Right now, estate tax returns must be filed for estates that are valued at a minimum of $5.5 million. The top death tax rate is around 40 percent.
Like a majority of Clinton’s ideas, this is a terrible one.
Here is what the Mises Institute writes:
Estate taxes consume the very capital which gives employment and productivity to workers. They rarely ever diminish a rich man’s share of personal wealth consisting of his consumer goods—his home, his automobiles, and perhaps some luxuries. His heirs usually keep and enjoy them and continue to live in a style to which they are accustomed. Confiscatory death duties obviously do not reduce the differences in the levels of living but may actually aggravate them.
Death duties are no painless levies, as the taxmen want us to believe; they actually affect the conditions and actions of three parties: wealthy owners, their heirs, and the public. Owners who created the wealth usually are aware of the confiscatory nature of their future estate levies and therefore may adjust their life styles while they are still alive. They may seek early retirement in leisure and play, enjoy their wealth, or give it away. Wealthy retirees support the fastest growth industry of our time, housing and entertainment of a large leisure class congregating in affluent retirement communities. Or they may redirect their talents and efforts toward estate tax avoidance or evasion in order to leave more wealth to the family.
The loss of capital is compounded by an army of tax accountants and attorneys who thrive on the administration and distribution of estates. The indirect costs of estate taxation often decimate productive capital as effectively as the death duties themselves. Billions of dollars are spent every year for devising and administering trusts and foundations which, loaded with tax attorneys and accountants, wage expensive battles with their counterparts in government, all frittering away productive capital. Many billions of dollars are sent abroad in search of reliable tax havens.
Also, here is what the legendary free market economist Milton Friedman says regarding estate taxes:
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