Inheritance Tax

Since wealth has a natural tendency to accumulate (the richer get richer; the poor get poorer), inheritance tax is seen as a way of slowing the inevitable increase of economic disparity. Critics of such wealth redistribution strategies claim it merely transfers the power of the wealth from the person who acquired it to the government. In practice, however, a progressive inheritance tax  does not necessarily tend to direct more money to government; instead, it can encourage people to divide up their wealth among many relatives, friends, associates, and charities, rather than leaving everything to a single heir to be taxed at the high rate. Additionally, a progressive tax rate is designed such that it does not discourage the majority of the people from being conservative and saving for the future and for one’s family. Recipients of less than $250,000 inheritance income (the value of the average home) are exempt.  Amounts above $250,000 are taxed at progressively higher rates, which conceivably could go as high as 90% on very large amounts.  See current estate tax exemptions. As gifts may be considered as a form of inheritance, the recipient pays tax on gifts received per inheritance tax rules. Additionally, any wages paid by individuals to other individuals must be scrutinized by the IRS to determine whether or not the wages are not actually gifted funds.

If wages were not subject to income tax (the original intent of the 16th Amendment), then the income is not subject to double taxing.

 

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