By Mike Brownfield
If you ask attorney Harold Apolinsky who really profits from the death tax, he’ll tell you, “I think I do, as an estate planning lawyer,” but then he will tell you why the tax needs to be permanently repealed.
According to Apolinsky, the death tax (or estate tax, as it is also known) taxes the transfer of a business from the deceased to their heirs upon death at an extraordinarily high rate. The tax first came into law in 1917 in order to pay for World War I, was abolished this year, but is set to come back in 2011 at a 55% rate and $ 1 million exemption.
Apolinsky, who helps families plan for the death tax, says it truly can be deadly for small companies. He observes that most successful businesses don’t have “buckets of cash” laying around to pay the tax, and they face the impossible choice of setting money aside, expanding their business, hiring new employers, or paying hundreds of thousands of dollars to insurance companies to fund a life insurance policy that covers their death tax obligation.
That just doesn’t make sense, Apolinsky says, in a country built on capitalism and free enterprise. “If you’re going to take away half the value of a business every generation, how can it grow?” he asks, while also noting that Sweden and Australia have repealed death taxes because they want family businesses to grow larger and provide more jobs.
The Heritage Foundation as looked at family businesses in America who are suffering the effects of the death tax. Watch the following videos to learn more:
Learn more about the death tax at heritage.org/deathtax.