Batchelder: Leveling The Playing Field Between Inherited Income And Income From Work Through An Inheritance Tax

Lily Batchelder, NYU School of Law, has made available for download her article Leveling The Playing Field Between Inherited Income And Income From Work Through An Inheritance Tax. The abstract is as follows:

The Problem 

The core objectives of tax policymaking should be to raise revenue in an efficient and equitable manner. Current taxation of estates and gifts (and nontaxation of inheritances) fails to meet these goals, perpetuating high levels of economic inequality and impeding intergenerational mobility. The current system also provides an intense incentive to delay realization of capital gains until death. These shortcomings distort capital markets, encourage nonproductive estate tax planning, and limit the effectiveness of the overall tax code.  

The Proposal 

Batchelder proposes to reform the way we tax inheritances by taxing inherited income through income and payroll taxes. She suggests three lifetime exemption levels—$2.5 million, $1 million, and $500,000—to ensure that the proposal only taxes individuals receiving the largest inheritances. Batchelder’s proposal would raise between $337 billion and $1.4 trillion over the next ten years. The proposal would limit tax avoidance through reforms to the rules governing the timing and valuation of transfers through trusts and other devices. 

To download the full paper, click Batchelder: Leveling The Playing Field Between Inherited Income And Income From Work Through An Inheritance Tax.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal..

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