Eliminating the estate tax is a bad idea for the average American, so it’s surprising how many Americans support it. Of course, it doesn’t help that House Republicans are calling it the Death Tax, which significantly changes how Americans view it.

Together with Jonathan Westfall of Delta State University, we polled more than a thousand Americans and discovered some insight on how the average American perceives the estate tax ― a very important but often misunderstood tax ― and how their opinions shift depending on how the tax is named and described.

Currently, the estate tax exempts the first $5.5 million, or $11 million for a married couple. Less than .5 percent of Americans are lucky enough to have this amount of wealth to pass on to their heirs when they pass, but nevertheless over 50 percent of all Americans favor its repeal, according to one recent poll.

This is astonishing for two reasons.

First, when over three out of four Americans think economic inequality is a big problem, a tax that impacts only a tiny number of people ― 3,200 of the wealthiest Americans, to be exact ― who inherit millions they did nothing to earn would seem to be a no-brainer. Second, standard economic theory assumes people are motivated solely by self-interest. Why not support a tax that personally costs you nothing but raises $246 billion over the next decade to fund government services that benefit you?

I decided to find out.

Our poll asked 1,241 U.S. residents whether they favored or opposed one of five differently named taxes ― described either as affecting the donor or the recipient. Roughly half in each condition were also told that the tax was only paid by people with more than $5.5 million, or the richest tenth of one percent. Finally, we asked our respondents how likely they were to have to pay the tax themselves.

As we expected, there was modestly greater support for the tax when we focused attention on the recipient rather than the donor. But telling respondents how few paid the tax had a much bigger impact, with over half the informed respondents either favoring or strongly favoring the tax, compared to only a quarter of the uninformed ones.

Was this because the information burst peoples’ optimistic bubbles, making them realize it would never affect them personally?

Information did dramatically lower people’s belief they would pay the tax themselves ― 17 percent of the uninformed subjects said they were likely or very likely to pay it compared with only eight percent of the informed ones. (Since the actual number is about 0.2 percent, it would appear there is a fair amount of optimistic self-delusion, even among the better informed.)                                                                           

We think fairness concerns also explain the effectiveness of the term “death tax,” which does, indeed, get a significantly lower level of support than any other tax. For one thing, it makes people focus on the person dying-  the donor. But we also find evidence in a second study that people just don’t think it is fair to tax death, which is admittedly bad enough already.

Our research suggests that those of us trying to defend the estate tax should work hard to make sure average Americans understand that only a very wealthy few pay it. The only “family farms” that it affects are those worth more than $11 million ― that’s a lot of cows!

Eric Schoenberg is a member of the Patriotic Millionaires, a nonpartisan organization of U.S. millionaires advocating for progressive tax policy

Source Link:
https://www.huffingtonpost.com/entry/death-and-taxes_us_5a1ef3a1e4b0d52b8dc22e7c?section=us_us-news

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