Cox Proposes an End to Federal Inheritance and Estate Taxes

WASHINGTON — Rep. Christopher Cox introduced legislation Monday that would put an end to inheritance and estate taxes.

Calling the tax a “death tax” because federal taxes are levied on every estate valued at $600,000 or more, Cox (R-Newport Beach) said those who are successful in society are punished for adhering to the virtue of saving and investing.

“One of the most powerful reasons that people work and start businesses is to make life better for their children and loved ones,” Cox said during a Capitol Hill press briefing to unveil the legislation. “Rather than seek to repeal this most basic of human natures, a sound policy should tap this force as a powerful engine of wealth creation.”

Backers of the measure who joined Cox said that inheritance taxes thwart the lifelong habit of thrift and discourage entrepreneurship and investment.

The legislation, which has 131 co-sponsors, including three Democrats, seeks to repeal both estate and gift taxes that can range from 18% to 55%.

Many lawmakers argued that the present system conspires against small family-owned businesses and farms being passed on from generation to generation.

Sen. Conrad Burns (R-Mont.) said family farms may be “land rich, but are cash poor,” and that children who inherit a farm can’t afford to keep it because the taxes are too high.

“If you have to sell the farm to save the farm, then that’s wrong,” Burns said.

But critics call Cox’s proposal nothing but a tax break for the rich.

A recent study by the liberal-leaning Center on Budget and Policy Priorities found that only 1% of all estates exceed $600,000 in value.

“The estate tax is a reasonable tax because it’s a way that wealthier people pay their share,” said Iris Lav, associate director of the center.

President Clinton has proposed that the ceiling be raised to $2.5 million.

The Concord Coalition, a nonpartisan deficit-fighting citizens group, also opposes abolishing the estate tax, according to Executive Director Martha Phillips.

“To state the obvious, balancing the budget with a tax cut requires deeper spending cuts than balancing the budget without a tax cut,” Phillips said. “To get out of a hole, you first should stop digging. Tax cuts make the deficit hole deeper.”