Why not consider ending the gift tax?

With tax reform now in the spotlight of political debate, repeal of the “estate” or “death tax” has moved to the front burner of tax reform proposals currently under consideration; unfortunately, many of these proposals do not include repeal of the gift tax. 

The death tax is infamous for the damage it has caused, especially to family businesses across America. In fact, a May 2016 Gallup poll, showed that more than half (54 percent) of Americans support repealing the death tax entirely; while only 19 percent support keeping the tax. The same poll shows that repealing the estate tax ranked highest in public support amongst all proposed tax cuts. It’s no surprise why repeal of the death tax has been a key component in nearly all of the Republican tax proposals, including those from President Trump and Speaker Paul Ryan (R-Wis.).

However, often lost in the weeds of repealing the death tax is the tax’s complex yet direct coupling with other taxes, including the gift tax. Estate tax expert. Alexander A. Bove Jr. rightly pointed out in a New York Times article in February, repealing the estate tax is really “like squeezing a balloon.” Bove goes on to explain, “You’re really talking about three taxes that work together as one unified piece of tax planning”; that is why repeal of estate, gift and generation skipping tax should all go hand in hand.  

Repealing the gift tax holds true to the same American values that cause voters to reject the death tax in such high numbers.  American taxpayers should not have their earnings subject to double, even sometimes triple taxation.

Think about it: The gift tax is imposed on a person’s assets – but these assets have already been taxed at the time of acquisition! The government took its piece of the pie and shouldn’t come for seconds just because you want to give your hard-earned business, or other assets to your family members, friends or anyone else for that matter.

Read more at the Hill