Argument: Cost of compliance with estate tax greater than revenue
- Debate: Estate tax in the United States - con argument.
MSN Liz Weston: "There are some who argue that the total cost of complying with the law may exceed the tax generated. The IRS assessed $23.5 billion in net estate taxes in 2001, which compares with a total IRS budget of $8.7 billion. But the estate-tax system's costs go well beyond the amount the IRS collects. People spend money on estate-planning services to reduce the tax's impact, for example, and on life-insurance policies to help their heirs pay any tax that's owed. Just filing an estate tax return can be expensive, since the form can be complicated and a high number of returns get audited, requiring professional help. Alicia H. Munnell, a former Federal Reserve economist who served on President Clinton's Council of Economic Advisors, estimated that the federal estate-tax system generates $1 in compliance costs for every $1 in tax revenue that's raised. The bottom line: It's pretty clear that collecting the estate tax is cost-effective for the government. Whether it's cost-effective for the rest of society is what's up for debate."
"Raises very little money -- in fact, it may cost the government and the taxpayers more in administrative and compliance fees than it raises in revenue." Heritage Foundation '96