Suppose you and me played a game of Monopoly. We both start out in the same situation (with $1500 and no properties at GO). Now over the course of the game I beat you. By the end of the game, I own all properties and make you bankrupt. I'm swimming like Scrooge McDuck in his Money Bin. You are in the poorhouse. Under our American system, this is right and the way it should be in the game because we both had an equal opportunity.
Now suppose your child then played my child, and my child insisted to your child, "I get to start with all the properties, money, houses, and hotels that my daddy won, but you start with nothing because your daddy was poor and went bankrupt against my daddy." (Obviously, my kid 's had one too many lessons on decency from the Million Dollar Man, Ted Dibiase.) Nevertheless, we'd all agree that this is unfair to your child since they should be given a legitimate chance to win regardless of your bad Monopoly decisions.
What I find disheartening is that though we would all agree that this would be unfair for a game of Monopoly, some would say that this is perfectly fine in the real world. Or at least this is what I infer after reading in the Memphis Commercial Appeal that the Tennessee House of Representatives and Senate passed a bill that would end the state inheritance tax in 2016 on estates with more than a million dollars.
There is nothing wrong with passing on some wealth to children. So many parents work hard to save money for their children to have opportunities that they didn't have. But right now the tax burden on the relatively wealthy is much less percentage-wise than it is for the middle class. For example, a single person earning $36,000 in hourly wages in 2012 will have a higher marginal federal income tax rate (i.e. 25%) than the effective federal tax rate of a billionaire who earns all of their income from capital gains (i.e. 15%) in the same year. Reducing the burden on billionaires and millionaires by ending their state inheritance tax seems unfair given these circumstances.
Furthermore, unlike the federal government, the state government has to balance it's budget. Therefore, this revenue cut by ending the state inheritance tax means that the state will either have to increase taxes elsewhere or cut spending. Kids who grow up in poor or broken households are dependent on education and law enforcement services provided by state funds to have an opportunity to escape their circumstances. By eliminating the state inheritance tax completely, we further endanger the plight of children who are dependent on that money for safety and education.
I pray Governor Haslam will remember these children and veto this bill to end the state inheritance tax.
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