Magazine article The Wilson Quarterly

Dying for Taxes

Magazine article The Wilson Quarterly

Dying for Taxes

Article excerpt

THE SOURCE: "Toying With Death and Taxes: Some Lessons From Down Under" by Joshua Gans and Andrew Leigh, in The Economists' Voice, June 2006.

A CURIOUS THING HAPPENED IN 1979 as Australia prepared to repeal its estate tax. During the final week the tax was in effect, the death rate declined. When the tax was eliminated, the rate rose.

The U.S. congressional calendar this year has been consumed by efforts to repeal the American estate tax, or as its opponents say, the death tax. The tax is no small matter, having accounted for $25 billion in revenue in 2005. Could the Grim Reaper possibly be kept on hold to save on taxes? And could an estate tax repeal create an unpleasant surprise for the U.S. Treasury by slashing projected revenues during the final days of taxation?

As its ongoing American counterpart has already done, the Australian campaign to repeal the tax took years, according to Joshua Gans and Andrew Leigh, of the University of Melbourne and the Australian National University, respectively. About nine percent of Australian estates were large enough to owe the tax. On June 30, 1979, estates of $1 million (Australian) or more paid 27. …

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