We’re No. 4! We’re No. 4!
Being No. 4 can be great, but not when we’re talking about a ranking of Organization for Economic Corporation and Development (OECD) countries with the highest death tax, sometimes more politely referred to as the estate tax.
A new Tax Foundation paper by economist Alan Cole points out that:
- At 40 percent the U.S. has the fourth highest death tax among OECD countries.
- Japan has the dubious distinction of being No. 1, with a 55 percent death tax.
- South Korea is No. 2 with 50 percent, followed by third place France at 45 percent.
The United Kingdom and the U.S. are tied for fourth.
However, 15 of the 34 countries on the list have no death tax, including Canada, Mexico, Sweden, Norway, Australia, New Zealand and Israel.
To be fair, the U.S. has a very high exemption rate: $5,430,000 in 2015. So my heirs are safe—for now. But only “for now” because our tax-loving president would lower that threshold significantly if the Republican Congress would let him, which they won’t—I think. I say that because we had actually eliminated the death tax.
The Economic Growth and Tax Relief Reconciliation of 2001, passed under President George W. Bush, eliminated the estate tax by 2010. But Obama demanded that Republicans reinstate it and, in order to get some of the Bush tax cuts made permanent and a budget deal to avoid a government shutdown, Republicans acquiesced to the death tax’s resurrection.
Cole points out that the death tax isn’t a particularly efficient tax because acquisition costs are high. And he says that according to a recent estimate from the Office of Management and Budget it will only bring in about $20 billion in 2015—less than 1 percent of the president’s proposed budget.
But whereas most Americans see that reduced revenue level as a victory for taxpayers, Obama sees it as a challenge to get more. And he has two more years to do it.
Those wanting to avoid a death tax might consider retiring elsewhere. Better yet, they might want to back a 2016 presidential candidate who will make the U.S. as attractive a place to die as Canada.