Any type of taxation that is placed on the assets of a decedent when those assets are redistributed to beneficiaries in accordance with the wishes expressed in a legal will and testament is referred to as death tax. Inheritance tax is one of the more common examples of a death tax. However, depending on the laws that apply in a given jurisdiction a death tax may take on several different forms.
Death tax in USA
In the United States, a death tax refers to the incidence of an estate tax that is the obligation of a beneficiary to pay as a part of the process of assuming control of the property. Closely related to death tax is the inheritance tax, by which taxes are applied to any type of financial asset that is willed to the beneficiary. For applying the death tax there is no uniform process among all states within the Union.
There are controversies about Death Tax
In many places around the world the use of a death tax has long been an issue of controversy. It is presumed by the opponents to the death tax that the process places an unnecessary burden on the beneficiaries during a period of grief. There is a strong likelihood that the individual would be in mourning or possibly he or she may be engaged in taking care of end of life expenses that are associated with the death of the friend or relative.
Tax Burden might force beneficiary to sell property
In some instances, the tax burden might be so huge that the beneficiary cannot afford to pay the taxes and the only choice that he has in hand is to sell the inherited property, which creates an ethical dilemma where the intended recipient of the property is not able to enjoy it in the manner that is intended by the deceased.
Death tax help to provide facilities to Citizens
Death tax raise revenue for local and federal governments that can be used for maintaining and increasing public services that can be enjoyed by all citizens. From this point of view, the death tax is seen as simply aiding in that process. Since the beneficiary is receiving those assets that he or she did not earn and they had not paid taxes on previously, proponents say that it simply makes sense to tax those assets so that it can serve the greater good of the populace.
