Estate tax

The subject of estate tax is once more in the news as the congress prepares for tax reform. This is a tax that falls on a small number of very wealthy people. The tax is mostly avoided by good tax planning using trust and such and purchasing life insurance to pay what is due. It still represents a 29 billion dollar per year tax to the government. The easy out is to eliminate the loophole and have these few individuals pay that tax to the government. This brings back the old argument of what do the rich do with their money. They have three options. First they can save it, second they can invest and third they can spend it. Each one of these options has benefits for the economy. It they save it, it becomes available for others to invest it. If they invest it, it helps grow the economy. If they spend it also helps the economy. The question then arises will these private individuals using their own money create more economic growth than giving it to the government and having the government spend the money. It is an argument that has been around for a long time.