Saturday, October 12, 2024
Soled: The Nation's Transfer Tax Regime And The Tax Gap
Jay A. Soled (Rutgers; Google Scholar), The Nation's Transfer Tax Regime and the Tax Gap, 76 Okla. L. Rev. 699 (2024):
For over a century, the nation’s transfer tax regime, comprised of the gift, estate, and generation-skipping transfer taxes, has played a pivotal role in curbing inherited wealth while simultaneously raising much-needed revenue. But for a variety of reasons, a sizable number of taxpayers are derelict in fulfilling their transfer tax obligations. This analysis explores the reasons for this phenomenon and the reforms that Congress should consider instituting to curb this behavior.
Conclusion
Over the course of the last several decades, closing the tax gap has proven elusive, and it has remained a stubborn feature of the nation’s tax system. This has depleted the nation’s coffers and has allowed trillions of much-needed tax revenue to escape taxation.
Therefore, Congress must make concrete efforts to narrow the tax gap. Most recently, Congress heeded this advice, granting additional funding to the IRS to the tune of approximately $79 billion. These funds are supposed to help modernize the agency, augment customer service, and add auditors. The IRS’s utilization of these funds for these designated purposes is calculated to yield billions of dollars in additional revenue.
But more must be done—and a good way to start would be to institute reform measures such as those advocated in this analysis to help buoy taxpayer compliance in the transfer tax realm. Instituting the practical measures that this analysis propounds would go a long way in helping the transfer tax regime fulfill its historic objectives, namely, raising revenue and curtailing inherited wealth. By restoring integrity to the transfer tax regime, Congress would have additional tax revenue to accomplish a whole host of objectives, including expanding public works projects, paying down the deficit, and reducing taxes; furthermore, a more robust transfer tax system would greatly diminish the chances for a monarchy-like political dynasty to arise.
This analysis sets forth a viable path to achieve these sought-after outcomes; whether such objectives will be achieved is only a question of political will.
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https://taxprof.typepad.com/taxprof_blog/2024/10/the-nations-transfer-tax-regime-and-the-tax-gap.html