Death taxes are any type of taxation 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. One of the more common examples of a death tax is the inheritance tax. However, a death tax may take on several different forms, depending on the laws that apply in a given jurisdiction.
In the United States, a death tax refers to the incidence of an estate tax that the beneficiary must pay as part of the process of assuming control of the property. Closely related is the inheritance tax, which applies taxes to any type of financial asset that is willed to the beneficiary. There is no uniform process for applying the death tax among all states within the Union. Some states have laws provisioning hefty taxes on any assets acquired as part of an inheritance, while other states require the application of modest taxes. Still other locations in the United States do not require any type of death tax at all.
The use of a death tax has long been an issue of controversy in many places around the world. Opponents to the death tax believe that the process places an unnecessary burden on the beneficiaries during a period of grief. There is a strong likelihood that the individual will be in mourning or possibly engaged in taking care of end of life expenses associated with the death of the friend or relative. In some instances, the tax burden may be so great that the beneficiary cannot afford to pay the taxes without selling the inherited property, creating an ethical dilemma where the intended recipient of the property is unable to enjoy it in the manner intended by the deceased.
Proponents of the death tax tend to point toward the need to provide for the greater good of society. This includes raising revenue for local and federal governments that can be used to maintain and increase public services that can be enjoyed by all citizens. From this perspective, the death tax is seen as simply aiding in that process. Since the beneficiary is receiving assets that he or she did not earn and has not paid taxes on previously, proponents say it simply makes sense to tax those assets so that the greater good of the populace is served.