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Bruce Bartlett on his Talking Points blog snags this good bit on estate taxes from Greg Mankiw:

N. Gregory Mankiw, Chairman of the Council of Economic Advisers, recently gave an excellent speech on why the estate tax should be abolished. He made two key points. First, the presumption that the tax falls on the rich is wrong because it assumes that the burden of the tax falls on the deceased, which is obviously wrong. In fact, taxes can only fall on the living, namely decedents, who are almost always less well to do.

Second, the estate tax is a direct tax on capital, which not only punishes the thrifty while relieving the profligate, but hurts workers and others far removed from the direct effects of the tax by reducing capital formation and, hence, productivity and living standards.

Mankiw concludes: "The estate tax unfairly punishes frugality, undermines economic growth, reduces real wages, and raises little, if any, federal revenue. There are no principles of good tax policy that support this tax, and I support the President's calls for its permanent repeal."

Posted by Greg Ransom | TrackBack