It's an estate tax and almost no one pays it.

Photographer: Scott J. Ferrell/Congressional Quarterly/Getty Images

The Death Tax Deception

Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
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There was some pushback on yesterday’s rather tame suggestion that the U.S. properly finance the fund that pays to maintain and repair our roads. Much of the correspondence was surprising. Then again, I am continually flabbergasted by the cognitive errors that the human brain can make. It’s a marvelously designed piece of wetware that does a great job at its intended purpose: keeping you alive on the savannah. Its flaws are easily revealed when applied to off-label tasks.

Let’s go over some of the criticisms from yesterday in declining order based on their lack of credibility.

Death Taxes: I suggested renaming the gasoline tax as a “usage fees on America’s transportation network," observing that it wasn't as catchy or misleading as the use of the phrase "death tax" to describe the levy on the estates of deceased multimillionaires.

Several of you wrote to complain that my characterization of the phrase “death tax” was an act of linguistic subterfuge. So let’s look at the data to see what it suggests.

The Estate Tax

In 2013, 2,596,993 Americans died, according to the Centers for Disease Control and Prevention.

About 5,000 of them paid a tax after that mortal event. To be more accurate, their estates paid whatever tax was owed. That means 2,591,993 Americans died that year without paying any tax.

In other words, just 0.19 percent of all deaths in 2013 resulted in a tax. When 99.81 percent of all deaths don't create a taxable event, calling it a death tax is mathematically nonsensical.

What is the actual trigger for this taxable event? If your estate is worth less than $5.43 million dollars in 2015 (or $10.86 million dollars for a couple), you are exempt from the federal estate tax. Over that and your estate pays, which by the way is why the Internal Revenue Service calls it an estate tax. Unlike the gasoline user fees that pay for bridge and highway maintenance and construction, the estate tax is indexed for inflation.

Why would someone use the phrase “death tax” when more than 99 percent of deaths don't result in a tax? Because he is either a) innumerate, b) ignorant or c) trying to deceive you. There are no other possibilities. 

Usage Fees: You want roads and bridges? You want them repaired and in good condition? Well, somebody has to pay for that. In most civilized societies, it should be the people who use or benefit from them.

Alternatively, we don’t have to have roads. We can go back to the 19th century with rutted dirt pathways. That seems to be the route some parts of the country are heading.  You might think this is acceptable. I don't.

Taxes and Big Versus Small Government: I must admit that some of the pushback was beyond comprehension. “What you are arguing for is a tax increase, and I am against that” wrote someone who could type but not think.

Look, not every single thing in the universe is a debate about the size of government. You are free to debate waste and inefficiency -- but the scope of government is simply not what every conversation must be about. The trash has to be picked up, kids need to be educated and the roads must be paved. Simply screeching "No" to every single governmental function isn't a meaningful or enlightening  way to further this debate. 

Comments, Where Intelligence Goes to Die: Have a look at the reader comments at the end of yesterday's post. There is no comprehension, insight or analysis involved. Instead, it is merely a parade of warmed-over slogans, tired talking points and worthless rhetorical jabs. 

This isn't how comments used to be, or at least how I remember them. I wrote "Bailout Nation" with a huge assist from readers of my blog. I would post short commentary and ask for feedback. It was an amazing experience in the midst of the financial crisis. That approach seems like it would be almost impossible today. And that's a shame, because the crowd can be an invaluable resource, although today it more often feels as if it provides nothing of value.

Damn Democrats: People are always surprised when I disclose my political affiliation.

I call myself an ex-Republican. When I was coming of age, Jacob Javitz was my senator. A Republican, Javitz backed balanced budgets, low taxes, no unnecessary overseas adventures and keeping government out of the bedroom. I agreed with all of that. 

Why ex-Republican? Because the modern GOP has tacked so hard and far to the right, and it has gotten into bed with religious zealots who have no use for science. I simply have no reason to want to be associated with that sort of ideology. Even though I am socially progressive, I am still fiscally conservative.

When I lived in Nassau County on Long Island, then controlled by a Republican political machine, I was a registered Republican. When I lived in New York City under a Democratic machine, I was a registered Democrat. In both instances, the primary functioned as the general election. Today, I am a registered independent. I voted Libertarian last election.

And I still want my roads paved. 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Barry L Ritholtz at

To contact the editor on this story:
James Greiff at