Afterlife of the Death Tax

35 Pages Posted: 8 Mar 2018 Last revised: 17 Aug 2019

See all articles by Samuel D. Brunson

Samuel D. Brunson

Loyola University Chicago School of Law

Date Written: March 7, 2018


More than a century ago, Congress enacted the modern estate tax to help pay for World War I. Unlike previous iterations of the estate tax, though, this one outlived the war and accumulated additional goals beyond merely raising revenue. The estate tax helped ensure the progressivity of the tax system as a whole, and it limited the hereditary ability to accumulate wealth.

This modern estate tax almost instantly met with opposition, though. The opposition has never been sufficient to entirely eliminate the estate tax, but it has severely weakened its ability to raise revenue and to prevent the accumulation of wealth. As a result, today’s estate tax is functionally a zombie: it accounts for less than one percent of federal revenues and does little to prevent the accumulation of wealth among a small group of citizens. The estate tax largely serves to evoke fear and costly tax planning, but it only manages to bite the largest and slowest estates.

Although the estate tax has proven hard to kill, it is time for Congress to end it definitively, and transfer its functions as revenue-raiser and impediment to wealth accumulation to the income tax. To effect that transfer, Congress needs to do three things: first, it should treat death as a realization event, and tax estates on their assets’ unrealized appreciation. Second, it should treat the receipt of an inheritance as gross income in the hands of heirs, thereby requiring heirs to pay income tax on their inheritance. Third, Congress should eliminate the step-up in basis, and instead assign basis to inherited property under ordinary basis rules. By making these three changes, Congress can put to rest the zombie estate tax, while, at the same time, revivifying taxation at death.

Keywords: estate tax, income tax, inheritance tax, stepped-up basis, death tax, zombie, inheritance, basis, exemption amount, unified credit, progressivity, dynastic wealth, revenue

Suggested Citation

Brunson, Samuel D., Afterlife of the Death Tax (March 7, 2018). Indiana Law Journal, Vol. 94, No. 2 (2019). Available at SSRN: or

Samuel D. Brunson (Contact Author)

Loyola University Chicago School of Law ( email )

25 E. Pearson
Chicago, IL 60611
United States

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