In the debate concerning repeal of the provision allowing ca

In the debate concerning repeal of the provision allowing capital gains on assets passed on to one’s heirs to escape taxation, some have reasoned that death is not voluntary, and therefore one should not tax capital gains upon death. Evaluate and explain.

Solution

Inheritance tax also known as \"Death Tax\" is imposed in the case of death of a parent.  It is a tax on the family business, which can endager the the existence of the firm and its management by family members; and it is also tax on the real estate of the family members are attached, and which ensures the solidarity of the family. This tax is generally has a disincentive effect than a normal income tax as it is highly likely that people will discount deathtime taxes in making decisions concerning work, savings, and investment.

There is debate on the death tax because many people argue that death is involuntary and therefore should not be taxed. One solution to this problem is to to handle capital gains in such a way that they were constructively realized as a gift or at death, with thier spread gains over a period of time.