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49 Am. J. Legal Hist. 197 (2007)
Historical Lessons from the Life and Death of the Federal Estate Tax

handle is hein.journals/amhist49 and id is 201 raw text is: Historical Lessons from the Life and Death of the Federal Estate Tax by DAVID FREDERICK* Academic tax analysis is typically reserved for economists and lawyers. Economists theorize about how tax burdens affect behavior in the marketplace. Lawyers pour over the fine print to find how tax code sections interact and how taxpayers may exploit or avoid various tax bur- dens. Despite the dominance of economists and lawyers, there remains a small but distinguished niche in the field of tax analysis for historians. By examining the lives of various tax laws, tax historians such as Randolph E. Paul and W. Elliot Brownlee can bring to light lessons about why cer- tain taxes persist while others fail, how revenue policies evolve, and how our views of the tax code have changed.1 These historical lessons can help current legislators develop tax provisions that are more likely to be fair, successful, and built upon sound policies. A particular area of taxation where an historical analysis may offer insightful lessons is the estate tax. Throughout the nineteenth century, the United States periodically enacted various taxes on the transfer of wealth at death to raise revenue in the times of financial crisis brought on by wars.2 After each of these financial crises abated, Congress routinely repealed the emergency death taxes.3 The modem estate tax4 was con- ceived in 1916 as part of a package of taxes designed to raise revenue to build up the Army and Navy in preparation for involvement in World War I. However, unlike previous incarnations of the death tax, the modern estate tax was not repealed when the revenue crisis surrounding the war *Adjunct Professor of Law and Economics, Washington University in St. Louis; J.D. and LL.M. in Taxation, Washington University in St. Louis-School of Law; B.A. and B.S. in History, Phi Beta Kappa, Truman State University. The author would like to thank profes- sors Cheryl Block and Kelly Moore for their constant support, guidance, and devil's advoca- cy in writing this article. I. See Joseph J. Thomdike, What's Old Is New Again: Historical Perspectives on Tax Law & Policy (Tax Analysts ed., 2005), at http://www.taxhistory.org. 2. For more details on the information presented in this introduction and specific citations to historical sources, see the in-depth discussion of these facts in the body of this article infra. 3. Here death tax is used to refer to any form of federal taxation which is payable only upon death. The earliest versions of such taxes were inheritance taxes that were paid by ben- eficiaries of bequests and stamp taxes on the probate of wills. The modem death tax is an estate tax that is paid out of the gross estate of a decedent upon death. Though the phrase death tax has become highly politicized in the past several years, it is used here only as the best way to refer to this class of taxes and without any political implication. 4. Here modem estate tax is used to refer to the federal death tax that was enacted in 1916 and started phasing out in 2001. Though it is more sophisticated than previous death taxes in its structure, the word modem is used here only to distinguish it as the death tax of the twentieth century as opposed to the death taxes of the nineteenth century.

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