I do not understand the rational after estate tax. It may be rational to prevent "depth escaping" in many cases but in death? I think most of the time some illegal activities or workarounds are used as subtext by government to take some more cut.
I don't know what you mean by "death escaping." I don't know what illegal activities you are referring to in this matter. The Wikipedia page http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States has a pretty complete coverage of the points both for and against the estate tax.
While the gift tax is, in the US, closely coupled to the estate tax, they are distinct things. I made an error in not mentioning income tax as well was the estate tax.
Gifts could be used to get around income tax. If I pay my children to work in my store, then they pay income tax. If however I give them gifts, and they just happen, out of generousness and familial good will, happen to do the same amount of work as an employee, then that's an illegal scheme to avoid paying income tax.
Estate taxes are a reflection of a philosophical viewpoint, which is that inherited wealth is not as good for the country's well-being as wealth from labor. Consider if I were to own 1/5th of the land of Manhattan, and make money from leasing out the properties.
If there were no wealth tax, then I could pass that land to one of my children, who then passes it on to one of my grandchildren, etc. Wealth like that tends to accumulate, and lead to increased economic inequality. The philosophical viewpoint is that a humane society does not have drastic differences between the richest and poorest people. In addition, this would tend to create de facto nobility, or landed gentry, which is something the US has traditionally opposed. If Picketty is right, and r > g, then the death tax or a wealth tax or some other means is needed to limit wealth inequality.
I meant "debt escaping". Being a foreigner I made a bad typo. I don't know really the term used in English, that's a way to evade debt by transferring funds to someone else.
Unless you regard all taxes as debt, this meant to keep people from escaping from paying taxes, not paying debts.
Here's a variation of the earlier scenario. I have a company. I give people gifts of US $40,000, with no strings attached. It happens to be that, in their free time, they volunteer at my company to help me out with my business, and spend about 35 hours a week in volunteer labor.
Is this really a "gift" that shouldn't be taxed at all? If so, it's a way to avoid employment and income taxes.
To prevent that from happening, the gift taxes are going to have to be at least as high as employment-related taxes would be.
Since the gift tax doesn't kick in until $14,000/year, which is under minimum wage, the gift tax for higher valued gifts must be much higher than employment taxes. Otherwise it will still be used to avoid employment and income taxes.
