Document Type

Article

Publication Title

Boston University Law Review

Publication Date

2007

Abstract

The United States gift tax is truly a unique tax insofar as it generates virtually no revenue. For 2005, the last year for which there is available data, the gift tax raised approximately $2 billion - considerably less than 0.1 percent of the overall revenue collected by the federal government for the same year and in stark contrast to the $1.1 trillion that the income tax alone raised for the same tax year. This 2005 collection figure, moreover, is not an aberration. Historically, the gift tax has raised very little revenue, and projections indicate that this trend is likely to continue. ...

This Article argues that if the gift tax is to be fully functional and to fulfill its historic missions - namely, to safeguard the integrity of the estate and income taxes - Congress must institute reforms. The first would be to put in place more accurate methodologies for valuing gifts of closely held business interests and certain trust contributions. The second would be to introduce a series of reporting requirements and a penalty structure that would enable the IRS to detect and punish those taxpayers who transgress their gift tax filing responsibilities.

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