Death and taxes. The two elements of life that are certain, as Benjamin Franklin once aptly noted. Today, however, the two are inextricably linked for another reason: the estate tax. The estate tax — or death tax, as it is more appropriately called — is a tax of 35-55% levied when a person dies and leaves behind assets worth more than $675,000.

But why should women care about the death tax? After all, most of us do not count ourselves among the nation’s aristocracy of wealth, and we certainly don’t think of ourselves as the owners of “estates.”

Women should be concerned about the death tax for a number of reasons. Although currently only 2% of estates are subject to the death tax, that is bound to change in the decades to come. The booming stock and real estate markets have considerably increased the net worth of a large portion of American society. Simply owning a home and investing over the course of your lifetime can expose your heirs to a large tax bill once you have died.

In fact, we are now in the early years of what one study by the Social Welfare Research Institute at Boston College has deemed the largest generational transfer of wealth in history, as the parents of baby boomers and older baby boomers themselves leave behind estates. Although by 2006 the estate tax will kick in for assets above $1 million, adjusted for inflation that will be about $627,000 in today’s dollars. You might not consider yourself rich, but you can nevertheless quickly reach the death tax threshold. Since the death tax is a tax on your net worth, the IRS counts all of your assets upon death. That includes stocks, bonds, bank accounts, and deferred retirement accounts, but also your house and everything in it, your car, your life insurance policy every personal possession you own.

Women are also business owners and entrepreneurs — 9.1 million businesses in America are women-owned today — and for them, the death tax has serious consequences. The sting of the death tax can be crippling, even fatal for a family business. If you are one of the millions of women who run a successful family business and you want to leave it to your kids, be warned: under the current tax system it will likely be cheaper for them to sell the business to strangers than face the hefty estate tax bill that will come due 9 months after your death. This doesn’t just happen to family farms, either. One woman who worked for her father’s recreational campground facility found that she owed the IRS nearly half a million dollars after her father died and she took over the business. This businesswoman was not flush with cash. In fact, the business had only $2,000 in the bank when her father died. Nevertheless, since the IRS had assessed death taxes based on the value of the campground property and everything on it, she found herself facing a huge tax bill — one she barely managed to pay off (with interest) over the course of fifteen years.

This woman was one of the luckier ones. From 1977 through 1990, family businesses were responsible for almost half (49 percent) of the country’s gross domestic product and 78 percent of new job formation. Yet 70 percent of family businesses don’t make it to the second generation, and 87 percent don’t last to a third. Of those many family businesses that don’t survive into the next generation, 77 percent of them enter bankruptcy after the unexpected death of the founder. It was the Chicago Daily Defender, one of the oldest black-owned daily newspapers in the United States, which was forced into bankruptcy by the estate tax. After the death of its publisher, John Sengstacke, the paper faced a $3 million tax bill that it couldn’t afford to pay (the National Black Chamber of Commerce has officially denounced the death tax as a “legacy killer” for the African-American family business community).

Supporters of the death tax claim that it is needed in order to insure the progressivity of our tax structure — to prevent, in other words, the growth of inherited wealth akin to that of the Vanderbilts, Carnegies, and Rockefellers of yesteryear. But this is a misguided principle for several reasons. As a tool for the redistribution of wealth, the death tax is a miserable failure, as even liberal economists will agree. Alan Blinder, a former member of President Clinton’s Council of Economic Advisors, conceded long ago that “the reformer eyeing the estate tax as a means to reduce inequality had best look elsewhere.” Moreover, those whom the death tax is meant to “punish” usually end up avoiding it by availing themselves of the services of estate planners and lawyers. During her lifetime, for example, Jacqueline Kennedy Onassis set up elaborate trusts so that her children could avoid paying exorbitant estate taxes after her death.

Policy makers who support the death tax often remark that the tax doesn’t really affect that many people. In truth, the tax has a detrimental effect on both family businesses and the overall economy. Consider the cost to the economy in terms of jobs lost and compliance costs for businesses: one survey of 365 family businesses in upstate New York found that they spent, on average, $125,000 each on estate planning, resulting in the loss of 5,000 jobs and countless hours of productivity. In addition, the death tax is a very costly tax to collect. While the tax raised $20 billion for the government in 1997, for example, Citizens for a Sound Economy has estimated that total compliance costs actually consumed 65 cents of every dollar raised. On a more practical note, we are a nation of spenders and getters, frequently chastised by financial planners for having one of the lowest rates of saving in the industrialized world. But if upon our death our children have to surrender half of the money we do save for them to the IRS, what is the incentive to save?

Ultimately, it is the principle behind the death tax that is unsound. As the fictional stories of writer Horatio Alger described, the American ethos is one that embraces the optimism and hopefulness of upward mobility for its citizens, no matter what their origins. The death tax sends a very different message: that some people have accumulated “too much” money, and that their children shouldn?t be allowed to receive the benefits of their parents’ labor. More disturbing is the notion — inherent in the principle behind the death tax — that even though you have paid income taxes throughout your lifetime, the government should have the power to decide if you have earned “too much” after your death. Remember, the assets you leave behind have already been subject to income taxes, sales taxes, and capital gains taxes during your life. The death tax is a “double tax” on these earnings.

The death tax is a tax on the American dream. The argument that this tax prevents the creation of an unfair aristocracy of wealth no longer holds true. The Vanderbilts and Carnegies of yesteryear have given way to entrepreneuresses such as Martha, Oprah, Madonna, and countless other women business owners. The future targets of the death tax don’t live on landed estates, but in American suburbs. Isn?t it time that our tax system changed to recognize these new circumstances?