Vanderbilt Journal of Transnational Law

First Page



The U.S. tax system receives much criticism. Recurrent themes in criticizing tax laws concern their complexity and the many loopholes relieving the wealthy from large amounts of taxation. This Article demonstrates how very wealthy U.S. taxpayers often do not pay gift and estate taxes. In fact the tax laws do not require these taxes to be paid. The Internal Revenue Code provides mechanisms through which taxpayers can evade estate and gift taxes in the United States. Furthermore, U.S. gift tax laws are extremely generous to taxpayers relative to tax laws of other industrialized countries. This Article analyzes the U.S. gift tax annual exclusion, the main exemption to U.S. gift tax laws. The Article develops the history and purpose of the gift tax annual exclusion to demonstrate that the current system does not accomplish its original purposes. The Article concludes that reform is needed and proposes legislation to simplify the gift tax laws and create a more equitable gift tax law system. The Article uses the gift tax laws of New Zealand, the United Kingdom, Japan, and the Netherlands as models for U.S. gift tax reform legislation.