Final answer:
The question addresses taxation of property transfers upon death (estate tax) or as gifts (gift tax) at the federal and state levels. Federal estate tax applies to estates exceeding a certain value, while gift tax is paid by the donor to prevent tax avoidance. States may have their own estate or inheritance taxes, which can vary widely.
Step-by-step explanation:
The subject of the question concerns the different types of taxes imposed on property transfers upon death or as gifts during life. On the federal level, an estate tax is levied on the transfer of property when a person dies. For example, in 2015, the federal estate tax only applied to estates worth more than $5.43 million.
This suggests a willingness to limit the amount of wealth that can be passed on. A gift tax is also imposed on the transfer of wealth during a person's life as a means of preventing avoidance of the estate tax by giving away wealth before death.
States have different approaches to taxing property transfers. They may impose an estate tax, an inheritance tax, both, or neither. The choice varies depending on the state's legislation. Estate taxes typically relate to the estate itself, while inheritance taxes are assessed on the individuals receiving the inheritance. Both taxes are tools for states to generate revenue and potentially moderate wealth transfers.
It's also notable that federal revenue includes other small sources such as excise taxes on specific goods (gasoline, tobacco, and alcohol) and estate and gift taxes.
The latter constituted about 0.2% of GDP in the early 2000s, despite being repealed in 2010 and reinstated in 2011. State and local governments also gather revenue through various taxes, which may include state-level estate and gift taxes.