The gift tax is considered a paper tax primarily because it yields very low revenue. This means that the amount of money collected through gift taxes is relatively insignificant compared to other forms of taxation. There are several reasons why gift taxes generate low revenue:

1. Limited scope: Gift taxes are levied on the transfer of property or assets from one person to another without any consideration or compensation. However, the scope of the tax is limited because not all gifts are subject to taxation. There are exemptions and exclusions that allow individuals to make gifts up to a certain threshold without incurring any tax liability. For example, in the United States, an annual exclusion allows individuals to give gifts of up to a certain value (currently $15,000) without triggering the gift tax.

2. Tax planning and avoidance: Many individuals engage in tax planning strategies to minimize their gift tax liability. This can include using trusts, family limited partnerships, or other legal structures to transfer assets in a tax-efficient manner. By utilizing these strategies, individuals can reduce or eliminate their gift tax obligations, further diminishing the revenue generated from this tax.

3. Complex rules and regulations: The gift tax rules and regulations can be complex, leading to compliance challenges and potential loopholes. Taxpayers may find ways to exploit these complexities to minimize their tax liability, resulting in reduced revenue for the government.

4. Incentives for charitable giving: Gift tax laws often provide incentives for charitable giving. Donations to qualified charitable organizations are typically exempt from gift tax. This encourages individuals to make charitable contributions, further reducing the taxable gifts subject to the gift tax.

Overall, the combination of limited scope, tax planning strategies, complex rules, and incentives for charitable giving contribute to the low revenue generated from the gift tax. As a result, it is often considered a paper tax, meaning it has little impact on overall government revenue and serves primarily as a regulatory measure rather than a significant source of income.