Paul L. Caron
Dean



Wednesday, December 15, 2010

Estate Tax Commentary

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How much does this silly tax bring in anyway, compared to the size of government?

It's virtually nothing. What, a couple per cent (back when it wasn't zero)? Think of the wasted time, effort, and money people spend trying to avoid it. The planning, the life insurance, the trusts, the legal fees, the foundations established, the gifting, the accounting, and the finagling.

Just scrap the damn thing already.

Posted by: Chester White | Dec 15, 2010 8:58:15 PM

If the courts don't believe that morals are within the purview of law, why is the estate tax so often supported with arguments about the immorality of allowing wealth to remain in private hands. It seems to me that large estates will either be spent and thus dispersed, or invested, presumably more efficiently than by government. That's really the nut of the debate. Is it better for the rich to manage their share of the nation's wealth or for politicians to play with it. If dispersing accumulated wealth is really the aim, they ought to disallow charitable donations and divide all the proceeds among the people. Under no circumstances should it be spent by politicians.

Posted by: flataffect | Dec 15, 2010 11:39:06 PM

Who's money is it? If everything belongs to the Federal Government, of course it would revert back to them on your death, just like an apartment in Moscow. But we're not in Moscow (yet).

I hate to admit it, but it does make sense to have *some* transaction tax on property that passes after you pass on, but a third? Heck, God only wants 10%, is the Government more than three times more important?

Posted by: Georg Felis | Dec 16, 2010 5:27:30 AM

The estate/death tax is a killer of small business. When the business owner dies, the heirs often have to liquidate the business to pay the estate tax. Farms, gas stations, retail outlets, restaurants, truck stops, motels, contractors, dry cleaners, and dealerships are appraised for zillions of dollars upon the owner's death. Assets bought years ago are appraised at today's inflated prices. Unfortunately this isn't money, it's land and buildings and machinery and "stuff", not cash. Estate taxes must be paid in cash.
The small businesses don't have that much cash. To raise even 35% of their appraised value in cash is beyond most of them. So the business is sold, to pay the taxes. The employees are laid off. The community looses part of its tax base, the goods and services, and the community support of Little League and youth soccer and the annual town parade that the small business used to provide.
The liquidated businesses don't grow back. It's very hard to keep a small business running and solvent. It's even harder to start one up from scratch.
So the estate tax, beloved of "progressives" actually encourages the growth of large business, and chains and destroys small independents.

Posted by: David Starr | Dec 16, 2010 6:09:09 AM

The tax at the old rates ($1M, 55%) brought in at least half of its revenues from estates under $5M, and thew highest effective rates were paid by estates between $2 and $10 million. In other words, the truly wealthy have little problem avoiding it. It's the "little rich" who get whacked, the small businesspeople without a spare few millions to spend on lawyers, sheltering their "fortunes."

You want to see the Left go truly wild? Vote to make the rate on estates over $50M really punitive, and then eliminate the "charitable deduction" that feeds all those "non-partisan" non-profit foundations they rely on so much come election time.

Posted by: Tully | Dec 16, 2010 6:10:30 AM