Sunday, June 8, 2008
Death and Taxes
"After my talk, a lady who appeared to be in her early 70s grabbed me by the arm and said: 'Mr. Moore, I thought you should know that my mother is 96 years old and in poor health. If she dies before 2010, we're not going to turn over her $30 million estate to the IRS. We will put her on ice if we have to.' ... 'I don't think members of Congress ever gave any thought to the chaos in estate-tax-planning they were causing. By bringing back the estate tax in 2011, they have created a roulette wheeel of death,' moans Dick Patten, head of the American family Busineess Intitute, a group lobbying to eliminate the tax for good. ... Consider a small-business owner who has accumulated $40 million of stock and other assets over her life. If she dies on Dec. 31, 2010, her estate will owe the government nothing. If she makes the mistake of dying one day later, the IRS reaches into her grave, and helps iteslf to about half, or $20 million (Less a $1 million exemption). Congress's tomfoolery might inspire a few Americans to consider the Menendez brothers' solution. ... Harold Apolinsky, an estate-tax attorney in Birmingham, Ala., says that clients 'are now preparing multiple wills' based upon which year they may die in. 'We've created thousands of jobs for estate-tax preparers' he explains. Another estate-tax planner tells me: 'I don't know it we will see an increase in suicides, but the threat of the government taking half of a lifetime of earnings and assets will certainly lessen the will to live beyond 2010 for many at death's doorstep.' ... The tax raises a tiny amount of revenue (just 1% of all taxes), which is a pittance compared with all the trouble it causes; it encourages wild spending during the last years of life while reducing the incentive to save and accumulate wealth during one's lifetime", Stephen Moore at the WSJ, 30 May 2008.
Anyone who thinks Congress can "solve" the "energy crisis" should read this. Congress can't see past the next election The estate tax raises little revenue and is a nuisance. Congress wants to increase the national savings rate, yet keeps the estate tax why? It's full of envious, ignorant fools. If Congress wants to "reform" the tax here's my suggestion: repeal the estate tax, repeal the asset basis step up and substitute a "deemed asset sale" rule. To reduce the nuisance factor my law would exempt amounts under $5 million and eliminate the marital exemption. All larger estates assets are "sold" at death and subject to the capital gains tax, currently 15%. If quasi-socialists like Warren Buffett and Bill Gates want to donate their estates to Uncle Sam, let 'em.