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May 21, 2013
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 ‘A Good Year to Die’Posted on Jul 15, 2010By Ruth Marcus George Steinbrenner’s well-timed death—though I suspect he may not have seen it that way—points up the insanity of the current estate tax situation. As you may have heard, the billionaire Yankees owner could end up owing no federal estate tax—because there is no federal estate tax this year. Last year, Steinbrenner’s heirs would have faced a tax rate of 45 percent on the bulk of his estate. Next year, the tax is set to spring back to a 55 percent rate. Congress is not going to let this happen—but it is also unlikely to do away with the estate tax altogether. Hence the good timing of Steinbrenner and three fellow billionaires who have died this year. You know there is something very wrong with the tax code when you have estate planners saying things like “if you’re super-wealthy, it’s a good year to die,” as BDO Seidman’s Jack Nuckolls told The Associated Press. The AP put Steinbrenner’s savings in the neighborhood of $500 million. Congress set the estate tax to disappear in 2010 and be, pardon the phrase, brought back to life in 2011. No one expected this throw-Mama-from-the-train scenario to actually play out in 2010, but Congress has been unable to agree on a reasonable level for a new estate tax. It’s possible an estate tax will be reinstated this year and applied retroactively, but there are a lot of law firms looking forward to billing for years of litigation over whether this is constitutional. Short answer: It is, but when has that ever stopped lawyers from arguing? Advertisement The notion of repealing the so-called “death tax” was wrong at a time of supposed budget surplus and is particularly irresponsible now. Even beyond bringing in needed revenue, the estate tax serves an important function. As Michael J. Graetz and Ian Shapiro write in “Death by a Thousand Cuts,” about the movement to repeal the estate tax, “For almost a century, the estate tax affected only the richest 1 or 2 percent of citizens, encouraged charity, and placed no burden on the vast majority of Americans. This tax was grounded on a core American value: that all people should have an equal opportunity to pursue their economic dreams.” The only thing wrong with this account is that it overstates the bite of the modern estate tax, which applied to only two of every 1,000 estates in 2009. The Obama administration has proposed renewing the estate tax at its 2009 level: 45 percent, with the first $3.5 million of an individual estate, or $7 million per couple, transferred tax-free. The House passed such a measure last year. That is more than adequate to protect against the supposed threat posed by the estate tax to family farms and other small businesses. If anything, this is too generous: It would cost about $250 billion over the next decade, compared to current law. Not generous enough, though, for Sens. Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark., who are pressing for a $10-million-per-couple exemption and 35 percent rate—although they hide the true long-term cost of this proposal by having it gradually phased in. The latest bad idea, proposed by Rep. Mike Thompson, D-Calif., is an unlimited exemption from the estate tax for farms. This is unnecessary because very few family farms are large enough to be affected by the estate tax—the Tax Policy Center estimates fewer than 110 next year if the tax were reinstated at its previous level. This exemption is unwise because it would simply incentivize super-rich non-farmers to transfer their wealth to farmland and, as the Tax Policy Center concluded, “make the estate tax essentially voluntary for the very wealthy.” It would actually hurt family farmers by driving up the price of agricultural land. So maybe Steinbrenner’s timely death can serve as a wake-up call uniting Yankees fans and Yankees haters alike. Resurrect the estate tax.  TAGS:
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Too Soon to Tell: The Case for Hope, Continued
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By SoTexGuy, July 18, 2010 at 4:31 am Link to this comment
Income is income.. and as long as we have an income tax then it should be applied across the board to all types of income and to everyone who has income..
Unfortunately, it isn’t!
‘Oh, it’s not fair to tax inheritance’ say the defenders of the very rich.. It’s inheritance, not income.. What?
But this tactic of renaming income as something else has worked big-time already.. Take for example the classifying of all sorts of investment income as ‘capital gains’.. Neat trick, that. And it’s just one of very many ways we coddle the well-heeled playas in our country.
One way or another if you have a big enough pile of cash things will work out for you.. Example: Ken Lay, of ENRON fame. He creates an empire of air by selling all sorts of things, either made up or belonging to others.. robs thousands of their lifetime equity.. gets caught and convicted. Think that’s the end of the tale?
No.. he’s off to Vegas or somewhere during the time the judge has given him to put his affairs in order.. and he does.. he conveniently manages to die. The judge vacates his conviction! Which also brings to a close the sad possibility that the government (or most of his victims) will ever get recompense for his scams from his estate!
Hallelujah!
Report thisBy Richard_Ralph_Roehl, July 17, 2010 at 1:24 pm Link to this comment
Wow! The DEAD and rotting body of George $teinbrenner, a multimillionaire man that employed generosity to attenuate the sins of being an arrogant $choolyard bully, will be enjoying magnificent tax breaks. I imagine that many of the unemployed yahoo hicks out there (meaning fans of Mr, Oxycontin and other corp-rat owned propagandists on talk hate radio) will celebrate George’s good fortune.
Ah yesss! Amerika the beee-ewe-tee-fool! The rich get richer… even when they’re dead.
No wonder Rome is burning! And it deserves to burn! Burn baby! Burn!
Report thisBy RAE, July 17, 2010 at 10:20 am Link to this comment
In this country most are required to WORK FOR PAY in order to have shelter and food. In order to get any reasonable paying job you need an education. In order to get an education you need either to have money or borrow it. Either way, to get that education you use money on which TAXES are paid.
Then you (maybe) get a job. Before you get your first paycheck the GOVERNMENT has stolen 15-30% of it in TAXES.
Then when you go to buy something, the GOVERNMENT is right there with MORE TAXES.
Now, if you manage to save anything after these multiple layers of legalized theft, the GOVERNMENT is planning to take 55% of it when you die.
Am I the only one who considers this ABUSE?
“Freikish” suggests that if you don’t like paying all this tax then go buy an island and defend it yourself. Glib in the extreme.
Besides if I had the money to buy an island I’d likely have enough to also buy some defenses should they be required. Since I’d probably not launch invasions and interfere in the workings of other countries from my island, I’d not likely NEED defenses. Even if I did, since I’d not be paying taxes, I’d have WAY MORE MONEY to buy them with.
There’s only one way to survive these days. Either be an especially favored “thief” (Banks, Insurance companies, Wall Street, etc.) or to be even more devious and cunning than the government. Fortunately, that’s not difficult.
Report thisBy ofersince72, July 16, 2010 at 10:58 pm Link to this comment
Don’t forget, it should be left to the public
to build their stadiums to make their billions..
Report thisRight RICO,,,, work for it…......Huh pal,
By Malcontent, July 16, 2010 at 6:01 pm Link to this comment
(Unregistered commenter)
Ah, Rico. Therein lies the rub: Those who don’t want to “work for it”. They think their money should work for them and their children, not that their kids should sully themselves working. The curse of the regressive, power and wealth hoarding world view.
What a system. If I work for my money I pay the most. If my money “works for me” (otherwise known as gambling), I pay less. And if I am just born into it, I pay nothing.
How long can this be sustained before 1% owns 99%?
Report thisBy rico, suave, July 16, 2010 at 6:46 am Link to this comment
tedmurphy:
“everyone left can start equal, with nothing and let them work for it”
Ah, Ted. Therein lies the rub: “work for it”. The curse of the progressive, redistributionist world view.
Report thisBy tedmurphy41, July 16, 2010 at 6:34 am Link to this comment
I was under the impression that America was nearly skint, so why this situation and why now??
Report thisI would make it 100%, then everyone left can start equal, with nothing and let them work for it, and not be left it.
By rico, suave, July 15, 2010 at 5:56 pm Link to this comment
Ortiz is right. Why do all you people assume that your money belongs to the government first, and that they are doing you a favor by letting you keep it?
Report thisBy Mark, July 15, 2010 at 3:43 pm Link to this comment
(Unregistered commenter)
Aaron Ortiz
Money = Power. Just look at how Congress works.
Moreover, as more money accumulates, so does more power.
Create inter-generational wealth which passes un-taxed (or under-taxed) and you will have consolidated and magnified that power. For example, G.W. Bush didn’t get to be POTUS because he rose to the top by hard work and perserverance.
He was the beneficiary of wealth and connections that stretch back 3 generations.
Per the Constitution, we don’t have nobility or titles.
However, when you’ve got the top 1 or 2% of the population controlling 34.6% of the wealth, and the top 20% of the population owning 80% of the wealth, you don’t have to.
BTW, George Steinbrenner was a convicted perjurer and a felon. He violated campaign finance laws by giving Richard Nixon $100,000.00 in 1972! He pled guilty and paid a $15,000.00 (!?) fine. Ronald Reagan saw fit to pardon him.
Money = Power
Report thisBy Aaron Ortiz, July 15, 2010 at 2:12 pm Link to this comment
Thanks for explaining
Report thisBy freikish, July 15, 2010 at 2:03 pm Link to this comment
@Aaron Ortiz: For the super-rich (and even for some of us not-so-rich) it’s actually trivial to put money in an account that becomes part of the estate, and avoids ALL tax burdens. Ever hear of a 401K? NO taxes going in, and none coming back out if it’s part of the estate. There are hundreds of far less common (and far more lucrative) ways to defer taxes until your death, at which point your heirs pay no taxes on the income.
We live in a country that does an awful lot for us from tax revenues (less than I’d like, and way more defense than I’d like, but still), and as such, yes, the governmetn has teh authority to levy taxes. You don’t like that fact, go buy your own private island somewhere. And try to defend it yourself
Report thisBy NABNYC, July 15, 2010 at 12:43 pm Link to this comment
We should call it the estate tax-break. It isn’t really a special tax assessed on estates. It’s a tax-break given to estates. Here’s why:
Let’s say Mom gives Kid $100,000. Other than the gift exemption (around $10,000 of a gift is tax free to the recipient), all of the money given will be subject to ordinary income taxes. It is money that was received by Kid, and will be taxed at the normal income tax rates.
If Mom dies and leaves Kid $100,000, guess what: no taxes. Kid gets the full $100,000 tax-free. That’s because of the special tax break for estates. A certain amount of the money and assets (jointly called their “estate”) that somebody leaves when they die gets the special tax break. They can leave to whomever they want, and nobody pays taxes on it because of the estate tax-break.
What part of an estate gets the estate tax-break? It used to be the first $600,000; then $1.0, then $1.2, $1.5, $2.0 million. As of last year, an individual who died and left an estate worth $2.0 million got the estate tax-break for their entire estate: nobody pays taxes. For a married couple, I believe it was $3.5 million. This year, 2010, is just a gap, a void, because of a technicality. What will Congress do now?
If Congress exempted the first $600,00 for an individual and $900,000 for a married couple, that would mean that—90% of all people who died would have the estate tax-break for their entire estate. The rich people—those who have more than $1.0 million—want the special estate tax-break for all their money, so they can leave it to their useless children, who likewise will never pay taxes.
I say we’ve had more than enough special tax-breaks for the rich. The estate tax-break should be limited to an amount that will allow most people to leave their assets tax-free, but do not give the rich anymore special tax-breaks. They’ve had enough.
Report thisBy Aaron Ortiz, July 15, 2010 at 12:34 pm Link to this comment
When the author says that the government’s failure to
tax a citizen is a cost, he almost implies that all
property and riches of that citizen belong to the
government. Are we slaves of the government that
our work is subject to every whim of lawmakers who
love to spend other’s money?
Why should the government get any money from the
Report thisinheritance we leave our children in the first place? Such an inheritance is only what was left after income tax has been taken from it on the years when it was earned.
By John P. Teschke, July 15, 2010 at 12:26 pm Link to this comment
(Unregistered commenter)
Though now that I’ve decamped to Canada I don’t care that much, this particular post is reasonable. It shows how dysfunctional things now are in the yankee republic that no fix can be agreed upon. A reasonable fix is $2000000 ($4000000 per couple) tax free, then the usual schedules.
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