Category Archive 'Estate Tax'

15 Dec 2010

Most Americans Are Hopeful, Not Envious

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Even now, House liberals are strategizing about a final effort to amend the bill extending the Bush tax cut to raise its death tax provision from 35% to 45% and lower its threshold from $5 million to $3.5 million.

William McGurn, in Wall Street Journal editorial yesterday, pointed out that the democrat’s obsessive animosity toward private wealth is not, in fact, an attitude shared by most ordinary Americans, wealthy or non-wealthy. Americans admire achievement and tend to believe people are entitled to enjoy the fruits of their own effort or even of mere good fortune unmolested.

For all the talk about “fairness,” Mr. Obama, Mr. Sanders and their fellow Democrats never really tell us what the magic number for fairness is. Is it 35% of income? 50%? 75%? Though they never commit themselves to an actual number, in each and every case we get the same answer: Taxes should be higher than they are now, for their own sake.

Americans are a more hopeful and less envious people than that. We are now hearing from them. Thus the heart of the tea party’s objections to the Beltway status quo is fundamentally a moral one: that Washington is arrogant about how it takes and spends our money.

The American people understand this. It’s not just tea partiers or those who work on Wall Street. Many years ago, the activist Michael Harrington—he, like Mr. Sanders, a self-declared socialist—wrote about the experience a friend of his had while campaigning in 1972 for George McGovern among the mostly black and Latina workers of New York City’s garment district.

Harrington told his friend that he must have had an easy time selling the candidate, given Mr. McGovern’s proposal for a 100% tax on every dollar over $500,000 of inheritance. This, Harrington thought, must have especially appealed to garment workers laboring for very low pay.

The friend informed Harrington how wrong he was: “Those underpaid women . . . were outraged that the government would confiscate the money they would hand down to their children if they made a million dollars.” No matter how he tried to tell these garment workers how unlikely they ever were to see a million dollars in their lifetimes, they couldn’t get past the idea that the government would take it from them if they did.

09 Dec 2010

Congress Reviving the Death Tax

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Warren Buffet

The really objectionable feature of the compromise Republicans in Congress made with the democrats to get the Bush tax cuts extended was the agreement to restore the death tax. It is obviously unfair and immoral to single out a small minority of Americans as a target for punitive taxation on the basis of excessive achievement or good fortune. Most Americans do not believe that government should set limits on opportunity or that we ought to have a tax system designed to prevent the accumulation of sufficient wealth to provide economic independence.

Warren Buffet, despite being notoriously wealthy himself, supports the death tax enthusiastically. Christopher Chantrill, at American Thinker, explains why.

Here’s a story about Warren Buffett, the estate tax, and the life insurance industry.

Did you know that the life insurance lobby is actively lobbying to restore the estate tax?

Why would the life insurance industry care about that? It turns out that ten percent of life insurance industry revenue is related to the estate tax. Wealthy people take out life insurance in order to reduce estate taxes because when you die, your life insurance payout doesn’t count as part of your estate.

Did you know that Warren Buffett owns six life insurance companies? Did you know he supports the estate tax? You do now.

Warren Buffett isn’t just noted as an owner of life insurance companies and a supporter of the estate tax. He’s also noted as a buyer of family businesses. As Dick Patten shows, these two business strategies support each other.

A family business owner or farmer takes out a large life insurance policy which he sinks tens or hundreds of thousands of dollars into each year. When he finally passes away, the life insurance pays out his policy to his family–tax free…

Even as Mr. Buffett’s insurance companies are “protecting” family businesses from the IRS, he is buying companies that are forced to sell themselves to pay the death tax. Mr. Buffett’s ability to buy family businesses at bargain basement prices depends on families being desperate to sell-and nothing produces family businesses desperate to sell quickly like a 55% bill from the IRS on all of the businesses’ assets.

Estate taxes must be paid to the U.S. Treasury within a year of the testator’s death. In cash.

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