Congress Reviving the Death Tax
Estate Tax, Life Insurance, Taxation, Taxes, Warren Buffet, Warren Buffett
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.