Death and Taxes

The nation dodged the bullet on the trillion dollar omnibus spending bill and saved the country a bundle. Couple that with the extension of the Bush tax cuts it was a pretty decent week for the American taxpayer. The electorate spoke in November, and Washington listened. One can only hope.

I hope America got an earful on how some of these guys think after the announcement of the Obama tax compromise. It wasn’t the Republicans making a stink. It was the Democrats. And the hostility and class hatred bubbled to the surface and they groused around about the “rich”. The estate tax compromise was the focal point of Democratic rancor. Where does the hate come from?

Ten years ago, if you had an estate valued over $650,000.00, you paid estate tax starting at 55%. No, that is not a misprint. If you were married, you were able to pyramid various tax credits to shelter $1.2 million…but if you were single, your heirs would have to pay 55% above $650,000.00 of what was inherited to the Federal government, plus another 7% to the state.

Bush gradually phased it out. This past year, the estate tax went to zero. So George Steinbrenner, worth millions, hit the jackpot (so to speak) by dying this past year. His multi-billion dollar estate paid nothing.

Democrats talk about the lack of an estate tax as being unfair. Could somebody please tell me what is fair about taking more than half of what a person owns when he dies? While there some uber rich who could afford and not blink an eye, for the most part these estate taxes were the death knell for family farms and small businesses that were capital intensive and cash poor. You can have a business that is valued at $20 mil, but if it is all equipment or land, you have to sell it off to pay the taxes.

If there were any other winners besides the government, it would be insurance companies. Small business people, if they were able, would purchase insurance policies for the sole purpose of paying taxes. Insurance trusts were specifically designed for this, and the life insurance was NOT subject to the federal estate tax so there would be enough cash to pay the taxes on the rest of the estates.

The compromise that came out of Obama for the next two years was to tax estates over $5 million at a rate of 35%. For a married couple with a good estate planner, that means about $10 million can be sheltered. I am opposed to all estate taxes, but I can live with this.

The Democrats screamed and yelled. How awful. Those rotten rich people!! How much liberal economic policy is based on sound economic principles, and how much on class envy and jealousy?

Remember, just ten years ago government bureaucrats were taking 55% of accumulated, earned, tax paid already wealth above $650,000.00. Maybe not in Youngstown, but in certain markets, that’s the value of an average house. And the government goons had no problem with that. And here is the lesson, if the government can do it to them, it can do it to you.

Now it’s the Republicans up at bat, I only hope they don’t screw it up, too.