Filed under: Law, Rants and raves, Rich in America, Politics, Headline news
In testimony to congress, Warren Buffett expressed his opinion that the inheritance taxes were meant to recirculate accumulated great wealth and that repealing them would support an undesirable “aristocratic dynasty of wealth.”
Republican arguments in favor of repealing the so called “death tax,” permanently, mention two concepts they think are unfair. One is that the money has already been taxed and the other is that to satisfy inheritance tax stipulations, heirs are forced to break up family businesses or farms and sell assets at what might not be an appropriate time or fair value.
The idea that our earnings are taxed more than one time is pretty weak to me. First of all, we’re not taxing the one that earned it (they’re dead), we’re taxing the heirs who didn’t earn it. Besides, most money is taxed every time it changes hands. It is taxed when earned, when you purchase or sell something, when you win the lottery, gamble or make money on a game show, receive a massive gift and more. Using gift taxes as the most similar — are not the heirs receiving a big gift?
The idea that business or property has to be sold to pay the taxes is also fallacious. Often some heirs want the cash and not the property or in the case of multiple heirs some want to be purchased out and some want to remain active in the enterprise. This is actually very common.
I concur with Buffett that permanently repealing the estate tax is a mistake. The wealthy already receive the majority of tax breaks. In 2011 when the current law is set to expire heirs will still receive up to one million dollars tax free. In addition through various tax planning methods involving foundations, gifts, and life insurance programs plenty of loopholes still exist.
Compromise discussions on both sides of the debate are ongoing. They are considering things like freezing the exemption rate at $3.5 billion and capping the tax rate at 35 percent. They must be kidding, right? I’m all for compromise but . . . raise the exemption rate from $1 million to $3.5 billion — what ‘family’ farms are they speaking about?
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
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