Death and Taxes: $10 M and 33 1/3 % (April 18, 2005)
(Now that the taxes are filed, it is time to deal with death)
Ben F., the key and kite guy, observed that there are two certainties in life. Americans are so arrogant that they believe they are entitled to repudiate their mortality, although they do not believe they are entitled to pay for the effort. Now the Congress wants to repudiate life’s other certainty, the payment of taxes upon death. Is there no certainty in life?
Estate taxes (E taxes) are paid on the loot before anyone gets their paws on it. Most Estate taxes are paid to the Feds, although the states will need to reach into the pot and grab a handful to survive in the near future. Inheritance taxes (I taxes) are paid by the individuals after they get their paws on the lucre. Most Inheritance taxes are collected by the states, although the Feds savor taxing any income from any source.
Contrary to the suggestions of their phalanxes of lawyers, lobbyists, lackeys, accountants and publicists, the rich often never paid tax on large chunks of their bounty. Those who can afford almost anything should be afforded the opportunity to be first-class citizens. Getting by on $10 million per couple and 66 2/3 % of the remaining stash is fair and balanced. Anything below ten million per couple should be exempt; anything over should be taxed at 33 1/3 %. A typical $20 M estate would yield $16 2/3 M for the kids. That is the definition of fairness. Fooling around with life’s certainties is foolish. And improvident.