Death taxes are ghoulish

money2.jpgWhile the estate tax debate is typically framed as a soak-the-rich proposition, I find the whole concept to be immoral. If the government desperately needs those tax revenues it should find them somewhere else. It is simply wrong for the government to profit from the death of anyone, rich or poor.  If actions such as earned income or sales transactions generate taxes, so be it.  But dying should not be such a catalyst.

I like it better when governmental and business entities root for me to stay alive, such as in the case of life insurance. Note that I don’t expect to benefit if the estate tax is eliminated permanently; I just think it is wrong. 

Keep in mind that the rich folks who come out in favor of estate taxes may not be quite as noble as they appear. Some of them buy businesses on the cheap because families must sell them to pay estate taxes.

The “really rich,” whom the government wants to soak, typically find loopholes to avoid paying taxes. The “sort of rich” are the ones paying most of the taxes.

As George Harrison of the Beatles sang in Taxman, “And my advice for those who die . . . Declare the pennies on your eyes.” As a life-long fan of Beatles music, this is one of the few times I agreed with their politics.

15 thoughts on “Death taxes are ghoulish”

  1. Why would anyone able to accumulate massive amounts of wealth courtesy of the laws of this nation be opposed to paying a tax on that wealth? Anyone affected by the tax, generally, can well afford it.

    The estate tax evens out the tax burden, making the rich pay a more proportionate share of the total tax income, rather than making the poor and middle class pay more than their share.

    Why would a rich guy need to get a tax break so he pays less, proportionately, than a poor guy? Shouldn’t Christians be concerned about equity, too?

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  2. Thanks for your comment. The rich pay a huge percentage of taxes (a post on this is coming soon). The rich paid taxes when they earned the money.

    Why should dying be a taxable event? I am quite blessed but am not rich by the definition of the estate tax laws, so I am not affected either way. Many people have to sell off family businesses to pay the taxes. The super-rich will find ways to get around most of the taxes anyway (attempts to soak the rich usually fail because they are remarkably water-proof).

    As a Christian I believe in fairness and equity, but I don’t see how taxing someone for dying is a Christian principle. In fact, it is a violation of Christian principles when I covet what the rich have.

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  3. Many people have to sell off assets to pay the taxes? This should be an easy number to find — it would be right at the top of the testimony of the advocates of the legislation in the hearings. Oddly, I can’t find the number. Can you?

    How many is “many?”

    No one is taxed for dying. Heirs of rich people are taxed for the privilege of getting enriched for no work. If we tax the wages of the poor man, why shouldn’t someone getting money for nothing also be taxed?

    One could avoid the taxes as Warren Buffet has done — donate it all to charity. Estate taxes won’t affect him, either. Incidentally, he’s opposed to the repeal of the tax, as is Bill Gates’ father. These are wise men. They should be listened to.

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  4. I think you are splitting hairs. Fact: Someone dies, and the government gets more money. Sounds like a bad plan to me.

    Also, the rich paid taxes when they earned their wages, so the estate tax is often double taxation (or triple, for the portion of wealth that came from dividends).

    I’m familiar with Buffett. Forbes did a good article on how his pro-estate tax position wasn’t quite as noble as it seemed. Turns out he has bought businesses on the cheap when they had to be sold for estate taxes.

    Gates and Buffett are to be commended for their generosity. But rich doesn’t always equal wise, and it certainly isn’t a direct correlation to moral behavior. Buffett’s generosity is perverse at times, given his pro-abortion positions and related charities (see the Pampered Chef controversy). And Gates wealth wasn’t always gathered in the most ethical of ways. So go ahead and consider them wise if you like. I’ll seek my wisdom elsewhere.

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  5. “Why would a rich guy need to get a tax break so he pays less, proportionately, than a poor guy? Shouldn’t Christians be concerned about equity, too?”

    I don’t quite see how involuntarily taking from a man after his death amounts to anything that would be labeled Christian equity. In everything I’ve seen of the early Christian communities I’ve never read of an example of forced or coercive means of obtaining funds to help others. That would kind of defeat the whole purpose of cheerful and voluntary giving out of one’s own desire help others- as opposed to giving out of one’s own desire to avoid jail or even further tax penalties.

    “No one is taxed for dying. Heirs of rich people are taxed for the privilege of getting enriched for no work. If we tax the wages of the poor man, why shouldn’t someone getting money for nothing also be taxed?”

    We simply shouldn’t do either. And this whole getting rich for no work, sounds a little like you think there are more Paris Hiltons out there than responsible heirs. It also sounds a bit covetous.

    “One could avoid the taxes as Warren Buffet has done — donate it all to charity. Estate taxes won’t affect him, either. Incidentally, he’s opposed to the repeal of the tax, as is Bill Gates’ father. These are wise men. They should be listened to.”

    If we repealed the estate tax tomorrow they would still be free to write the government a check for whatever amount they desired. 😉

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  6. “It also sounds a bit covetous.”

    You nailed it. Underneath all the talk of caring for the poor is the notion that God didn’t do things right the first time and some people just have too much. We need to take it away . . . but it’s for the poor, right?

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  7. “The rich pay a huge percentage of taxes (a post on this is coming soon). The rich paid taxes when they earned the money.”

    When we have a large imbalance of wealth this isn’t surprising.

    The purpose of the estate tax is to prevent the formation of a “ruling class” aristocracy that simply leaves their wealth from one generation to the next.

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  8. Hi Mike – it isn’t surprising, but that doesn’t mean it isn’t true. Half the country pay little or zero income taxes.

    What is wrong with giving your hard earned money to your family? Many of the “ruling class” didn’t start that way.

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  9. Growing up, I worked for a local grocery chain, Bi-Lo. Frank Outlaw started this chain of about 4 stores and it had grown to 80+ by the time I worked there. Mr. Outlaw died just before I started (his funeral was the week I started).

    About a year later, his widow was forced to sell her interest in the chain in order to pay the taxes. The business he had built from the ground up was sold to foreign interests. A family owned buiness, gone.

    This all happened a long time ago and the tax laws have changed many times. I always wondered if he couldn’t have sheltered his estate a little more. Or how it would be done today.

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  10. If your wealth is liquid, it is very easy to pass it to the next generation without taxes. If you have enough wealth and really good lawyers you can even pass wealth along while appearing to give it away.(I don’t think a Christian could do this, but I have seen it done more than once).

    That is why estate taxes are so hard on small family businesses. All of the (so-called) wealth is tied up in the business property which is usually also mortgaged. When the founder dies the heirs have to sell the business to pay the taxes, or they have to re-mortgage the business to pay the taxes. Since most small businesses are already carrying all the debt they ca service, the second option, at least among people in my part of the country, most often ends in bankruptcy with the heirs losing their inheritance.

    As for redistribution of wealth, if the business has good potential it will be purchased by someone rich enough to pass wealth on without taxes.

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  11. The other heinous tax: property taxes. We pay taxes in order to rent what we own so the government doesn’t take it. How is that fair? We never truly own it at all, just rent it from local governments. Both taxes need to be done away with.

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  12. Death tax is double taxation. The dough had been taxed already when it was earned. The death tax is just another way the feds get money from us to cover their overspending. There’s nothing noble about it whatsoever.

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  13. “When we have a large imbalance of wealth this isn’t surprising.

    The purpose of the estate tax is to prevent the formation of a “ruling class” aristocracy that simply leaves their wealth from one generation to the next.”

    a) Taking money from one group simply because they have more is a violation of the Tenth commandment.

    b) If we saw that the same group of people that were wealthy 30 years ago were also wealthy today, then I would see a problem. But we don’t.

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