Show #415 Airing Sunday, 1/6/08
Based on all the attention the estate tax gets, you might be surprised to hear that most of us pay no tax at death. Ninety-nine percent of Americans can leave everything we have, all of our money and all our property, to our heirs, without any federal estate tax, or death tax as it's also been called.
Only the wealthiest one percent of Americans pay federal estate taxes at death, and only on assets over $2 million dollars. And that's not even the real number. Using trusts and other tax plans, most rich folks can shelter 4, 5, 6 million dollars, sometimes even more, from any tax.
Of course, the wealthiest Americans would rather avoid paying taxes. That's why they're again pushing for repeal of the federal estate tax. But it's nice to know there's at least one wealth citizen who thinks paying estate tax is a patriotic duty. Warren Buffet recently announced that efforts to repeal the death tax were "dead wrong". He said:"A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy."
What's the argument for repeal? Senator Charles Grassley said: "death should not be a taxable event." And on its face, that makes a nice sound bite. But let's take a closer look.
If death should not be a taxable event, why should buying gasoline to get to work be a taxable event? Yet we're taxed every time we fill up the tank. Why should eating the sausage and biscuits at Bob Evans be a taxable event? Why should traveling to Chicago to visit a sick aunt be taxable? Why should you pay tax when you sell your home? And maybe most important, why should we be taxed for working?
When you think about it, the estate tax on the wealthiest one percent of Americans is actually one of the least onerous and most fair taxes that we have. It only impacts people who did nothing to earn that money, the heirs of the very wealth. And if we repeal the federal estate tax, we'll all just have to pay more for buying gas, eating at a restaurant, traveling to visit a relative, or working.
None of us likes to pay taxes. But we do appreciate the need for our government to provide Social Security and Medicare, build roads and bridges, and defend us from attack. And there is a price for that security. The federal estate tax is probably the one tax that makes the most sense. And it should not be repealed.
