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Thursday, June 08, 2006

OpinionJournal - Featured Article
DelaThought also had comments on this article, but I wanted to focus on other aspects of it.
Do the Kennedys or Rockefellers look any poorer from the existence of a tax first created in 1917? The real people who pay the levy are the thrifty middle class and entrepreneurs who've built up a modest nest egg or business and are hit by a 46% tax rate when they die. Americans want family businesses, ranches, farms and other assets to be passed from one generation to the next. Yet the U.S. has one of the highest death tax rates in the world.

By far the largest supporter of preserving the death tax is the life insurance lobby, which could lose billions of dollars from policies written to avoid the tax. The Los Angeles Times reported this week that the insurance industry is the main funder of an anti-repeal outfit known as the Coalition for America's Priorities. A Coalition ad features a sound-alike of heiress Paris Hilton praising the Senate as "like awesome" for cutting her family's taxes. But this is the opposite of the truth. The American Family Business Institute has found that the bulk of the Hilton estate has long been sheltered from the IRS in tax- free trusts.
A few points:
1) The super-rich can afford to avoid estate taxes through planning and trusts and the like. It's the not-as-wealthy who avhe trouble. If they build a successful business that they would like to pass on to their children, they can't because all the wealth is tied up in that business, so that the only way to pay taxes on it is to sell it. A prominent example of this is the sale of the Los Angeles Dodgers by the O'Malley family. When Peter O'Malley sold the team, which had been in the O'Malley family for decades, he stated that estate planning was a driving factor in selling the team to the Fox Corporation. Is that really what liberals want: a policy that drives more influence and profits to Fox and corporations like them?
2) As noted in the second paragraph above, one of the biggest sponsor of the anti-repeal forces is the insurance industry. As is so often the case, liberals are (most likely) unintentionally doing the bidding of big business which has no interest in supporting a free market and is willing to spend the money to protect their market share and profits.
3) I know the scourge of the Delaware blogosphere objects to the term, but I don't really have a problem with the phrase "death tax." After all, what is being taxed? It's not the estate, if the person were still alive, no taxes would be paid on the estate. It's only because they were foolish enough to die that they pay this tax; it's taxing them for dying, since that's the only thing that's different and triggers the tax.

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