Estate Tax
So a lot of people are whining about the estate tax, both ways. I think it is an unreasonably confiscatory tax. I think that it is a serious problem for small business owners and entrepreneurs who are trying to pass on wealth to their children.
But that is not why I am writing. I am writing because I've heard people say, hey, Bill Gates Sr. is in favor of the Estate Tax! And so is Warren Buffett! And they are rich! So what's wrong?
Well, first, Buffett is so incredibly rich that an inheritance tax will still leave his children with billions, if he wants to give it. The inheritance tax kicks in at $1 million, and if you've got only $2 million to pass down, it could take a huge chunk of that, maybe 20 percent or more. When you've got a house, kids going to college, kids buying houses, and so on, $2 million doesn't last long, and taking $400,000 or more out of that is a huge hit.
As for Gates, his son has many billions more than he does -- more than anyone else in the country -- so he has no need to pass it down.
But the funniest part is that much of Buffett's wealth was created because of the estate tax: his business is buying and selling businesses, and he has bought many profitable properties at a low price because they were sold to pay for the estate tax. Further, he sells estate tax insusrance products. He'd lose a lot of business if the estate tax went away.
So don't think for half a second that Buffett is thinking of society when he favors the estate tax. He, like most people, is thinking of himself, and the profits he has and will continue to make.
But that is not why I am writing. I am writing because I've heard people say, hey, Bill Gates Sr. is in favor of the Estate Tax! And so is Warren Buffett! And they are rich! So what's wrong?
Well, first, Buffett is so incredibly rich that an inheritance tax will still leave his children with billions, if he wants to give it. The inheritance tax kicks in at $1 million, and if you've got only $2 million to pass down, it could take a huge chunk of that, maybe 20 percent or more. When you've got a house, kids going to college, kids buying houses, and so on, $2 million doesn't last long, and taking $400,000 or more out of that is a huge hit.
As for Gates, his son has many billions more than he does -- more than anyone else in the country -- so he has no need to pass it down.
But the funniest part is that much of Buffett's wealth was created because of the estate tax: his business is buying and selling businesses, and he has bought many profitable properties at a low price because they were sold to pay for the estate tax. Further, he sells estate tax insusrance products. He'd lose a lot of business if the estate tax went away.
So don't think for half a second that Buffett is thinking of society when he favors the estate tax. He, like most people, is thinking of himself, and the profits he has and will continue to make.
"It is the common fate of the indolent to see their rights become a prey to the active. The condition upon which God hath given liberty to man is eternal vigilance; which condition if he break, servitude is at once the consequence of his crime and the punishment of his guilt."
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