Billionaire Deaths

[obs20]

With the Estate Tax due to be reinstated in January, will we see an uptick in the number of wealthy people dying as 2010 comes to a close?

http://freakonomics.blogs.nytimes.co...se-incentives/

[dsvick]

I don't have anyone in my family that has enough money to matter

[obs20]

Originally Posted by dsvick

I don't have anyone in my family that has enough money to matter

Neither do I, but as a fan of murder mysteries I couldn't resist.

[thinkpad]

I've never understood that particular tax. The tax on the money has already been paid once. Makes no sense at all for it to be taxed again

[Logseman]

It's not billionaire's deaths I'm worried about. It's corporations' immortality. Or, like a commenter says:

(1) MOST small family businesses end up worth well over 1 million after they’ve been going for a few years, so the heirs often must liquidate the business to pay the death tax.[...]

(2) MANY family farms and ranches, although cash poor, are worth vast fortunes on paper due to the inflation of land value. Again, the heirs must often sell to pay the taxes, wrecking the family’s liveliehood. Too often the sold-off family farms are bought by developers or corporate megafarms. [...]

Corporate megafarms never lose their land to death taxes because CORPORATIONS DON’T DIE — only family farmers do.

(3) Finally, in real-estate inflated areas of the country (California, Florida, etc), even modest middle-class homes that were purchased for only $30,000-$50,000 decades ago, are often reassessed at 1-2 million. In these areas, hard working middlle-class families LOSE THEIR HOMES because of the death tax. [...]

The commenter makes the case for the example (2), but the idea in (1) and (3) is practically the same. This tax favors a transferral of assets from middle-class entrepreneurial individuals to corporations, which, unlike individuals, do not die; additionally, when they do die (per liquidation) it is hard that they pay the full value of their debts, since they have limited liability. Corporations are less innovative than entrepreneurial individuals because they adopt hierarchical vices: therefore, this tax harms innovation and entrepreneurship of the individual, which is at the core of the generation of value and wealth for everyone else.

[phenomshel]

Unless they're leaving me large bequests (and I don't see this happening) I really don't care, LOL!!

[HarryT]

Originally Posted by thinkpadx

I've never understood that particular tax. The tax on the money has already been paid once. Makes no sense at all for it to be taxed again

Death duties (aka inheritance tax) are a standard part of the tax system here in the UK. The first £325,000 (about $500k) of the value of an estate is tax free; the remainder is taxed at 40%. The average value of a British house is currently about £200,000, so the majority of people pay no death duty.

Am I to understand that no such tax exists in the US?

[obs20]

Originally Posted by HarryT

Am I to understand that no such tax exists in the US?

The question remains:
If the Estate Tax is to be reinstated on January 1, would our hypothetical heir be better off if Granny dies before the year is out?