Death Tax: Pretzel Logic from the WaPo

By June 6, 2006General

Hmmmm…. Wonder who’s writing the WaPo editorials these days? Perhaps Sebastian Mallaby, the same guy who already showed his misguided stripes yesterday. Well, they’re back today talking about us “abolitionists” in an editorial, and they’re still wrong. We’ve said before that our small manufacturers saddled with this tax are often forced to sell the company, thereby eliminating jobs and livelihoods in the process. Indeed, many of our manufacturers have commented and have written to the Post to make this point. The Post’s rejoinder is jaw-dropping in its stupidity:

“Suppose that the estate tax does force the sale of some farms and businesses; is that necessarily a bad thing? Well, it would mean that the heirs don’t have the inclination or ability to manage the farm or the small business and turn a profit — otherwise they would earn enough to pay the tax….From the standpoint of job creation, it’s a mistake to leave a farm or small business in the hands of heirs who don’t know how to turn a profit on it; better that those assets be sold to purchasers who will maximize their value. Far from promoting a vibrant small-business and farm sector, the abolition of the estate tax would increase the number of businesses and farms that are managed by non-vibrant sons and daughters.

For the record, yes it is a bad thing as you’ll see from the many comments posted on this topic. These are people who have generated livelihoods and wealth for their employees. For the Post to dismiss it with the backs of their rhetorical hands is just flat irresponsible.

Click here to drop the Post a note and let them know you they’re dead wrong – again — and click here to tell your Senators to vote to keep this tax repealed past 2010.

[UPDATE] From NAM Tax VP Dorothy Coleman: The Post’s editors should take a closer look at the Congressional Budget Office study cited in their editorial as evidence that the estate tax does not impact many companies. The study is very narrow in scope and doesn’t tell the full story. It’s based on the number of small businesses claiming the arcane “QFOBI” (Qualified Family-Owned Business Interest) deduction, an ill-conceived estate tax relief provision for small businesses enacted in 1997. Because of the uncertainty, complexity and confusion surrounding QFOBI, very few estate tax planners advised their clients to rely on it as an estate tax planning device. And, based on the CBO numbers, clients took their advice. Moreover, even original supporters of “QFOBI” admit it wasn’t much help and the provision eventually was repealed in 2001.