Whoopi, Oprah — Death Tax Does Not Become Them

By December 11, 2007Taxation

Whoopi Goldberg isn’t the first celebrity talk show host to speak out against the death tax. Oprah Winfrey once told an interviewer: “I think it’s so irritating that once I die, 55 percent of my money goes to the United States government…You know why it’s so irritating? Because you already paid nearly 50 percent when the money was earned.”

What Warren Buffett and Bill Gates don’t get that Whoopi Goldberg and Oprah Winfrey do is that the battle over the estate tax isn’t about rich people paying more in taxes. The problem with the estate tax is that it’s a flawed tax – it’s unfair. As Oprah and Whoopi point out, they’ve already paid taxes on their income, so why do they have to pay a second tax (at a much higher rate) when they die?

The more pressing problem for manufacturers is that the value of the estate is based on assets – like businesses, trucks and machinery. Of course the tax must be made in cash – so people often have to sell things like businesses, trucks and machinery to pay the tax. That’s not good for the economy. And, it’s unfortunately very inconvenient for families who have other things on their minds…like the death of a loved one.

(From Carter Wood): Useful readers’ comments to an earlier post on the subject here.

UPDATE (CW – 8 p.m.): Here’s a challenge from a commenter: “I don’t think you can document a single case of someone having to sell a truck or a piece of machinery to pay the estate tax. Not one.”

Join the discussion 5 Comments

  • bob says:

    Well said concerned! We need fair reform with a much higher exemption AND SOON!

  • concerned says:

    To mjshep;
    The death tax is devastating to middle class families in that it has unintended consequences. First, to answer your point; the death tax is a double taxation because the “dead person’s” estate is taxed before any creditors are paid and before any beneficiaries/heirs receive anything.

    The death tax is devastating to many middle class families who find themselves “asset rich but cash poor”. What frequently happens is that they are forced to sell off land that used to be not worth much but greatly appreciated due to wealthy developers developing land all around these middle class or even working class families. When the parent (or grandparent) dies, this vulnerable family discovers that they will lose their land because they do not have enough money to pay the astromonical death tax nor could they have afforded an extremely expensive life insurance policy to pay this immoral death tax. As a result, they are forced to sell their land (and move off the land) to guess who????? The wealthy developer who then, “low balls” the offer for this family’s land because the developer knows that this is a “hot sale”-meaning that the family only has nine months to sell the land and is unable to hold out for the best selling price (because the death tax is due only nine months after death of the decedent). End result? The wealthy developer low balls the price to this middle class family, acquires the land, drives the family off the land, then subsequently developes the land-building luxury housing for other rich people.

    What we really see around the country is wealthy developers and corporations just waiting to snatch the land of middle class families and small businesses who are forced to sell their appreciated land to pay this outrageous death tax whereby these developers and corporations then swallow up this land as well as other land throughout the country. Thus, we really see a transfer of wealth from middle class families to wealthy corporations and developers who pray on their inability to pay the death tax. This was not the rationale of the death tax in the first place and we really either need to abolish this atrocity or enact a fair reform with a much higher exemption to protect against this outrageous injustice.

  • randy says:

    The other thing that seems to be forgotten, is that estate taxes are currently optional. They can be planned around. If business owners would take the time and hire competent estate planners, they can minimize or eliminate their potential estate taxes. Same for Oprah and Whoopi. While it may involve some complexity and some risk, paying 1/2 of your estate in taxes involves some risk as well.

  • hank stark says:

    They might not have to sell a business asset to pay the tax, only because they had to buy expensive life insurance from warren buffett.

  • mjshep says:

    What you don’t seem to get is that no dead person pays an estate tax. Dead people do not pay taxes, their heirs do. Therefore the money is not “taxed twice” any more than when I pay my attorney or whatever with money I have been taxed on and then he has to pay taxes on that money. The heirs pay the tax because it is income to them.

    Given the high exclusions and deductions from the tax, the last paragraph is just silly, or disingenuous. I don’t think you can document a single case of someone having to sell a truck or a piece of machinery to pay the estate tax. Not one.

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