Angle estate tax claims. Sorta false?

Sunday’s Reno Gazette-Journal Fact Checker took on the worrisome - to Sharron Angle anyway - issue of the Estate Tax, uh, I mean the ‘Death Tax’, giving it a slightly false rating. At least I think that’s what the little needle, pointing ever so slightly to the yellow means. I guess that I’m a little slow, but I don’t quite get what neither false or true means.

Sorta one or the other?

I was generally wondering about Angle’s hysteria about estate taxes, so I emailed our family tax and estate attorney, asking if it was anything we should be concerned about here at Rancho Maven … should the unexpected happen.

Uh, not being gazillion-aires, ‘no’ was the answer. In other words, our due diligence in protecting our estate should do the trick and ‘pay off’ adequately.

First of all, as the RG-J notes, it doesn’t kick in until your estate reaches the $ONE MILLION DOLLAR mark. With the recent decline in home values many of us now have estates that look more like the Grapes of Wrath than Park Avenue these days. Secondly, anybody with even close to that amount of money is a complete idiot if they haven’t sat down with a tax attorney and planned for the uh, unexpected. That person deserves to lose it, and their estate will be better spent paying for Estate Planning for Dummies books.

The following, from Who Rules America, by G. William Domhoff, Dept. of Sociology, University of California at Santa Cruz, is very enlightening. The number of Americans who might actually have to worry about estate taxes is miniscule. The issue is being used by cynical pols like Sharron Angle to frighten her unenlightened Tea Party supporters.

“Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes — which they always call “death taxes” for P.R. reasons — would take a huge bite out of government revenues for the benefit of less than 1% of the population. (It is noteworthy that some of the richest people in the country oppose this ultra-conservative initiative, suggesting that this effort is driven by anti-government ideology. In other words, few of the ultra-conservatives behind the effort will benefit from it in any material way.)

Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever — for generations and generations — thanks to bankers. After Congress passed a reform in 1986 making it impossible for a “trust” to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their “rules against perpetuities,” which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these “dynasty trusts” (which could be the basis for an even more solidified “American aristocracy”) in a New York Times opinion piece published in July 2010 by Boston College law professor Roy Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).”

So, the bottom line here is that Sharron Angle can move on to some other ginned-up hysteria. The estate or death tax issue sorta isn’t.

From what I understand, if we were gazillion-aires we’d probably worry even less about the Estate Tax, since we would have dozens of tax/estate attorneys on retainer. That’s what the very wealthy do. That’s why they have all the money.

Duh.