Quatloos!

Bunning: Steinbrenner ‘smart’ for dying in ‘10 (By Jay Heflin)

Sen. Jim Bunning (R-Ky.) on Wednesday praised New York Yankee owner George Steinbrenner for passing away in 2010 when there is no estate tax.

“Because he was smart enough to die in 2010, there is zero tax liability on the estate tax,” he said.

------Snip!-----

“If he had died in 2009, or 2011, there would have been a $500 million tax liability to his estate in 2009, and in 2011 — under the proposal that we have — there would have been a $600 million liability,” he said.

(This is tax related, but not a tax protester issue, so it seemed to belong here. I apologize if I've popped it in the wrong forum.)

Parvati,

You stole some of my thunder.

I posted a link from MoneyCentral on Captain Kickback's thread that gives a short list of wealthy people whose families escaped the Estate Tax this year.

Apart from the crassness of the quotation, it assumes something very improbable.

However little love one had for Steinbrenner, he undoubtedly had good business advisors. I am sure that he arranged his affairs in such a way as to minimize the taxes for his survivors, even if the estate tax were going at full force. Although there have been flamboyant claims about how much estate taxes bring in, the fact is that the inheritance tax is the closest to being a "voluntary tax" because it touches only the wealthy and nearly everyone so prosperous can have things arranged so that his heirs will receive his wealth with a minimum of tax bite.

I strongly disagree with the statement that the estate tax can be easily circumvented, even by the very rich, without giving up control of the assets to a charity.

That being said, the number of billionaires dying this year suggests that Congress would have a problem retroactively reinstating the estate tax, as those estates would have lobbyists. A tax board I frequent suggests now that Congress will leave the $1,000,000 (equivalent) exemption and 55% tax rates in place for 2011, and reform the estate tax starting in 2012.

As for choosing the time of death, I had seen speculation that L. Ron Hubbard (or his agents) chose the date of his death to minimize tax consequences. According to that source, he hadn't been seen for many years prior to his death. Wikipedia's statement that he died of a stroke, and that the body was looked at by the coroner, suggests that is not the case, but they could have killed a stray Scientologist who physically resembled him, and put one over on the coroner. (I don't mean to imply that the Church of Scientology would commit an illegal act to protect themselves; I'm stating that outright. I don't know if they would have gone that far.)

Arthur Rubin wrote:I strongly disagree with the statement that the estate tax can be easily circumvented, even by the very rich, without giving up control of the assets to a charity.

That being said, the number of billionaires dying this year suggests that Congress would have a problem retroactively reinstating the estate tax, as those estates would have lobbyists. A tax board I frequent suggests now that Congress will leave the $1,000,000 (equivalent) exemption and 55% tax rates in place for 2011, and reform the estate tax starting in 2012.

My legislative sources have said that there will be a fix for 2011 that will basically go back to 2008-9 levels. I wouldn't rule out a retroactive attempt. It would be hotly contested and I'm not sure it would survive the lobbying force. Legally, its a very close call as to whether they could do it. Case law suggests that they might be able to get away with it.

Perhaps today was a good day to die.

On the other forum someone noted that there has been a retroactive fix introduced. I think the retroactively would be a hard sell both practically and legally. One of the big issues is whether the estate tax is still a law on the books at this time as opposed to applying no tax rates and no filing requirement. If its a new law, then retroactive application faces a much harder challenge legally. If its a correction of an existing law, then it would be much easier to overcome a constitutional challenge. Very interesting issue.

Technically, the estate tax is still on the books; it's just "suspended" for 2010.

Senators Kyl and Lincoln have proposed an estate tax provision that would phase in a $5 million exemption equivalent (phased in over 10 years) and a rate of 35%. Basis step-up would continue. Estates of people dying in 2010 would have the option to be governed by existing law (no tax and limited basis step-up) or by the new law.

http://lincoln.senate.gov/newsroom/2010-7-14-1.cfm