Senator Chuck Grassley was talking the other day about the new tax bill. Senator Grassley is an 84-year- old Republican. He has been in Congress 42 years. He graduated from Iowa State Teachers College with a masters in 1956. From 1959 to 1975 he was in the Iowa House of Reps. The latter year he was elected to Congress. His net worth is around 3 million which is not too far out of line for a guy of his age who has had a steady job and avoided women, booze and movies.
Right now the federal estate tax will exempt from taxation estates with a value of over 5.5 million dollars. Ma taxes estates with a value of over 1 million. The new federal tax bill will increase the exemption to those earning over 10 million dollars.
The tax rate on the estates that exceed those figures is 40%. So roughly after the new tax bill if you leave an estate of 20 million dollars the amount your heirs will receive tax-free is 16 million dollars. Grassley wants to do away with the tax totally.
He explained: “I think not having the estate tax recognizes the people that are investing. As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
He’d later explain that: “My point regarding the estate tax, which has been taken out of context, is that the government shouldn’t seize the fruits of someone’s lifetime of labor after they die” I wonder how many people end up with over ten million dollars after a lifetime of labor. And it seems the government is hardly seizing the fruits of their labor leaving them take ten million dollars tax-free and the rest after taking only a portion of it in taxes. The estate tax doesn’t take the whole estate.
Grassley went on “The question is one of basic fairness, and working to create a tax code that doesn’t penalize frugality, saving and investment.” Hardly is leaving ten million untaxed penalizing that. And I’d suggest few get ten million by frugality, saving and investing.
Now here’s the kicker. He added: “That’s as true for family farmers who have to break up their operations to pay the IRS following the death of a loved one as it is for parents saving for their children’s college education or working families investing and saving for their retirement.” Parents with more than ten million dollars are not saving for college education nor are working families investing that type of money. As for true family farms, I suggest not many are valued at more than ten million and of those that are the law could be written to protect them and not the people who get no closer to a farm than the farmer’s stand in Whole Foods.
Grassley’s later explanation came after a great negative feedback on his first statement suggesting two classes of people: those that invest and those others that “are just spending every darn penny they have, whether it’s on booze or women or movies.” Many resented the out of touch observation that you would have had more than ten million dollars in your estate if you had not wasted it on booze, women and movies.
In 2017 it is projected that 2.7 million will die and of that amount only 1 in 487 will pay any estate tax with the present 5.5 million dollar exemption. Under the new tax bill that number will fall. Right now two-tenths of 1% are taxed the other 99.795% of Americans in Grassley’s view have waste their money. But we know that is false but what is true is that the super rich support Grassley and he wants to pay them back.
Another aspect of Grassley’s comment does a great disservice to women. He talked about them as if they were a commodity like booze and movies, something to be bought on the market place. Beyond that it seems the only constituency he is concerned about is men. Surely he’s not suggesting that women are wasting their money on women. But no matter how you slice his original statement and subsequent explanation it is clear Grassley has little concern for the average American nor does the new tax bill.
Thinking of this I though that perhaps Grassley is confused and has mixed up in his mind the statement of a great Irish football (soccer) player who earned huge amounts of money over his career. It turned out after not too many years he was broke. “Mike,” one of his friends asked him one day. “Whatever did you do with all the money you earned.” Mike replied, “Sammy, my friend, I spent about ninety-five percent of it on booze and women. As for the other five percent, I’m sorry to think that I wasted it.”
I see the “deplorables” are back in the news, this time as men who are squandering all of their money on booze, fast women and art house movies like “The Shape Of Water.” I guess these folks just can’t win with either party! To the government haters, I’d say I much prefer the rule of the U.S. government to free-market rule by the likes of Equifax.
Search on the term “kleptocratic oligarchy”.
Why should anyone care whether Rose Kennedy lived mostly in Florida or mostly in Massachusetts?
Re: Ed. For the purpose of establishing residency. Florida has no estate tax. You cannot live full time in one state and claim to be a resident of another state to avoid tax liability. Allowing Florida to probate the estate raised more than a few eyebrows among the professionals in the DOR at the time. Some people are special, don’t you know.
Sen. Grassley is responding to an Iowa constituency farmers, , not Wall Street billionaires. That is how our system works. That being said too few people adequately prepare for the inevitable with life insurance to cover the tax burden. The financial shock can be ameliorated. [I do not sell insurance.]
Many estates consist of unrealized capital gains that have never had taxes paid on the underlying assets. This is contrary to the tired Rush Limbaugh scenario of double taxation.
Death has always been a revenue source. The laws should take into consideration collateral damage in addition to raking in the bucks. The whole thing is a minefield and deserves a rethink. especially the use of trusts. Trusts – that is where the real money is.
There is too much avoidance. Examples. Rose Kennedy had not been out of the Commonwealth for over a decade, yet her estate was probated as if she were a Florida resident. A patent absurdity. When President Kennedy’s son tragically perished in an accident his heirs attempted to avoid death duties by getting the IRS to declare his estate ordinary income. They were denied special status. Sometimes scams work, sometimes they do not. The revenue codes are too porous.
There has to be a better system. Grassley tends towards no system. It has a logic, but it would lead to an ever smaller, ever richer, financial elite.
By definition, however, the tax has to fall on those with substantial assets. Dragging those who only inherit a funeral tab does not help. The proposed tax bill only fiddles around the edges. The issue should get a better vetting further down the line. The overhaul needed politically cannot be addressed in the bills before Congress today. It is just too complex.
Tax cuts have been very effective in American history, Coolidge cut the top rate to 25% and we got the roaring twenties. Kennedy’s tax cuts led to solid growth. Reagan’s reduction of the top rate to 28% produced twenty million new jobs and huge economic growth. Revenues to the Federal Government doubled after the Gipper’s action. The current tax system benefits the wealthy with it’s unnecessary complexity and multiple avoidance schemes. Remember Ralph Nader called Hillary, Kerry and Schumer the corporate liberals for voting for carried interest. 2. It is only the Harvey Weinsteins, Matt Lauers, Charlie Roses, Al Frankens and other fat cats who manipulate the current code to their advantage. The average American family will be helped with a two thousand child tax credit and a 12,000 personal exemption per person. The people in the low tax states are subsidizing those who itemize in the high tax states.. 3. Why is the stock market up except in anticipation of solid economic growth. Trump’s policies of lower taxes, reduced regulation, improved trade deals and energy independence will spur growth and job creation. Abolishing the Death Tax is a good idea.
Funny ending.
We all have to pay a fair share.
Think of this . . . I know a true life couple who own a small business; they’d like to pass it own to their children. Now, I don’t know tax law; but if their business is worth 20 million and they’d have to pay 40% of 10 million, or $4, they may have to sell the business to give their heirs their fair share. When they sell, lifelong employees, they employ about 50, may lose their jobs.
Anyway, you raise good issues,.
As for me: The more $ left in the American people’s hands the better.
He who taxes least, taxes best; he who governs least, governs best; and, yes, we’re all sure of two things in this life in the good old USA: one of them is taxes.
Let’s not do what Dems do: Beat up on the rich, while public servants like the Clintons accumulate $150 million in personal wealth, and $1 billion to their quasi-political charity.
Moderatio in rebus.
P.S. Using the word “men” only in a sentence is not a sexist remark, but as Tadzio said, an allusion to the “White Tea Party” may be a racist remark. Or, to put it otherwise: you don’t have to think or write in politically-correct lingo: most sane folks get the drift! l reject today’s psychobabble and demands we alter our speech to be “more inclusive.” “Men” means human beings, too.
P.P.S. Have you seen the latest? LGBT . . . . is now 12 letters long? It’s simpler to say heterosexual (95% to 98%-plus of us) or non-heterosexual. In my humble opinion