Here's A Modest 'Death Tax' Proposal for Whoopi Goldberg

Whoopi Goldberg thinks she sees something called a 'death tax,' the same way she saw phantoms in Ghost. Ghosts may or may not be real, but there is no such thing as a "death tax." Like many wealthy people, Whoopi uses this artificial phrase to complain about her inability to give as many tax-free millions to her children as she would like.

Whoopi's kids will pay tax on their unearned income. That's an inheritance tax, not a death tax. And even though they've done nothing to deserve it (except for having a rich parent), they'll receive much more favorable tax treatment that regular people get when they work hard for their money. They'll be able to enjoy their first $2 million of inheritance absolutely tax-free.(1)

Why, you may ask, do wealthy children get a tax break that others don't? Because our country's lawmakers have traditionally favored the idle rich over working people. Whoopi, I think you understand that. And while everybody understands the desire to leave our wealth to the children we love, hardworking Americans aren't really happy about the 'tax-free' part.

This "death tax" phrase was designed and marketed by conservatives to confuse people into supporting the idea that rich kids shouldn't pay any tax at all on their unearned multi-million dollar income. And it won't go away. I saw a headline the other day that read "Dexter: Let's drop death tax." I thought it was referring to the serial killer on TV named Dexter. If he paid taxes for every victim he murders, that would be a "death tax."

(Actually, "Dexter" is a Canadian politician who's using the phrase for its intended purpose, which is to confuse voters.)

"If I have to give something to my kid I (when) already paid the tax," says, Whoopi, "why do I have to pay it again because I died?" Er, Whoopi ... you don't. They do. Just the same way your gardener and maids have to pay taxes on the money you give them, even though you paid taxes when you earned it. (Except for the fact that they don't get the first two million tax-free.)

It would only be a "death tax" if you had to pay it again personally.

Hey, look. We like Whoopi Goldberg. She has a big heart, and she does great work. We don't want to pick a fight with her. So here's an offer to keep things friendly: Whoopi, we'll tax your kids, but we won't tax "you" twice. So if you really think you've been forced to pay a "death tax" after you die, here's our proposal:

Just come back and ask for a refund. We'll see to it that you get one.

___________

(1) See this tax guide for information on the Federal estate tax, which is commonly referred to as the "death tax." Here's an excerpt: "... Congress has approved a schedule that increases the amount an individual can leave to heirs tax-free to $2 million in 2006-2008 and to $3.5 million in 2009. In 2010, it will supposedly be repealed altogether."

A Night Light
The Sentinel Effect: Healthcare Blog
Future-While-U-Wait
RJ Eskow at the Huffington Post

Comments

[youzaho]

This is such a sloppily written and poorly reasearched article, I don't know where to begin.
1. As has been pointed out by others, the death tax is paid by the estate, not the kids. Moreover, it is not a tax on income, but on wealth, like property tax. It is akin to taxing savings, not the interest (income), but the principal (wealth). So all the comparisons to taxing income are meaningless.
2. The current death tax rate, 45%, is higher than the highest income tax bracket, and is set to go higher still to 55% when the current law expires in 2011. How is that "much more favorable" than the tax treatment "regular people" get? You don't have to be super-rich to get hit with the tax: just owning a home in many parts of the country could put you over the $1 million exemption once the current law expires.
3. If "death tax" is an artificial phrase designed and marketed by conservatives to confuse people, phrases like "regular people", "working people", "hardworking Americans", and "idle rich" are phrases designed and marketed by lefties to incite class warfare.
4. The top 1% of Americans may own 30% (or whatever) of the country, but they also pay about 35% of all taxes. And it doesn't take a whole lot to put you in the top 1% of earners, $350,000, and a lot less, about $160,000, to put you in the top 5%, a level easily reached by police officers, fire fighters, and other public officials, hardly the "idle rich".
5. What evidence do you have to support the claim that "our country's lawmakers have traditionally favored the idle rich over the working people"? Goverment policy could be summed up as: soak the rich, screw the middle class, and pretend to help the poor.
6. Why aren't the "working people" voting the bums out? Voting irregularities? Yes, there was a lot of chicanery in 2000 and 2004, mainly by the GOP, but I'm talking about turnout rates hovering around 40%. Whose fault is that?

[lapoutlander]

"(Actually, "Dexter" is a Canadian politician who's using the phrase for its intended purpose, which is to confuse voters.)"

As compared to writers like you who don't. Maybe you didn't read the article. Dexter is no conservative and he is not asking for the wealthy to not pay inheritance taxes. He is NDP, thats right of the Communist Party of Canada and left-Left of the Democratic party of America. He may just be looking for a headline or he may be trying to provide some relief for widows dealing with funeral service sticker shock ( "...and if you dropped him overboard would you still charge me sails tax?" ;)

Ok maybe they do dig holes in Digby but they won't let two little old ladies make off with all the cash
" You mean you knew what you'd done and you didn't want the Reverend Harper to see the body?"

The issue of passing on the family house, farm or business which are the principal arguments to kill the tax could be handled simply enough by treating it as a transfer of capital and capital gain. As long as the gain is not realized then the lucky inheritors would pay no onerous tax. But if they sold or cashed out the tax would be due. And they could avoid much of the tax by doing what the third generation is known for. You know like what Bush is doing to the US dollar.

[dpdog]

I read the comment from Mormondude about how "There is enough upward economic mobility that we don't have to worry about a small upper echelon of families dominating the world" and wondered what world he is living in. The top 1% are getting richer at a fantastic rate and from the middle on down people are struggling.

Whooopi may be one of the rare cases where the income she passes on has actually been taxed once. Most people who pass on $2 million or more made that money from either stocks, land or a business. All of those grew over the years and they are now attempting to pass that on without paying capital gains on the increase. Show me someone who has saved up $2 million ($4 million for a couple) out of their salary and I will have a little sympathy. Even then it is hard to feel for someone getting $2 million tax free. Where would that rank in a list of the injustices that happens in the US?

[mavenla]

As a tax preparer, baby boomer, sometimes liberal, sometimes progressive,and Whoopi fan, I have read all of the comments with great interest. I agree with many points. I'd like to add this.

The biggest problem with the estate tax is that the exemption has not kept up with the value of the dollar. Only a few years ago, it had been 600,000 and had been that for at least 2 decades. Clearly, the increase in the exemption was warranted and should continue to rise--I think 10 million is about right. Many of the smaller estates, like the family farm with the appreciated land would then be exempt.

I live in AR, and Sam Walton's children are great examples of why dynasties need to be broken up by estate taxes. Under Sam, Wal-Mart 'associates' (employees) were well paid, good benefits, and loved their jobs. The kids have been the ones who have managed the abusive growth and downgrading of the workplace since they got their Daddy's wealth. Yeah they have charitable foundations, but not in proportion to the immense wealth they hold. And the grandchildren on down probably will feel more entitled and less generous.

Finally, I am all for a massive overhaul of our government to eliminate waste, (as well as horrific military spending to empire build), but that's a different issue. I am with our forefathers to break up rich families.

[redfish62]

Dude it is an estate tax, not an inheritance tax. Some states may have inheritance taxes, but the federal government does not.

The heirs are not liable for the tax, the estate is liable for the tax.

[BobLablah]

Actually you're wrong. When you die your estate pays the tax.

[Mormondude]

There really is no need for a death tax today. There is enough upward economic mobility that we don't have to worry about a small upper echelon of families dominating the world.

A whole lot more good can be done by individuals with a great deal of money than can be done by the government.

Our federal government alone spends almost $3 trillion per year. That's more than the top 100 richest people on the planet, combined.

Those hundred people could set up new Nobel Prizes, or new Carnegie Foundations, or new Bill and Melinda Gates Foundations. They could give a billion to an endowment for the arts, or for medical research, or any number of other worthy causes. And this money would continue blessing the lives of people worldwide for decades if not centuries to come.

Or... we could blow through it all in roughly an hour worth of federal spending.

It's truly sickening how much the government spends, and how much good could be done with that money.

[recessdawn]

Don't work hard and don't save money because your kids will benefit from all those taxes they spend so wisely? So much for family values and looking out for your own.

If I am wise enough to invest and not be in debt when I die why should I support federal spending rather than the welfare of my children?

At this time this whole subject is not a major issue. Why is the public and private debt not given more attention? If most of the people in this country owe money on credit cards and home loans and the government is not even able to find funds to pay the interest on our national debt, who has the money? According to the CIA world factbook the public debt is 64.7% of GDP (that was in 2005.)

I have a hard time understanding how debt that cannot be paid will somehow have value in the future.

Who cares how much we are taxed in the future if the dollar has little worth?

[daniel155]

Some people like the author want to use the tax system as a way to get at rich people rather than as a way to raise revenue.

The point that Whoopi Goldberg makes is that she has already paid taxes on the money that she has set aside for her kids. Whoopi is taxed on the income she made from a movie, if she invested some of that money in stock or bonds she got taxed on the dividends and interest. The money she has set aside for her children has already been taxed several times.

The people that inherit estates are not getting off without being taxed. The will pay taxes on capital gains when the sell inherited homes or stock.

I submit that the inherited assets do more good in the hands of private individuals who invest them than it does when it is taxed and goes to fund the government.

Lets use taxes to raise revenue not to punish or reward different groups.

[ShaunHammer]

Someone up the comment ladder earlier made the comment that this only helps the richest kids inheriting money from their parents has no idea about who this helps.
My friend is a farmer, his grandpa is a farmer, his dad, his 2 brothers, his 2 uncles all farmers. They harvest about 4,500 acres of corn, beans, and wheat every year (ohio). They live very modest lives and never buy new cars or live flashy. When my friends dad passes away, my friend will have to sell away some acres they already own to pay the tax on the newly inherited land.

It hurts family businesses. Why do you want to keep taxing people anyway? Even if your point above is valid about rich inheritance. Why are you so driven to hurt successful people. Should everyone not be able to succeed? I work hard everyday just to make it and save about $300 per month into the bank. I hope someday that I am weathly because of hard work and saving. When did saving and making good financial decisions throughout life become bad?!?

[AlButerol]

Actually the situation is even more unfair than you paint it. Since a great deal of the money that is inherited by rich kids is capital gains on investments, this money isn't even taxed once. A rich person invests in stocks, bonds, real estate, or whatever. The value of the investment increases, but does not get taxed unless it is sold. If it is not sold and gets passed on to an heir and there is no "death tax" then the added value never gets taxed. In the meantime we poor shmucks get taxed on every penny we work for. There is something wrong with a system that punishes people for working for a living and rewards people for sitting on their asses while unearned money pours in.

[Schaz]

It's misleading to say "wealthy children get a tax break that others don't" -- everyone gets that "tax break" (up to $2 million) on their inheritance.

[johannesrolf]

it's always charming to see poor shnooks fighting tooth and nail for the privileges of the rich.

[johannesrolf]

many of the super rich approve of the estate tax. Whoopie stop whining.

[realitytrumpsbull]

Remedy for the death tax? Die broke, don't have kids. For the rest of it? Don't buy anything.