No, it wasn’t because of lawsuits.
No, it wasn’t because the four people were buried with trade secrets worth a lot of money.
It was because they happened to die in a year during which the estate/death tax is zero. From a post at ElderLawAnswers.com:
[George] Steinbrenner was worth an estimated $1.5 billion, meaning his heirs could save as much as $600 million in taxes because he died this year. Steinbrenner’s wealth — mostly consisting of the Yankees, a new stadium and a regional cable network — could pass to his wife tax-free even if the estate tax were in effect, but this year she might have an incentive to disclaim (or turn down) any bequest, which would allow the assets to pass to Steinbrenner’s four children free of federal tax. (But, as the Probate Lawyer Blog points out, Steinbrenner’s family would have to pay a huge capital gains tax if it were to sell any highly appreciated assets, since along with the disappearance of the estate tax, there is no “step-up” in the cost basis of inherited assets during 2010.)
The other billionaires to die in 2010 are Janet Morse Cargill of the family that founded Cargill Inc. (net worth: $1.6 billion), Texas pipeline magnate Dan Duncan ($9.8 billion), and California real estate mogul Walter Shorenstein ($1.1 billion). By rough calculation, their deaths in 2010 have cost the government some $6.5 billion.
We’ve blogged on this topic before. The inconsistencies of U.S. tax law, if it weren’t rather serious, would be comical.
Question: this being December, with a January to follow that may see an entirely different estate-tax law, might there be some surprising death activity this month among the wealthiest American families?
(HT: Van Brenner)
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How is it a “death tax” or “double taxation” when it’s the heir, not the deceased, who’s paying the tax? Any reasonable definition of income would include inheritances.
Its more than a little misleading to pretend that billionaires like George Steinbrenner had no estate planning that minimized his estate taxes.
In fact, its been previously reported in major media.
Are you assuming that they did no estate planning? If so, then are you overestimating the tax loss?
Inheritance of estates promote an aristocracy in direct contradiction to the ideal of a meritocracy. Taxing estates is one of the best ways to gather income and promote social mobility with a minimum deadweight loss.
Add me to the “this isn’t a ‘cost’” chorus. It is purposefully misleading to argue that a failure to tax someone amounts to “losing money.” President Obama recently went so far as to claim that not increasing taxes on the rich amounts to paying them.
Estates are post-tax wealth, and the government already took a cut a long time ago. If the government had been as wise with its sums over the years as these people were with theirs, perhaps it too might have developed a nice nest egg. Instead it seems to view taxpayers as a well of money that will never run dry.
The money belongs to the deceased. The governement didn’t LOSE money and it didn’t COST the government becuase it’s not the government’s money.
Of course, it’s a cost. A cost is what you give up due to a choice made. This is the microconomist’s definition of cost. Since this ios a blog on economics matters, it makes sense to use terms correctly.
You didn’t mitigate based on what might be done with the money they were permitted to keep.