Thursday, December 08, 2005

Death and taxes

"What do you call this?" said Joe. "Bed-curtains?"

"Ah!" returned the woman, laughing and leaning forward on her crossed arms. "Bed-curtains."

"You don't mean to say you took them down, rings and all, with him lying there?" said Joe.

"Yes I do," replied the woman. "Why not?"

—from A Christmas Carol by Charles Dickens

Publius 2001 at Feet to the Fire was rightfully hot under the collar recently about Minnesota Republicans taking credit for turning the state's $4.5 billion budget deficit into a projected $1 billion budget surplus.

What the Minnesota GOP and Governor Pawlenty neglect to mention while patting themselves on the back is that a significant portion of this surplus was made possible by estate tax collections. Grassroots Republicans should remember that the state party's standing platform, which we delegates in the rabble take seriously, calls for the abolition of "death and inheritance" taxes.

This sin of omission is especially egregious in light of likely the largest estate tax collection in state history: $112 million from the estate of James Binger, former chairman of Honeywell, who died in November 2004. To add insult to injury, according to Mr. Binger's granddaughter, "we paid out at least that much to the federal government, maybe a little more. It's been sort of a nightmare." The dollar amount of this collection from a single estate is only slightly less astounding than the apparent lack of tax-advantaged, wealth-protecting estate planning that one would expect from your average H&R Block tax preparer, let alone the well-paid team of Big 4 CPAs within the reach of someone like Mr. Binger.

As Stephen Moore, in his column "Repeal the Grave Robber Tax," points out, "this tax is imposed on dollars already taxed when the income was earned during the deceased's lifetime." The estate tax is a double-taxation windfall for the government that should be repealed.

If you think this is a partisan issue, consider the words of Hillary Rodham Clinton during her 2000 Senate campaign: "You ought to be able to leave your land and the bulk of your fortunes to your children and not the government." (Hat-tip to our favorite econ prof King Banaian, SCSU Scholars.)

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