‘Only Morons Pay the Estate Tax’

JENNER: If I could do whatever I wanted, I would have a successful makeup line, and I would want to hopefully start more businesses, and just be, like, a businesswoman. And then, hopefully, I’ll go off the map. When I’m, like, 30, I want to go off the map, have a family, and live in Malibu with a farm, and just raise my own chickens.

“Kylie Jenner,” Chris Wallace, Interview Magazine, December 2015

The alert Mel Pine spotted yesterday’s New York Times editorial (below) and asked if I’d respond to it here. Ah, the death tax. Upon your death, your entire personal net worth, which is and has been subject to income and capital gains taxes all your life and will be still, gets hit with an extra double-dipping tax to make sure you didn’t earn too much.

But wait: you don’t have to pay it if you give enough of that estate away while you’re still alive. Give it to your friends, family, and retinue and pay the less onerous gift tax. Earn it overseas and keep it there, no American tax. Give it to charity and pay no tax. Give it to a family foundation and pay no tax. Put it in a charitable remainder trust or set up some life estates for your survivors, ditto. Got some cash? A GRAT, which is so named either because 1. it’s the first entry in a billionaire’s gratitude journal or 2. it’s a Grantor-Retained Annuity Trust or 3. both. Get one, they’re neat. My parents like theirs and they’re not even billionaires. The point is that you shouldn’t die before you’ve planned to someday die, and that way only death is certain; the taxes may never happen.

Very few people pay very much estate tax. Two estates in a thousand pay any at all, and the tax isn’t particularly high. It’s meant to accomplish two main things: first, raise money for the government in a place where there’s money; second, prevent vast sums of money from accumulating in the hands of too few people and thus destabilizing the democratic system. Apparently, neither goal is important to Congress.

But one thing it absolutely is not about is the family farm. The type of family farm that is likely to be subject to the estate tax is the type that should be growing two-car garages instead of chickens on Malibu Beach—i.e., worth far more when not put to some vanity legacy use. If you have some high-value real estate that supports your family business, yes, you may have to think about the estate tax. But that’s far more likely to be the family office park or family strip mall than it is to be the family farm. Politicians love that farm, though. Jesus talked a lot about family farmers, too. Interestingly, one particular farmer of His is well-regarded for having paid an inheritance while still alive.

I don’t support any of the current Republican bills on tax reduction schemes. They have some nerve calling it “reform.” I’m not the only rich person who disagrees with those plans, by any means. In my opinion, our governments in the United States don’t collect enough tax and we ought to be talking about raising taxes.

Particularly on people like me. Not the first time someone’s called me a moron.  I’ll live.

Image: Detail, Thomas Gainsborough, Robert Andrews of the Auberies and Frances Carter of Ballingdon House after the marriage, 1750. National Gallery. Ordinary farm folk, basically. (Yes, that’s sarcasm.)