I am amazed at how many conservatives who are not rich want to repeal the estate tax. If only those subject to estate tax opposed it, I doubt that a half of one per cent of the electorate would get much traction in getting it repealed. Why are the moderately well-off so concerned about getting rid of the estate tax? Is it because they worry that the tax-free estate will be reduced to the point that they might be taxed, or because they expect to suddenly become rich?
I see nothing unfair about taxing the wealthy when they die. Seven million is a LOT of money. Maybe corporate CEOs who plunder their companies for that much every year don’t think so, but they are out of touch with reality. If a couple have 2.4 children and have a taxable estate, they can leave each child more than $3M, tax free. If I had had a $3M head start in life, I would not be struggling to put my children through public college. What is so fair about a Bush or a Kennedy child starting off life rich, when most of us have no real chance of ever achieving wealth?
I heard George Bush described as someone who was born on third base and was convinced he hit a triple. He had no concept of earning a living. This society should not be so protective of the wealthy that they are allowed to pass millions and millions on to their offspring, creating an aristocracy.
It would be different if we were talking about earned wealth. There are a few billionaires who really earned their wealth, but most of them started out life wealthy. They are people like Ivan G. Seidenberg, CEO of Verizon, who received $19.4 million in salary, bonus, restricted stock, and other compensation in 2005. Seidenberg received 48% more than in the previous year; yet The stock fell 26%; bondholders lost value as the company’s debt was downgraded by credit agencies; and 50,000 managers saw their pensions frozen. Verizon closed its books with 5.5% earnings.
UnitedHealth Group’s William McGuire walked away with $1.1 billion in stock options, retirement payouts, and other benefits, after allegedly defrauding shareholders in the stock option backdating scandal that triggered a tsunami of CEO exits and financial restatements.
Home Depot chief Robert Nardelli’s severance package was a paltry $210 million. His poor performance was well-known, but his resignation was mutually agreed upon with the board of directors.
Hank McKinnell, CEO of Pfizer, was forced out after five years. Pfizer stock took a beating; McKinnell took $180 million.
Dick Grasso, CEO of the New York Stock Exchange–a non-profit–was ousted over a deferred compensation package of $140 million plus an additional $48 million tacked on by his buddies on the board because he was such a good sport about it all.
In 2006, the Corporate Library named 11 public corporations whose chief executives’ pay had exceeded $15 million during the previous two years despite five-year shareholder losses. These included Verizon, AT&T, BellSouth, Hewlett-Packard, Home Depot, Lucent Technologies, Merck, Pfizer, Safeway, Time Warner and Wal-Mart.
Did these people EARN that much money? Hell, no. They were in the in-crowd where family connections get you seats on corporate boards and executive compensation packages with six zeros to the left of the decimal point.
What rule of fairness dictates that Ivan Seidenberg’s kid should start out life with financial advantages that my kid would have only the slenderest hope of achieving by her own efforts, and most kids would have no hope of gaining. If his estate is $1B and he and his wife have 2.4 children what is so unfair about giving their birthright a haircut from $416M to $250M? The Seidenberg kids can’t be happy with $250M? Get real. There is no way they could even spend $250M in a dozen lifetimes, without making a conscious effort at wasting it.
There is nothing the least bit unfair about taxing estates over $3.5M/individual, $7M/couple. Let’s get real and stop pitying the poor little rich kids.
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com ©2010 John B. Payne, Attorney