During an appearance on the O'Reilly Factor, Congressman Anthony Weiner (D-NY) said that since those who inherit their parents' money did nothing to earn it, it was like hitting the lottery and they should pay estate taxes on it. This is his justification for a 35% estate tax on inheritance over $10 million. (The Democrats originally were hoping to get 55% on estates of $5 million or more.) Before I continue, let me just say that at 47, it looks like the chances of me leaving an estate of over $10 million to my kids someday aren't very good, so I really don't have a dog in this fight. However, the difference between right and wrong doesn't depend on whether or not I have a personal stake in the matter.
Although I believe it is a compelling argument, I will ignore the fact that an estate has already been taxed as income every year that it was accumulated. I'd rather focus on the contention of Representative Weiner that the children did nothing to earn the money and his unspoken implication that $10 million is more than enough money.
First, I would argue that, at least in my experience, many children help with the family business. Small businesses and farms are traditionally a family affair and kids that work after school in their parents shops, wake at 4 AM to milk the cows, or spend their college summer breaks helping run the family farm or business would certainly disagree with Mr. Weiner's opinion that they have done nothing to earn the money.
Next, I would point out that, even if the children never worked a day to help their parents build the estate, they surely paid a price in missed dance recitals, school plays, sporting events, fishing trips, family vacations, etc., that one or both of the parents had to forego in order to be successful. There is a cost associated with spending time away from one's family; one borne by both parent and child.
Lastly, I contend that, contrary to what liberals fomenting class warfare would have you believe, $10 million isn't really that much money when it comes to a family business. For example, a certain 6 acre lot that I know of in my town on a busy main road is being sold for $6 million dollars. That is a suitable size and location one would need to run a small car dealership. And the building on this particular property doesn't have the required service bays or garage space which would need to be add and would add to the cost of the facility. Then there is the matter of the inventory. 150 cars is not a huge dealership and according to the Detroit Free Press, the average new car price in 2010 was $29,217 so the inventory value alone would be more than $4 million. Without even including home value, personal property, or life insurance benefit, it is easy to see that the value of one's estate can quickly exceeded $10 million as it did in this example. With the 35% estate tax, the children would have to come up with $3.5 million dollars to pay their tax bill which will most likely mean having to sell the family business. A reasonable valuation of an estate comprised of a small family farm would produce a similar result.
I think it is clear that, once again, the liberal justification for taking your money doesn't add up. Contrary to Congressman Weiner's veiled assertion, $10 million isn't a lot of money when one considers an estate that is comprised of a family business or farm. Further, even if inheriting children never worked a day in the family business or on their family's farm - a scenario I consider highly unlikely - the time spent by parents working instead of with the family exacts a toll on their children far in excess of the price of a $2 lottery ticket. I would hope Representative Weiner's children think so too.
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