Readers respond to Ray D. Madoff's recent New York Times op-ed proposal

Last Saturday (11/21/09), Ray D. Madoff published published a New York Times Op-Ed article, Protect the Farm, Tax the Manor.  (See my earlier post for a summary and a review.)

Today (11/29/2009) the New York Times published four letters to the editor in which readers give their opinion on Madoff's proposal -- My Estate Tax, Your Family Business. 

The first letter, by Robert Miller, highlights what he views as socialist overtones in Madoff's proposal.  Miller thinks that Madoff's plan "echoes" Karl Marx.  He also thinks that Madoff's plan discriminates against the estates of wage earners.  He concludes by writing, "I earned that money and paid my taxes on it. It is mine and I want to give it to my hard-working kids, not to the government." 

The second letter is by Melissa P. Walker, a trusts and estates lawyer in Atlanta.  Walker would keep the exemption amount and rate as they currently are, and she would not give farmers and small business owners the special treatment that Madoff proposes.  Walker believes that such provisions are already in the tax Code.  She also believes that Madoff discriminates against "estates built through savings and investments."

The third, and longest, letter is by Steven Baker, a CPA in Florida.  Baker strongly feels that farmers and small businesses already get special treatment.  He writes, "After practicing estate planning for more than a decade, I can attest that I have yet to see a family farm or small business go under because of the estate tax."

I have heard Baker's statement repeated many times by many practitioners.  You might be interested to read a direct response to this attestation.  See my November 3, 2009 interview with Josh Rolph, a national affairs director for the California Farm Bureau Federation.

The fourth letter is written by Michael Hepner, a benefits professional, and yours truly.  We argue that Madoff creates a "a false dichotomy between good and bad wealth."  For more on my other projects with Michael, see here. 

Comments

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I never get the argument that the estate tax is somehow "double taxation," as if that were some unusual activity. Check me here: I make a paycheck, which is taxed. I use the money to pay for food, which is taxable income to the store where I buy it (double taxation) and also in many states taxed through a sales tax (triple taxation). The store uses some portion of my money to pay suppliers and employees, to whom it is taxable income (quadruple taxed).

So I don't understand while multi-millionaires - who BY DEFINITION are the only ones to whom the U.S. estate tax applies - should claim some special egregious harm under the label "double taxation" because they MAY have paid income tax on some portion of the value of their estate.

Further, much of that value has in fact NEVER been taxed because it is unrealized capital gain - which at inheritance, would have its basis stepped up without an estate tax and so would not be "double taxed" - it would be "never taxed," which seems to be the goal of those in opposition to a reasonable estate tax.

[Zara Desiree]

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