Former Starbucks Prez Says: Don't Gut Estate Tax

[one...two...tree 2,762]

The estate tax is still on the agenda within the halls of the U.S. Congress.

In our nation's capital, after Congress failed by several votes in June to abolish the federal estate tax, the Senate will soon consider a bill to gut the law and dramatically reduce the tax.

This change would be a mistake. Our federal inheritance taxes raise substantial revenue exclusively from those most able to pay -- the heirs and heiresses of multimillionaires and billionaires. The federal tax will raise over $1 trillion in the coming 15 years.

Paying an estate tax is one of the ways that those of us who have accumulated wealth in our society re-fertilize the garden of opportunity that we have benefited from. As an individual and former executive at Starbucks, I know the hundreds of ways our society's investments have helped my company and me. None of us exists on an island -- and no wealth can be created without a society that provides a fertile ground of opportunity.

I don't sympathize with the wealthy families that have spent millions to abolish the estate tax. Passing on unlimited inheritances is not only bad for our children but also unhealthy for a democracy to tolerate concentrations of hereditary wealth and power. It is more important to give our kids educational opportunities and encourage them to make their own way in the world of work. I have a moral responsibility to all the children in our society, not just my own, to ensure access to quality education.

The advocates of repeal talk about how the tax threatens family farms and small businesses. A responsible reform of the federal estate tax will assist closely held family businesses and farms that might be squeezed by the tax. It is irresponsible, however, to let a few hundred households drive a debate over our state and national tax systems.

In the coming week, the U.S. Senate will likely vote on an estate tax proposal that will effectively gut the federal estate tax. This proposal will probably raise the amount of wealth exempted from $4 million for a couple to something like $10 million, and significantly cut the rate from its current level of 46 percent. This kind of proposal would cost hundreds of billions of dollars over the decade following repeal, and would closely approximate the negative budgetary effects of full repeal.

National anti-tax groups are exerting enormous pressure on U.S. senators who oppose gutting the tax. Such tactics have no place in a dignified and honest dialogue about an important policy matter. Their proposed law change includes pairing an estate tax cut with popular tax breaks that expired last year. Tying the extension of these unrelated tax cuts to the estate tax is but a form of political pressure. Hopefully we will be able to see through the subterfuge to understand the vital issues at stake.

The key question is, why now? With an $8.5 trillion federal debt, it seems an odd time to give the super-haves another tax break. How would we replace $774 billion in lost revenue? What will this do to our investments in equality of opportunity?

When we eliminate or dramatically reduce the most progressive tax in our state and federal systems, we effectively shift the tax burden from the wealthy to others. The estate tax should be responsibly reformed, but not gutted. We should preserve the fundamental framework of the tax -- and the substantial revenue it generates.

I agree with Bill Gates, Sr., that the estate tax is a "gratitude" or "grateful heirs" tax. Financially fortunate individuals like myself have a responsibility to pay back society in many forms, including charitable giving. But we also have an obligation to pay an inheritance tax. When the revenue is linked to important services like education and health care, the matter is crystal clear.

Howard Behar is the former president of Starbucks International. These are his own personal views and do not represent those of Starbucks.

[Ban Hammer 14,301]

not this topic again

[one...two...tree 2,762]

not this topic again

Thanks for reading it, Charles.

[desert_fox 32]

Why should anyone pay taxes on money that was taxed previously??

You dont know the number of small businees or family farms that have to be sold or order to pay this unfair tax. Many family farms, just because of the value and size of the land, exceed the threshold, but only generally generate enough income to feed a farmer and his family. Do you think that just because you own 26 acres in Nebraska growing corn that this is a justified tax to pass on to his children who may want to continue being a corn farmer??

Wonder how Ted Kennedy is going to vote, but Im sure that he is broke on paper.

[one...two...tree 2,762]

You dont know the number of small businees or family farms that have to be sold or order to pay this unfair tax. Many family farms, just because of the value and size of the land, exceed the threshold, but only generally generate enough income to feed a farmer and his family. Do you think that just because you own 26 acres in Nebraska growing corn that this is a justified tax to pass on to his children who may want to continue being a corn farmer??

You know what you stated is completely false, yes?

Will my estate have to pay taxes after I die?

It depends. The federal government imposes estate tax at your death only if your property is worth more than a certain amount, which depends on the year of death. But all property left to a spouse is exempt from the tax, as long as the spouse is a U.S. citizen. Estate tax is also not assessed on any property you leave to a tax-exempt charity.

Year of Death Exempt Amount

2005......................................$1.5 million

2006, 2007 or 2008.................$2 million

2009......................................$3.5 million

2010.......................................No estate tax

2011.......................................$1 million unless Congress extends repeal

Are there ways to avoid federal estate taxes?

* Tax-free gifts. You can give up to $12,000 per calendar year per recipient without paying gift tax. You can also pay someone's tuition or medical bills, or give to a charity, without paying gift tax on the amount. This reduces the size of your estate and the eventual estate tax bill.

* An AB trust, where spouses leave their property in trust for their children, but give the surviving spouse the right to use it for life. This keeps the second spouse's taxable estate half the size it would be if the property were left entirely to the surviving spouse. See Tax-Saving AB Trusts for more on this type of trust.

* A "QTIP" trust, which enables couples to postpone estate taxes until the second spouse dies.

* Charitable trusts, which involve making a sizable gift to a tax-exempt charity.

* Life insurance trusts, which let you take the value of life insurance proceeds out of your estate.

http://www.nolo.com/article.cfm/ObjectID/D...7E/309/126/FAQ/

[desert_fox 32]

You dont know the number of small businees or family farms that have to be sold or order to pay this unfair tax. Many family farms, just because of the value and size of the land, exceed the threshold, but only generally generate enough income to feed a farmer and his family. Do you think that just because you own 26 acres in Nebraska growing corn that this is a justified tax to pass on to his children who may want to continue being a corn farmer??

You know what you stated is completely false, yes?

Will my estate have to pay taxes after I die?

It depends. The federal government imposes estate tax at your death only if your property is worth more than a certain amount, which depends on the year of death. But all property left to a spouse is exempt from the tax, as long as the spouse is a U.S. citizen. Estate tax is also not assessed on any property you leave to a tax-exempt charity.

Year of Death Exempt Amount

2005......................................$1.5 million

2006, 2007 or 2008.................$2 million

2009......................................$3.5 million

2010.......................................No estate tax

2011.......................................$1 million unless Congress extends repeal

Are there ways to avoid federal estate taxes?

* Tax-free gifts. You can give up to $12,000 per calendar year per recipient without paying gift tax. You can also pay someone's tuition or medical bills, or give to a charity, without paying gift tax on the amount. This reduces the size of your estate and the eventual estate tax bill.

* An AB trust, where spouses leave their property in trust for their children, but give the surviving spouse the right to use it for life. This keeps the second spouse's taxable estate half the size it would be if the property were left entirely to the surviving spouse. See Tax-Saving AB Trusts for more on this type of trust.

* A "QTIP" trust, which enables couples to postpone estate taxes until the second spouse dies.

* Charitable trusts, which involve making a sizable gift to a tax-exempt charity.

* Life insurance trusts, which let you take the value of life insurance proceeds out of your estate.

http://www.nolo.com/article.cfm/ObjectID/D...7E/309/126/FAQ/

where is the false part???

I said when it excceds the threshold.....

The money was taxed previously...the land etc. was bought with after tax money.

Good idea...give you corn farm to a chariity, or your family restaraunt....what do you think that they are going to do with it.

Get your facts straight.

[Ban Hammer 14,301]

i just find it wrong for the government to be having their hand out when someone dies.

[desert_fox 32]

I have a friend that wons a small business that employs maybe 40 full time workers so that they can fed their families. I know that it worth over 2 million on paper considering all the capital equipment, land, building, etc.

He knows that when he passes away, that no way could his heirs come up with the 35% tax rate on estates over 600K should this law be appealed. That would mean that this business would be closed and 40 ppl lose their jobs just to pay taxes.

Same applies to family restaraunts, etc.

Im sure that someday that when you have bought a home, that many will be worth more than the 600K threshold......so the OP is saying that the house has to be sold in order to pay the estate tax.......real fair isnt it.

I have actually seen this with a car dealership where a friend of mine worked after the owner and his wife passed away. New owners fired all the employees.

[w¡n9Nµ7 §£@¥€r 123]

i just find it wrong for the government to be having their hand out when someone dies.

Agreed. The estate tax should be renamed the envy tax

[one...two...tree 2,762]

where is the false part???

I said when it excceds the threshold.....

The money was taxed previously...the land etc. was bought with after tax money.

Good idea...give you corn farm to a chariity, or your family restaraunt....what do you think that they are going to do with it.

Get your facts straight.

This part...

You dont know the number of small businees or family farms that have to be sold or order to pay this unfair tax. Many family farms, just because of the value and size of the land, exceed the threshold, but only generally generate enough income to feed a farmer and his family. Do you think that just because you own 26 acres in Nebraska growing corn that this is a justified tax to pass on to his children who may want to continue being a corn farmer??

Neil Harl, an Iowa State University economist whose tax advice has made him a household name among Midwest farmers, said he had searched far and wide but had never found a farm lost because of estate taxes. "It's a myth," he said.

Even one of the leading advocates for repeal of estate taxes, the American Farm Bureau Federation, said it could not cite a single example of a farm lost because of estate taxes.

The estate tax does, of course, have a bite. But the reality of that bite is different from the mythology, in which family farmers have become icons for the campaign to abolish the tax. In fact, the overwhelming majority of beneficiaries are the heirs of people who made their fortunes through their businesses and investments in securities and real estate.

http://www.commondreams.org/headlines01/0408-02.htm

[desert_fox 32]

I can almost guarantee you that Ted Kennedy will not be paying any estate taxes, and his family will continue to be among the richest in New England.

why dont you explain again why this would be good to repeal this law???? I still havnt got it.

Many farms have been lost.

[dalegg 143]

Is there anybody who would be affected by this who agrees with Bill Gates that is not a multi-billionaire- I mean someone who has an estate worth 2 to 5 million who would be sad to see the tax abolished for good?

[one...two...tree 2,762]

why dont you explain again why this would be good to repeal this law???? I still havnt got it.

Many farms have been lost.

First of all, now you're just flat out lying - no family farms have EVER been lost because of the estate tax.

As for whether you're for it or against it - we can either have a society where wealth can be accumilated and passed on through inheritance until we have an oligarchy or we impose through taxation the inability for families to become too powerful. Money is power - there's no getting around that fact. I understand the basic thought is - it's their money, the government should stay out of it, but that argument ignores the fact that wealth is not created in a vacuum. It is only possible within a society that makes it so. Trying moving to an island starting with nothing and attempt to create wealth - it ain't going to happen.

Edited August 8, 2006 by Steven_and_Jinky

[onwa 6]

Trying moving to an island starting with nothing and attempt to create wealth - it ain't going to happen.

whenever there is more than one person, there is going to be a vieing for wealth. Take one family who has 10 kids--move them to an island. Building of wealth starts with agriculture. Someone will want more land to have more coconut trees. The one with the most land is going to be the most wealthy. I love on an island. At one point of time it was empty. People came. Population grew. Tribes fought over land. It happens. There was definitely a class system. Wealth just isn't monetary.

[desert_fox 32]

why dont you explain again why this would be good to repeal this law???? I still havnt got it.

Many farms have been lost.

First of all, now you're just flat out lying - no family farms have EVER been lost because of the estate tax.

As for whether you're for it or against it - we can either have a society where wealth can be accumilated and passed on through inheritance until we have an oligarchy or we impose through taxation the inability for families to become too powerful. Money is power - there's no getting around that fact. I understand the basic thought is - it's their money, the government should stay out of it, but that argument ignores the fact that wealth is not created in a vacuum. It is only possible within a society that makes it so. Trying moving to an island starting with nothing and attempt to create wealth - it ain't going to happen.

the Robin Hood tax theory...take from the rich and pass it out to the poor.

its bad to acculate wealth..to be successful....and then to be penalized for it???

I sure like this screwed up thinking.