If you're paying $500M in taxes, you just inherited so much money you'd need several trucks to take it to the bank.
So you're supposed to feel sorry for people in that position? That they have to pay so much tax they might have only a few hundred million left to pad out their mattress?
Most people are ground down to nearly nothing by taxes and cripplingly high insurance premiums. They should be so lucky to have this much left over after taxes.
You know what most kids inherit when their parents die? A giant tab for the funeral.
No one has $500m of cash lying around in a liquid form. Generating that kind of cash, even for the very rich, usually involves selling lots of assets at rock bottom price.
Moreover, when the cash is tied up in an art collection, the valuation is really tricky. Art that earns a $500m tax bill could easily be worth less than that if sold immediately - as is, in fact, the case with the piece under consideration.
As for the fact that most people inherit debts from their parents, I don't see how that's material to the discussion at hand.
The article says they sold $600m of the collection. Which means even with the huge tax bill, they have over $100m plus whatever art they havent sold left.
To be fair, if you piloted your $100M yacht into Monaco harbor you'd have to anchor your sad little boat way in the back. Think of the shame this brings!
"Get the rich" is not a good justification for policy.
Do you have kids? It turns out one big economic incentive, particularly late in life, is to make money not for yourself but for your children. A lot of people hate the concept of an heir running around with money he/she didn't earn, but i mean, it's Not Your Problem so long as the money was fairly earned by the parents. Furthermore, a billion dollar estate is probably something that has already been taxed, possibly several times, possibly in a compound fashion, so I don't think there should be any worries that rich heirs have not paid society for their money.
There's also serious implementation problems with estate taxes, as other posters have described. Levying very large taxes on illiquid and hard-to-value possessions is unfair no matter how you slice it.
I don't want to defend the handling of this particular estate, but the justification for estate taxes in general is that it is counter to the interests of a democracy to have a hereditary aristocracy. It's not just that we hate the idea of trust fund babies -- they actually hurt America.
> A lot of people hate the concept of an heir running around with money he/she didn't earn
I don't hate the concept either, but IMHO complaining that one would only receive $500M of unearned money instead of the $1B anticipated just makes the would-be recipient look like an asshole.
Most people in the world would probably be satisfied to receive a few thousand dollars of unearned money. $1M and they'd be set for life in most parts of the world. Anything above that is just gravy.
Oh come on. Is expecting them to pay taxes an "enormous ... pile of stress"? Is it not treating them as humans? They inherited an incredibly big estate consisting of illiquid assets. They did not have to work to inherit the assets, now they have to either actually do some work or hire a professional to do their fiscal duties. If that is too much stress, not accepting the inheritance is a stress free option as well, but of course it means they don't get to never have to work for money again.
The money was already taxed. I have no problem taxing transactions that have a value add. When I get paid a wage I have created that wealth a tax on the newly created wealth is fine.
No wealth is created when an estate gets handed over. The tax thus stops being a way to assign a percentage of wealth to public projects and becomes a accounting trick. The idea that this simple wealth transfer should be taxed at such a high rate is slly.
No less an extremist as Thomas Jefferson supported the estate tax, and we still have it for many good reasons. This article talks about it better than I could:
The entire principle behind estate taxes, which are only relevant to those with significant estates, is to prevent the massive accumulation of wealth by a tiny minority.
The United States, as conceived, was a departure from the European system comprised mostly of wealthy land owners and destitute peasants.
In a sense, the estate tax is an unfortunate necessity. Without it you would have Paris Hilton inheriting billions absolutely tax free, and likely accumulating even more wealth not by any particular skill, but through interest alone. That much money has a sort of gravitational pull at that point if not mis-managed.
So you're supposed to feel sorry for people in that position? That they have to pay so much tax they might have only a few hundred million left to pad out their mattress?
Most people are ground down to nearly nothing by taxes and cripplingly high insurance premiums. They should be so lucky to have this much left over after taxes.
You know what most kids inherit when their parents die? A giant tab for the funeral.