It’s obvious that Senators Saunders and Warren have not
dealt with wealth very much. Their
proposed wealth tax is indeed a bright and shiny tax to look at. My 45 years working with the current wealth
(Estate) tax has convinced me that this tax won’t work. Most of us non-billionaires know to within a
few thousand dollars how much we are worth.
As the value of our assets increase, the valuation of them becomes more
and more uncertain. We regularly see
mansions go down in price between listing and selling by millions of
dollars. Famous artwork can go from a
few hundred thousand to a few million in the short period of an auction. It’s pretty much accepted that the market value
of an item is what a willing buyer will pay a willing seller. Without a willing buyer how do you value anything?
Most large estates
take years to settle with the IRS due to court hearings, with highly paid
valuation experts testifying on the value of assets. Many lawyers are employed using trusts,
limited partnerships, and other tools to keep the value of the estate assets
down. To ask for an annual valuation
will do nothing but bring on lawsuits and complications for our taxing
authorities. The elimination of the “step
up in basis” on death is a similar bright and shiny tax that doesn’t seem to
die. We tried it in the 80’s and found
it totally flawed in its’ execution because no one kept track of decades of
additions to the tax basis. We still hear from our legislators that
eliminating the “step up in basis” would be a great idea. I
wouldn’t expect to hear much about this from tax practitioners as they always
seem to welcome new tax twists as job security.
The far left has better ways to tax the super rich: from transaction
taxes to increasing the estate tax. They
need to actually work through the mechanics prior to trying to blind us with
shiny non-sense.
