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I'd argue one of the points of estate taxes (which are heavily favored by Buffet, Gates, et. al) is to encourage you to will your fortunes to philanthropy - so

I'd argue one of the points of estate taxes (which are heavily favored by Buffet, Gates, et. al) is to encourage you to will your fortunes to philanthropy - so it doesn't end up in the hands of the government.

DevX101 16y ago
Great point! High estate taxes gives an incentive to the wealthy not to pay estate taxes. The original intent of my argument was that I don't like the idea of handing over half your estate to the government. I suppose the proponents of the high estate tax wanted avoidance of the tax via philanthropy as an intended side effect. Thanks, I never looked at it that way.
jacoblyles 16y ago
Or buy expensive life insurance policies.
ramanujan 16y ago
The biggest lobbies for increased estate taxes are life insurance companies: http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-industry-is-spending-millions-lobbying-for-the-estate-tax-afbfs-latest-issue-brief/ http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-... “The estate tax is a cash cow for the life insurance industry – and the industry’s lobbyists guard it zealously...[o]nly three industries – pharmaceuticals, electric utilities, and oil and gas – spent more over the same period.”
- waterlesscloud 16y ago
  Of which Buffet owns several. Which may or may not play a role in his support.
  - jakarta 16y ago
    I don't think it does. The life insurance contribution to Berkshire Hathaway results is quite small. The bulk of the income is from reinsurance and P/C activities.
  - jbooth 16y ago
    How many billions has this guy given away again? I'd wager that he doesn't really care about an extra few million in insurance company profits.
- DevX101 16y ago
  For more details on WHY the life insurance lobbies aggressively to support the estate tax, see this link from ramanujan's article: http://www.nodeathtax.org/uploads/view/2313/life_insurance_brief.pdf http://www.nodeathtax.org/uploads/view/2313/life_insurance_b... Excerpt: "Life insurance is the most basic tool for estate planning. Put simply, inheritance is subject to the estate tax, while life insurance benefits are untaxed. This drives up the demand for life insurance, thus driving up the price. The disparate tax treatment distorts the market so much that a wealthy person could buy a policy knowing he will pay more in premiums than the value of the benefit – and it would still make sense financially. For example, if someone bought a $20 million whole life policy at age 60, and paid $25 million over the years in premiums, he would still be giving more to heirs (an untaxed $20 million) than if he just bequeathed that $25 million to his children – because after the estate tax, that could be worth less than $20 million." --This discussion has been really informative. Thanks to all.
  - russell_h 16y ago
    Is there anything to stop a person from investing their estate in a company whose sole purpose is to insure their life?
    - jacques_chester 16y ago
      If it hasn't already been tried, the IRS would tie it up in litigation for so long that the principal would be consumed by legal fees.
ovi256 16y ago
Another one is to avoid the creation of a plutocracy. Of course, somebody more cynical could argue that it is too late for that.

DevX101 16y ago

Great point! High estate taxes gives an incentive to the wealthy not to pay estate taxes. The original intent of my argument was that I don't like the idea of handing over half your estate to the government. I suppose the proponents of the high estate tax wanted avoidance of the tax via philanthropy as an intended side effect. Thanks, I never looked at it that way.

jacoblyles 16y ago

Or buy expensive life insurance policies.

ramanujan 16y ago

The biggest lobbies for increased estate taxes are life insurance companies: http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-industry-is-spending-millions-lobbying-for-the-estate-tax-afbfs-latest-issue-brief/ http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-... “The estate tax is a cash cow for the life insurance industry – and the industry’s lobbyists guard it zealously...[o]nly three industries – pharmaceuticals, electric utilities, and oil and gas – spent more over the same period.”

waterlesscloud 16y ago
Of which Buffet owns several. Which may or may not play a role in his support.
- jakarta 16y ago
  I don't think it does. The life insurance contribution to Berkshire Hathaway results is quite small. The bulk of the income is from reinsurance and P/C activities.
- jbooth 16y ago
  How many billions has this guy given away again? I'd wager that he doesn't really care about an extra few million in insurance company profits.
DevX101 16y ago
For more details on WHY the life insurance lobbies aggressively to support the estate tax, see this link from ramanujan's article: http://www.nodeathtax.org/uploads/view/2313/life_insurance_brief.pdf http://www.nodeathtax.org/uploads/view/2313/life_insurance_b... Excerpt: "Life insurance is the most basic tool for estate planning. Put simply, inheritance is subject to the estate tax, while life insurance benefits are untaxed. This drives up the demand for life insurance, thus driving up the price. The disparate tax treatment distorts the market so much that a wealthy person could buy a policy knowing he will pay more in premiums than the value of the benefit – and it would still make sense financially. For example, if someone bought a $20 million whole life policy at age 60, and paid $25 million over the years in premiums, he would still be giving more to heirs (an untaxed $20 million) than if he just bequeathed that $25 million to his children – because after the estate tax, that could be worth less than $20 million." --This discussion has been really informative. Thanks to all.
- russell_h 16y ago
  Is there anything to stop a person from investing their estate in a company whose sole purpose is to insure their life?
  - jacques_chester 16y ago
    If it hasn't already been tried, the IRS would tie it up in litigation for so long that the principal would be consumed by legal fees.

ovi256 16y ago

Another one is to avoid the creation of a plutocracy. Of course, somebody more cynical could argue that it is too late for that.