George Steinbrenner really knows how to pick a winner. While I have never been a big fan of the Yankees (who am I kidding, I root for two teams, the Phillies and whoever is playing the Yankess) I respect the fact that he put together championship caliber teams year after year.
With his passing this week, he once again struck gold by avoiding paying any federal estate tax on his substantial fortune. Worth an estimated $1.1 billion, the Steinbrenner family saved approximately $500 million due to the tax repeal for 2010.
So should we return to the days of taxing people’s estates? I’ll let you decide for yourself but there are a few facts that you should consider.
First, a federal estate tax, or “death tax”, at 2009 levels will affect only the wealthiest 0.3% of estates. Second, if the 2009 $3.5 million individual exemption ($7 million for a couple) returns, even the majority of estates that may owe federal estate tax would only do so on the small portion of assets exceeding these amounts. For example, IRS data shows that the average federally taxable estates are effectively taxed at a rate of 10-20% after accounting for the exemption. Finally, with a little tax planning it is possible to reduce any tax that may be due even further, especially if you have a family owned business or farm.
It remains to be seen how the federal estate tax will shape up. In the mean time, the Steinbrenner family will enjoy the benefits of this winning season no matter how the team does in October.
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