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Silicon Valley Billionaire Takes Out $201 Million Life Insurance Policy
Hugh Pickens DOT Com writes "The Mercury News reports that somewhere in Silicon Valley, a 'mystery billionaire' has bought what the Guinness Book of World Records says is the most valuable life insurance policy in history — a policy that will pay his survivors a cool $201 million. Was it Larry Ellison? Eric Schmidt? Elon Musk? Zuck? Nobody knows because the name of the buyer is a closely guarded secret. 'We don't want hit men running around Palo Alto trying to find him — or members of his own estate,' joked Dovi Frances, the Southern California financial services provider who sold the policy. By last count, California boasts 111 billionaires with more than a third of them in tech, while San Francisco has 20 billionaires alone so it could be any of them. But why does a billionaire even need to take out life insurance when he or she has so many other assets. The most likely answer to this question is taxes and estate planning.
Upon death, an estate would be liable to pay off loans on any leveraged properties, plus a lot of money as part of the death taxes owed. This could force the estate to liquidate holdings to raise the money to pay off these liabilities even if it weren't the most opportune time to sell the assets. By taking out the life insurance policy, it would give the estate more flexibility in paying off the taxes and other debts owed, without necessarily having to sell assets to do so. 'In California, there are state death taxes that are exceptionally high (45 percent),' says Frances adding that the policy is actually a combination of more than two dozen policies, underwritten by 19 different insurers because if any single company had to pay out such a lavish benefit, it could be crippling. 'If your properties are leveraged then those loans are called immediately and need to be paid off, you want to hedge yourself against such a risk so [your beneficiary] can receive the proceeds without being exposed to taxes.'"
Upon death, an estate would be liable to pay off loans on any leveraged properties, plus a lot of money as part of the death taxes owed. This could force the estate to liquidate holdings to raise the money to pay off these liabilities even if it weren't the most opportune time to sell the assets. By taking out the life insurance policy, it would give the estate more flexibility in paying off the taxes and other debts owed, without necessarily having to sell assets to do so. 'In California, there are state death taxes that are exceptionally high (45 percent),' says Frances adding that the policy is actually a combination of more than two dozen policies, underwritten by 19 different insurers because if any single company had to pay out such a lavish benefit, it could be crippling. 'If your properties are leveraged then those loans are called immediately and need to be paid off, you want to hedge yourself against such a risk so [your beneficiary] can receive the proceeds without being exposed to taxes.'"
We need to stop big tax dodgers useing loop holes to pay no taxes.
No, no, no!
We need to force politicians to eliminate the loopholes, which are all legal and often intentional
To create legal loopholes and then to expect people to voluntarily pay more (than they have to) taxes is a losing and pointless battle.
Don't be a douche by calling them "death taxes".
We know where leadership by an anti-intellectual "strongman" who scapegoats minorities and likes boisterous rallies goes
it is nobody's damn business.
Actually....
We need to stop big tax dodgers useing loop holes to pay no taxes.
No tax dodging. They are going to pay taxes with the life insurance money instead of having to sell off assets. That's the point.
We need to stop big tax dodgers useing loop holes to pay no taxes.
We can assume they paid their taxes when they received their paychecks. Why should their heirs pay them again?
In this case, this life insurance policy isn't to stop anyone from paying taxes. The purpose is to pay the taxes rather than having all the assets sold off to pay them. For example, if I were to leave a taco hut family business to my kids, if they can't scrape up the cash to pay the taxes on what the state guesses the hut is worth, they would be forced to sell it to pay 45% tax, thus losing the business me and my family spent a lifetime building. A life insurance policy would allow them to pay the taxes in cash and keep the business. Unfortunately, this may not be an option for those who do not have "extra" income to afford an life insurance policy.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
You and the OP are still seeing the wrong side of this.... Why is there an estate tax of 45% upon anyone's death!!! That income has been taxed already. Bequeathment is not a fucking INCOME issue.
"But why does a billionaire even need to take out life insurance when he or she has so many other assets. The most likely answer to this question is taxes and estate planning. Upon death, an estate would be liable..."
Thanks a lot for stifling the need for lots of uninformed commentary, guys. I was looking forward to lots of basement-dwelling idiots spouting off about how stupid this billionaire must be. Now I have to find somewhere else to spend my morning.
To the reddit! /me gone
Dear Slashdot: next time you want to mess with the site, add a rich-text editor for comments.
It wasn't me. Just sayin'.
Estate tax. Only the wingnuts call it a "Death Tax."
Why is there an estate tax of 45% upon anyone's death!!!
Because if you don't heavily tax (effectively) inheritance then that's your new aristocracy right there.
sigs are hazardous to your health
You and the OP are still seeing the wrong side of this....
Why is there an estate tax of 45% upon anyone's death!!! That income has been taxed already. Bequeathment is not a fucking INCOME issue.
It may have been taxed as income for the principal - although anyone that rich probably managed to find a way not to pay it to begin with - but when the estate is passed to heirs, it becomes their income, and just like any other system where cash flows from point to point, it becomes fair game for the taxman again.
I will get a lot of grief for saying this, but I wouldn't cry if the whole Death Tax thing were 100% less what it takes to support minor heirs until they're grown up enough to be able to make their own fortunes. That's because the best legacy that a successful person can leave his/her heirs isn't a large chunk of money, it's the skills and mentoring that will make them successful on their own without simply breeding up a generation of useless drones living off other people's hard work. And after all, isn't that what we revile welfare recipients for?
We don't (so far) allow you to be handed political power simply because of who your parents are a la monarchy in the USA. But we do support handing wealth to people simply because of who your parents are.
You and the OP are still seeing the wrong side of this....
Why is there an estate tax of 45% upon anyone's death!!! That income has been taxed already. Bequeathment is not a fucking INCOME issue.
I think YOU are seeing the wrong side of it. Why is taxing income the best way to tax people? Income is wealth generation,
we shouldn't tax it. Taxing consumption would be much better. Originally in the USA estate tax was the only form of taxes.
This also makes sense to me as you're only taxing people after they are dead. Especially today as people generally live long
enough to see their grandchildren established, I think this is a great idea. Taxing people after they are dead with maybe an
exception for people who die while still having young dependents seems like the least painful way of collecting revenue for
the government. And as far as the "that income has been taxed already", all money has been taxed already, most forms of
taxes including income tax, sales tax, estate tax, etc... are a tax on the transfer of money from one person or company to another.
We can assume they paid their taxes when they received their paychecks. Why should their heirs pay them again?
Because their heirs did nothing to earn the money unless we consider kissing ass a valuable skill. They essentially won the (genetic) lottery and they should be taxed the same as someone who won the Mega-Millions lottery. The source of the funds is irrelevant. If I gave you $1 billion today then you would owe taxes on it. Why should it be any different if we happen to be related?
For the same reason why when I pay my plumber out of money I have that was already taxed, he has to pay taxes on it as well.
Money is usually taxed when it changes hands. Now I'll admit in case of estates it's not really practical because there are so many ways to get around it, and it also makes stupid situations happen, like if a parent wants to help an adult child pay for an expense they have, they are limited to the ~$14,000 a year gift limit without the kid being taxed as well.
So I admit it's a stupid law, but saying it's already been taxed is not a good argument against it in my opinion.
Because the insurance payout won't be taxed & the overhead costs of the insurance policy are still likely to be less than the 45% inheritance tax that would otherwise be charged.
It's a loophole to make sure a bigger share of your estate lands in the hands of your heirs, rather than in federal pockets.
Quite a few billionaires (Buffet, Trump) would disagree with you.
If I am a brilliant man and create a company (and create value), I deserve to keep that. But why should my descendants, who are by virtue of their birth part of a "lucky sperm club," entitled to all that wealth?
True capitalism should require a level playing field when you start, and to really do that, when the final score is tallied, the slate should be wiped clean.
That's why such super high estate taxes exist. And typically they're not for you and me, it's for people over a certain threshold (say $1 mio + in assets)
in NYC the rich people buy up municipal bonds that are used to build infrastructure. actually its done like this all around the USA
rich people with lots of money like say $10,000,000 want a safe low risk place to park it and live off the interest. cities and counties want people to lend them money at low interest because there is no other way to build large infrastructure projects. NYC for instance they are building a huge new water pipe and there is almost $20 billion of transportation construction going on now.
it's not like this money is not doing anything useful
They pay capital gains based on appreciation from the fair market value when they inherited the asset, not when the purchase price their ancestor paid.
Your ad here. Ask me how!
So you are saying if someone should happen to get lucky that the state should take it away from them because it's not you?
Has nothing to do with whether it is me or someone else. If I won the lottery today I would be taxed on the income. Getting an inheritance on an asset you didn't help create is functionally identical to winning a lottery and should be taxed the same way. There are a few exceptions I would make for exceptional cases of bad luck (like underage children whose parents died unexpectedly) but those corner cases are fairly easy to deal with.
It's not only the super rich that inherit things.
True but irrelevant. The only difference is the amount they inherit, not the principle of how it should be handled. You unexpectedly come into some money you should be taxed on it the same as anyone else. No better, no worse.
Farms that have been in families for generations are being sold off to pay the taxes when the farmer tries to pass it to his children
The question is whether the children were involved in the farm prior to the farmer dying. If they were involved then they helped earn the income and we can handled that as we would any other business that changes owners. If they were not substantially involved in the work of building the company then they can pay their lottery winnings the same as anyone else. If that requires selling off assets to pay the tax man then so be it.
If the farmer has a brain in their skull they will have the farm held in a corporation and have named the heirs as shareholders. Hell they can hold this stuff in a trust if they want to. But just because your parents had an asset that they worked hard for doesn't mean you should be entitled to it unless you worked hard for it too. If the kids helped build the farm and worked hard at doing so then they have earned the income and there is no problem. It's a working business that will require continued work to make money, not a cash award. If they are just handed the keys then it is nothing more than an asset that should be taxed like lottery winnings.
These farms may have millions of dollars in the equipment alone so the state sees these kids as inheriting millions of dollars.
If they were suddenly gifted the farm upon the death of the former owner and were not working the farm themselves then they WERE inheriting millions of dollars. If the kids were working the farm and appropriate business arrangements were made then it's hardly a lottery ticket. Working a farm is hard work. We can make some sane exceptions for productive business assets utilized appropriately but let's not confuse a working business with a cash bequeathment. If all the kids did was inherit the farm then it isn't a family asset.
These are people that have worked a farm their entire lives only to have it ripped from their hands because of class-envy assholes like you think they are getting away with something.
"Class envy"? Fuck you. You know nothing about me. I've worked my entire life too, inherited nothing, I'm doing just fine and I don't give a shit about people who think they are entitled to something just because their parents worked hard. I'm talking about applying the same rules to everyone and not giving a pass to people who are lucky enough to come into wealth they didn't earn themselves. You think that people who picked the right parents should be subject to special rules?
How 'bout trying to mind your own damn business
When we have a trillion dollar public debt, tax policy IS my damn business. Yours too.
Quite a few billionaires (Buffet, Trump) would disagree with you.
If I am a brilliant man and create a company (and create value), I deserve to keep that. But why should my descendants, who are by virtue of their birth part of a "lucky sperm club," entitled to all that wealth?
True capitalism should require a level playing field when you start, and to really do that, when the final score is tallied, the slate should be wiped clean.
That's why such super high estate taxes exist. And typically they're not for you and me, it's for people over a certain threshold (say $1 mio + in assets)
Because building for my family's future is one of my primary motivators. I'm not just in it for myself. If I die I want my kids to receive the same education they would if I were still alive. The government already takes half of what I earn, and I will do everything legally possible to give them nothing more when I die.
Eagles may soar, but weasels don't get sucked into jet engines.
Inheritance is not income.
Inheritance most certainly IS income. It is functionally equivalent to lottery winnings. People that receive an inheritance by definition did not create it and so they should be taxed on it in the same way they would if they went to Las Vegas and hit a jackpot.
Personally, I want to see all taxes go and be replaced by a sales tax.
I really don't think you've thought that through. Sales taxes are by their very nature regressive so you need to address that problem. Just because people have more money doesn't mean they spend more. Further, while there is nothing wrong with using a sales tax, having it as the only form of taxation is a bad idea which is why few places rely on them solely. Good tax policy depends on multiple revenue streams or else you get budget shortfalls when tax revenue falls from one stream. It's functionally identical to having all your money in one stock. Might work out well but its safer to diversify. For instance lots of local governments in the US get most of their revenue from property taxes but when house prices fell recently they found themselves with difficult to manage short falls. Sales taxes are vulnerable to the same thing when consumer spending falls in an economic downturn.
Everyone is taxed, but only on what they spend. All money is spent.
No it is not. Much money is simply a store of value. The very fact that people die with money they have not spent is clear evidence against your argument. That was money that was not spent but merely handed to another person. All money has the ability to be spent but once you get a certain amount of it there is no reason to spend it. At that point it simply becomes an insurance policy against a rainy day.
Why is there an estate tax of 45% upon anyone's death!!!
There isn't. Only people inheriting assets worth millions are subject to such a tax. Furthermore why should the family be entitled to inherit a large fortune that they played no role in creating? If the kids weren't involved in creating the wealth then they should have no special tax rights regarding receiving the wealth.
That income has been taxed already. Bequeathment is not a fucking INCOME issue.
Inheritance most certainly IS income to the person inheriting it. The inheritor by definition did nothing to create that asset and to them it is income. It is functionally identical to them winning a lottery and should be taxed under the same rules. Whether or not the inheritor is related should be irrelevant to the discussion.
If you want to argue (pointlessly) again the income tax then that is a separate discussion. But as a principle inheritances should be handled just like lottery winnings for any part of the inheritance that wasn't created by the inheritor.
Because building for my family's future is one of my primary motivators.
Nothing is stopping you from doing that. That doesn't mean your family should be entitled to special treatment under the law just because they are related to you. If your kids get income from any source then they should have to pay taxes on it the same as anyone else. I don't give a shit if your precious snowflakes are special to you. They aren't special to me and they should have to earn what they keep. If they are unable to care for themselves for some reason then society can make some appropriate accommodations for that but I have no interest in allowing able bodied people to get special treatment they don't deserve because they won the lucky sperm lottery.
If I die I want my kids to receive the same education they would if I were still alive.
So buy a life insurance policy. Set up a trust. Have a will. That's what they are for.
That income has been taxed already. Bequeathment is not a fucking INCOME issue.
Of course it is; "income" doesn't get taxed, TRANSFERS get taxed. For income tax, it's the transfer from your employer to you. For inheritance tax, it's the transfer from the estate to you.
The point is that it is YOUR money, and you paid the taxes on it. As such why the fuck should the government get to double tax you?
When you give it away it by definition is NOT your money (you gave it away) and therefor you cannot be taxed twice on it. It's someone else's money AND it is money they did not earn. It is functionally equivalent to lottery winnings and should be taxed the same way.
There is not a tax on anyone's death. There is a tax on receiving an inheritance.
No, it really is a tax on their death. The money is pulled out of the estate before being distributed.
Given X dollars, dividing them among Y heirs leads to no taxes, regardless of how large X is (although the higher X is, the higher Y needs to be).
This is just wrong. This is not how estate taxes work. It really is based on the initial amount and not how much it's divided up. From the IRS:
The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your "Taxable Estate." These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify. After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit. Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $1,500,000 in 2004 - 2005; $2,000,000 in 2006 - 2008; $3,500,000 for decedents dying in 2009; and $5,000,000 or more for decedent's dying in 2010 and 2011 (note: there are special rules for decedents dying in 2010); $5,120,000 in 2012, $5,250,000 in 2013 and $5,340,000 in 2014.
http://www.irs.gov/Businesses/...
If we had one tax rate for everyone, it would solve the problem of tax loopholes.
No it would not. The loopholes aren't in the tax rate. The loopholes are in defining income. Defining income is complicated and that is what 90%+ of the tax code is. You want to simplify the tax code then you need to simplify the definition of income. A good start to that is to not make special tax exemptions for special groups. When you do that you are complicating the definition of income and saying a particular group deserves to pay less because their "income" is less.
One, you should pay more attention to ending tags
Two:
The gifts are per person (up to their inheritance) is added to the deduction. So, you're correct on form, but wrong on substance.
Your ad here. Ask me how!
Quite a few billionaires (Buffet, Trump) would disagree with you.
I'm not sure what you're saying these billionaires disagree with. If you're saying that Buffet and Trump think estates should be taxed, I would point out that there is nothing preventing them from donating their fortunes to whatever cause they wish. If their will states that their money should be given to the state or federal government, that's up to them.
If I am a brilliant man and create a company (and create value), I deserve to keep that. But why should my descendants, who are by virtue of their birth part of a "lucky sperm club," entitled to all that wealth?
That doesn't sound like capitalism to me. Are you saying that at your death the company that you've started and built should be liquidated so that no one can benefit from your work after you're gone? In your opinion true capitalism means that no matter the amount of effort, luck, or work one puts into their life, the outcome should be the same?
True capitalism should require a level playing field when you start, and to really do that, when the final score is tallied, the slate should be wiped clean.
That's why such super high estate taxes exist. And typically they're not for you and me, it's for people over a certain threshold (say $1 mio + in assets)
I can't agree with you that that everyone with over $1million is super-rich.
Here's a very middle-class example: A 50 year old man with three kids under 18. He has $200k equity in his home, and has saved $800k towards retirement. He dies, suddenly. Is it the moral obligation of the government to force the sale of his home and liquidate his retirement account so that they can "wipe the slate clean" for his minor children?
If you make $50K a year, you are in the 25% Federal bracket,and if you are in California another 9.3%, then don't forget social security and medicare - 7.65%, and if you go thru the trouble of being self employed, you get to pay that twice, or 15.3%... OK you're right. It is ONLY 49.6% tax, for a self employed person in California. But, with what you have left you still have sales tax, gas tax, taxes on phone bills, cable bills, car tax (annual vehicle license fee), real-estate taxes... you get the idea.
This issue is a bit more complicated than you think.
Taxing consumption is taxing income. Tarrifs are market meddling.
Taxing consumption is not the same as taxing income at all.
Taxing consumption in the way of sales tax, luxury tax, etc... taxes you for consuming resources.
Taxing income taxes you for generating wealth. It penalizes you for creating value.
As we have a finite amount of resources and wealth it makes a lot more sense to tax someone for
consuming resources that it does to tax someone for creating resources and wealth.
I realize for someone living paycheck to paycheck that these are sometimes close to the same
but for the wealthy there is a huge difference between someone like Warren Buffet who creates
alot of wealth and spends very little of it and someone like Paris Hilton that consumes alot of
resources with a lavish lifestyle.
I think YOU are seeing the wrong side of it. Why is taxing income the best way to tax people? Income is wealth generation, we shouldn't tax it. Taxing consumption would be much better.
Taxing consumption disproportionately hits the lower and middle classes, who consume a greater percentage of their income than do the upper classes. It puts the burden of shouldering the government on those least able to afford it. In that manner it would act as a strong barrier to income mobility by preserving wealth for the wealthy and taking it most from the least wealthy.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
"That income has been taxed already."
No, it hasn't. Estates that are large enough to cross the $5,250,000 threshold for estate taxes in 2013 are overwhelmingly comprised of a) unrealized capital gains, and b) tax-protected unearned income. These by definition have not been taxed already.
Wrong, with the 5M+ exemption the $1M dollar Mcdonalds pays nothing in estate taxes to the federal government. Now many businesses are worth more the and $5M but with a bit of estate planning the ability to avoid a large portion of estate taxes is available.
Why is there a 7% sales tax on any retail transaction!!! That income has been taxed already. Why is there an annual tax on any developed property!!! That income has been taxed already.
Money gets taxed whenever it moves around. I can sell you a shoe, and you'll pay sales tax on it. You can sell me that same shoe back, and I'll pay sales tax on it. We'll be paying sales tax on that shoe for as long as we keep exchanging it.
When you inherit money, you haven't been taxed on that transaction yet. Not until you pay the estate tax, that is. But maybe you're right. Maybe it's a gross violation of our code of ethics. After all, why penalize someone just for dying! Indeed, to get around this "death tax", you should merely transfer your wealth to your heirs prior to your death. That way you won't have to worry about the tax impact.
Dislaimer: sarcasm; the wealth transfer is taxed either way.
Chuuch. Preach. Tabernacle.
"Here's a very middle-class example: A 50 year old man with three kids under 18. He has $200k equity in his home, and has saved $800k towards retirement. He dies, suddenly. Is it the moral obligation of the government to force the sale of his home and liquidate his retirement account so that they can "wipe the slate clean" for his minor children?"
Except there is a $5 million exemption per person so his heirs don't have to pay anything.
I don't read your sig. Why are you reading mine?
Taxing income taxes you for generating wealth. It penalizes you for creating value.
Bull. Shit.
Taxing income taxes you for ripping people off. Note, ripping people off is not the same thing as generating wealth.
There's nothing stopping people from providing goods and services for no profit, and hence not paying a cent in taxes.
You can buy $1 of raw materials and sell $2 of finished goods (the market can bear it!), turning a $1 profit, and paying taxes on that $1 profit.
Or you can buy $1 of raw materials and sell $1 of finished goods (at cost, below market rate), turning no profit, and paying no taxes.
In either case, the same amount of wealth (indeed, the same end product) is generated. However, in one case, there is no tax paid. Therefore, it necessarily follows that income tax is independent of generation of wealth.
If you're bothered by taxes, simply opt to avoid profit. But, you see, the problem isn't that you have to pay taxes. The problem is your unbridled greed.
Chuuch. Preach. Tabernacle.
Stop pretending you pay the *marginal* tax rate on ALL of your income. You have an argument, but you weaken it with sloppy form. Oh, and said example pays last dollar at 15%, not 25%.
Tax rate schedule from here: http://www.forbes.com/sites/kellyphillipserb/2013/01/15/irs-announces-2013-tax-rates-standard-deduction-amounts-and-more/
$50k in 2013, no kids, all self-employment. Subtract standard deduction (6100) and personal exemption (3900), and 1/2 of self-employment tax (3825), net taxable income is $36175. First 8925 gets taxed at 10%, income from 8926 to 36250 gets taxed at 15%. 892.5 + (36175-8925)*.15 = $4087.5 in tax -- 8.175% effective income tax.
Add 15.3% self-employment tax (you pay employee and employer halves) 50000*.153 = $7650
Total effective federal liability of 23.475%
Assuming your California number of 9.3%, that's a total income-based tax burden of 32.775%, or a little less than 1/3.
Non self-employed in same circumstance DOES fall under 25% marginal rate, but only by $3750, tax of $5928.75 for effective tax rate 11.8575% + 7.65% FICA.
Total federal of 19.5075%, together with 9.3% California for a total of 28.8075%.
28% ish to 32% ish of total income-based liability isn't cheap, but it's certainly not the 50%+ you just tried to demonstrate.
It's even worse if you compare 12% or 8% to your suggested 25% marginal rate.
All that to say I think the numbers will be even lower if your knowledge of California marginal rates is similar to your knowledge of Federal marginal rates...
You may be thinking of income - the cutoff to enter the top 1% of annual household income is indeed about $700,000. But the discussion is about household net worth. It's frustratingly hard to find exact numbers, but as far as I can tell, somewhere around 8% of American households have a net worth above $1M, not counting primary residence (9.6 million households according to CNN out of ~120 million households according to the Census Bureau). It takes about $5M in non-house wealth to make the 1%. Including home equity, between 15% to 20% of households are millionaire households, as far as I can tell.
Having said that, I agree with you that very few Americans have to worry about the estate tax. The first $5.4 million of an estate is exempt from taxation, and two spouses can join their exemptions onto a single estate if they want, for a total exemption of $10.8 million. I'm no real fan of the inheritance tax, but even I'll admit that the tax in its current form only affects those who are truly loaded. I think that the law we have now (40% tax on anything over 10.8 million) is a vaguely reasonable compromise between the soak-the-rich folks and the no-taxes-ever folks. However, for many years prior to 2011, the exclusion was much lower, and the inheritance tax and really did impact a number of people who had relatively large amounts of money tied into illiquid assets like the proverbial family farm. Many of the "save the family business" arguments actually did make sense prior to the law change in 2011.