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REVIEW &
OUTLOOK If the father of your two daughters were buried in the World
Trade Center, you might think no one could hurt you more than Osama
bin Laden already has. But that was before Lucy Thompson met the
grief counselors at the Internal Revenue Service.
Mrs. Thompson last heard from her husband Ian, a money trader on
the 84th floor of Tower Two, minutes after the first plane hit Tower
One. But her added misfortune is to be British. For though the
entire family held green cards that put them on the path to U.S.
citizenship, the estate tax has a nasty little noose just for people
like her: They don't get a marital exemption when a spouse dies.
The IRS figures that sooner or later it'll get its large share of
an estate passed to an American spouse. But the bereavement
bureaucrats are afraid that a foreign spouse will take the family
assets and move back overseas. So the IRS forces mourning widows and
widowers to pay up immediately, at the estate tax's terrible
confiscatory rates. Worse, the IRS levies that tax on everything
above their first $60,000 of assets, against the first $675,000 for
Americans.
So at a time when Lucy Thompson has to provide for her children
by herself, the IRS gets first dibs on everything they have. That
includes her husband's life insurance and her modest home in Summit,
N.J., where Ian was a volunteer with the local First Aid squad.
Outside that home these days Mrs. Thompson hangs both the U.S. flag
and the Union Jack--symbolic of the stalwart British support for the
American anti-terror effort.
Sitting on her sofa in the home she now fears she might lose,
Mrs. Thompson is nonetheless all British stiff upper lip.
"We're a family who long ago made the decision to buy into the
American dream," she says. "America has been wonderful to
us. All we want now is the ability to stand on our own two feet so
the American people won't have to carry us."
But back to the estate tax. Experts tell us there are
bureaucratic hoops to jump through to avoid it. If, for example,
Mrs. Thompson were to put her money in a qualified trust within nine
months, she could escape the tax, albeit with the usual trust
limitations. Families might also get hardship rulings that allow
them to draw down on accounts without paying tax, at least for a
time. And the House has already passed the Victims of Terrorism
Relief Act, which would allow lower tax rates for all families who
lost a loved one in the attacks.
These are welcome if bureaucratic mitigations. But the cases of
these widows bring into sharp relief the immorality of the death tax
itself. Earlier this year, the father of Microsoft's Bill Gates told
the Senate Finance Committee that it is "appropriate that a
special tax be imposed on those who have so fully enjoyed the
benefit of the things this country provides."
This is the usual line of those who don't mind paying the tax
because they're already superrich. Or because they've already set up
trusts or foundations to avoid paying the tax themselves. But that's
not the way the estate tax looks from Lucy Thompson's living room.
She and her late husband have already paid taxes once on their
income. Now, with her main breadwinner gone, she's going to have to
pay a "special tax" so that Bill Gates's Dad and the
Rockefellers can feel better about all the money they've made. And
while the special horror of September 11 may prompt some exceptions
for Mrs. Thompson, what about the widows and children left behind by
a car accident or some other tragic, early death in the family?
Earlier this year Congress voted to phase out the estate tax but
not for nearly a decade, and then only for a single year. (This
ridiculous law was designed to satisfy the crazy budget rules of the
Senate.) Mr. Bush would win applause in the Thompson and other
households if he pushed to make the estate-tax elimination
permanent.
Since September 11, the Thompsons and Gilbeys tell us, they have
witnessed the best of America. But in the INS and IRS they are also
seeing some of the worst. |
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