[IMC-Boston-Editorial] Column from black millionaire on the estate tax
bleondar-wright at faireconomy.org
Wed Sep 20 14:41:21 PDT 2006
Would you be interested in running this column by black millionaire Darius
Ross about African Americans and the estate tax?
If you¹d like a photo of Mr. Ross, please contact Bob Keener at
bkeener at faireconomy.org, 617-423-2148 x120.
Estate Tax Helps Fund the Dream
By Darius Ross
A cynical few are saying the estate tax hurts African Americans in some
disproportionate way. But they¹re overlooking common-sense wealth planning.
Here¹s the deceptive reasoning behind their statement. It¹s harder for
African Americans to become millionaires (true), so the estate tax hits
black entrepreneurs especially hard, forcing them to sell family businesses
to pay the tax.
The U.S. Small Business Administration states that the main reasons family
businesses fail are lack of business viability, lack of planning, little
desire by the owner to transfer the firm, and reluctance of offspring to
join the firm.
Note that paying the estate tax isn¹t one of them.
It¹s great that there are more African American millionaires. I count myself
fortunate to be among them. Between 1983 and 2001, the number of black
households with net worth of a million or more dollars increased from 61,000
to 109,000. Many get their wealth from family businessesfuneral homes,
medical practices, and real estate, construction, and service businesses.
If there are challenges in passing on the family business, let¹s not kid
ourselves that it¹s due to the estate tax.
If anything, it¹s due to a lack of legacy thinking and estate planning.
There¹s an ³I¹m gonna live forever² attitude that prevails among my
wealthier African American friendsnot all of them, but many. Patriarchs and
matriarchs are not training heirs in business succession.
These wealthy folks seem to be envisioning a Brinks truck following right
behind the coffin. There are no legal agreements in place to ensure the
continuation of their businesses. Their kids are caught in a cultural trap
that makes it difficult to discuss death and money.
Next thing you know, along come 18 super-rich families with a vested
interest in repealing the estate tax. They are collectively worth $186
billion. They stand to gain $72 billion if the estate tax is repealed. It¹s
worth their while to exploit family businesses by using them as poster
children for repealing the estate tax.
But it¹s all cynical nonsense.
They¹ve spent hundreds of millions of dollars to spread deception about the
estate tax. As a result of their efforts, many Americans think they will be
subject to the estate tax when they die. Not true. Only one-quarter of one
percent of the deceased will pay this year. That means that over 99% of us
can leave everything to our heirs tax-free.
Since the majority of African American families have $21,000 or less in net
worth, most blacks won¹t even come close to owing the estate tax after they
pass away. Compare the $21,000 black median wealth with the $2 million
exemption from the estate tax, and you¹ll see that the typical black family
has barely a penny on the dollar of the minimum taxable amount.
People think they will lose half their estate to the taxalso untrue. The
effective rate on big fortunes is about 20%.
The idea that the estate tax forces lots of African Americans to sell their
family businesses is just the latest myth. People this rich have the
capacity to do basic financial planning. We know how to buy the insurance
necessary to pay the estate tax so our heirs won¹t be affected.
The reason to care about keeping an estate tax in place is simple. Wealthy
people of all races have benefited from government investment-education,
infrastructure, loans, public contracts-to create our fortunes. It¹s only
right that we pay something back, so the ladder of opportunity can be
extended to those coming after.
What could persuade the rich to give back, if the government didn¹t mandate
it? Human benevolence alone is not going to cut it.
Make no mistakewe need the $20-30 billion the estate tax generates each
year. Unemployment ravages the African American community. Medicare will
soon be required to support the baby boomers. Kids are dropping out, with
too little encouragement from government-funded after-school programs. Which
is more important, spending on these needs or a tax break for
Repealing the estate tax would help squeeze the middle class into a
For some of us, there has been a rich gravy train in this country. So if
you¹ve enjoyed the ride, now pay the toll.
Darius Ross is a New York City real estate developer, entrepreneur and
fourth-generation Southern landowner. He is a member of Responsible Wealth
United for a Fair Economy
(617) 423-2148 x113
bleondar-wright at faireconomy.org
29 Winter Street
Boston, MA 02108
United for a Fair Economy is a national organization that raises awareness
of the damaging consequences of concentrated wealth and power.
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