Thursday, December 16, 2010

The Estate Tax: A True Story

This is a true story. It may be long – but it has an important message.

In 1939 Enzo came to the United States from Italy. He settled in New York City. He married a lady who also came from Italy and they had three sons and one daughter. He worked very hard as a mason in the construction field and his wife worked as a hostess in a restaurant. Enzo and his wife saved every penny that they could with the hope that someday they could open a restaurant. Enzo’s family in Italy had been in the restaurant business as chefs and waiters and Enzo and his wife were excellent cooks.

Eventually, after saving as much as he could, he opened his first restaurant – a small pizzeria. Enzo bought the land and helped build the pizzeria himself. Enzo and his entire family worked in the pizzeria putting in many hours of labor. Eventually, they expanded the pizzeria into a restaurant that had 20 tables in it. The entire family worked very hard and they prospered. To Enzo the American dream became a reality. Hard work paid dividends. In time Enzo expanded the first restaurant and then opened a second restaurant. The family worked in both. Enzo was the chef in one restaurant and his oldest son was the chef in the second. The rest of the family worked as wait staff, greeters, cleaners, etc. in both places. Everything was wonderful for Enzo and his family until 1980 when Enzo and his wife died in an automobile accident. Needless to say, the family was devastated. But what would come later also was devastating.

Enzo poured every penny they had into the restaurant. He never had a lavish life style. The only luxury he had was a Cadillac – that was three years old when he died. He lived in a modest house in Queens, New York. He did not have stocks or bonds, just some CDs and savings. The two restaurants through hard work supported Enzo and his children and families. He never thought of himself as wealthy or a millionaire because, as he said, how many millionaires make pizza or pasta every day?

Enzo’s estate was split between his sons and daughter and they continued to run the restaurant. In a few months they learned for the first time that they were considered “rich” and what that meant. Back in 1980 the top bracket for the Estate Tax was 70%. In other words, even though you paid income taxes on what you earned, what you left behind for your heirs would be “shared” with the federal government: up to 70% to Uncle Sam and at least 30% to the heirs. On top of that New York State had crippling taxes, too. In the end they found out that the two restaurants were appraised at a total of $6 million. Since Enzo and his family never had any intention of selling the “business” as they called it, they did not realize how much it was worth. And the bad news was that they had to come up with more than $4.5 million to pay the estate and inheritance taxes. Needless to say, they did not have the cash on hand to pay the taxes. The only real asset they inherited was the two restaurants. Enzo’s family had to sell both restaurants to come up with the cash to pay the estate and inheritance taxes. If Enzo were alive he would not believe that his “American dream” would become a nightmare. Enzo worked hard, saved everything he could, and paid taxes all his life with the expectation he would leave “the business” to his family. After all, wasn’t that the “American Dream?” Well, the family had to sell the restaurants, the land, and the buildings to raise enough money to pay the taxes. In the end, the family split $1.5 million amongst four of them – or $320,000 after taxes and costs. If you totaled up all of the hours that Enzo, his wife, and the children put into the restaurant this “vast sum” amounted to less than $.60 an hour.

There are many Enzos in the U.S. – men and women who worked hard and built up a business, be it a restaurant, a farm, or any other business. And these are the bulk of the people who will be impacted by reinstating the estate tax as many liberals want to do. The wealthy families such as the Kennedys and Rockefellers will not have to pay any estate taxes because everything was set up years ago in trusts, etc. and when there were no estate taxes. So keep Enzo and his family in mind when the New York Times, NPR, and other liberal media call out to soak the rich and re-impose the estate tax.

Conservative Commentary by Jim Pirretti

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1 comment:

Walter O'Brien said...

The greed and envy lobby as personified by the Democrats, don't even want to let a person die in peace. They want to get that one last ounce of blood by taxing his estate that all ready has paid its taxes during the person's lifetime - it is double taxation, pure and simple, in other words, the government is stealing a family's money without their permission. What a disgrace!