Tuesday, May 06, 2008

When Is Mark Warner Moving to Florida?

Inheritance Tax Hypocrisy

I saw an interesting item in the Wall Street Journal this past weekend about the late Senator Howard Metzenbaum of Ohio. Metzenbaum, who passed away recently at age 90, was a Democrat from Ohio, and was known for his leftist voting record and his baseless attacks on Supreme Court Justice Clarence Thomas. He was also a self-made millionaire who made his fortune in parking lots, according to the article.

What’s so interesting about Metzenbaum and his ilk is the issue of inheritance tax avoidance. Here’s what the Journal had to say:

But we come today not to judge the late Senator, only to praise him for one last act of personal financial acumen. Though a lifelong Ohioan, the Senator moved to Florida in 2002, according to a declaration of domicile filed with the Broward County Clerk's office in 2003. In doing so, he avoided paying his home state's income tax (top rate: 6.55%).

More important as he neared the end of his life, the former Senator also saved his family from paying Ohio's death tax, which features one of the highest state rates (7%) and lowest asset thresholds – $338,333 – in the country. Florida famously has no income or estate tax, which is one reason other than the climate that it is home to so many northern-born retirees.

Howard Metzenbaum thus denied the state in which he lived most of his life a parting financial gift. But he has at least provided the rest of us with a teaching moment in tax policy. If a liberal lion like Metzenbaum is willing to relocate late in life to avoid his state's death tax, maybe living politicians in Ohio will better understand how their confiscatory tax laws are driving its citizens to warmer climes.

Another leftist dinosaur, Ted Kennedy, has a hard time explaining why his wealthy family pays so little of the inheritance tax with which the rest of us poor peons are saddled. See the video here. (I think Brian has run this before.)

This brings us to Mark Warner. As we know, Warner ran with a promise not to raise taxes. He lied. He also told us about how he was going to repeal the death tax. Well, as Jim Gilmore and Bob Marshall can probably remind us, Warner lied about that too. Amazingly, Mark Warner has applied his fortune to a foundation, in this case to provide health care to poor communities, or so his web site says. Of course, wealthy people also start these foundations to avoid paying taxes.

Thanks to the tax cuts enacted under Bill Clinton and especially George W. Bush, the amount of wealth in this country has increased, and with it an explosive growth in philanthropic foundations. I do not deny that these foundations (including Mark Warner’s) do a lot of good, but leftists like Warner are being hypocritical by raising taxes on the rest of us who do not have the means to set up this kind of tax avoidance.

Of course, this foundation money may not be subject to inheritance taxes. So Mark Warner gets some reprieve that way. But I wonder, has the former Governor drawn up a will? Is there more money that will be shielded from inheritance taxes? I think it is high time he makes a full disclosure.

I do not wish Mark Warner to win the U.S. Senate race in Virginia, but I will not be so mean as to wish him an early and untimely death. That being said, will Mark Warner also make the move to income- and inheritance-free Florida one of these years?