There's an interesting story in the NY Times about a Texas billionaire whose entire estate will be passed along tax-free, thanks to a rather silly act of Congress. It's obviously a bit of a scandal that a guy worth $9 billion will pay no estate tax at all, but the really interesting tidbit was deep in the story:
The United States enacted an estate tax in 1916, and when John D. Rockefeller, America’s first billionaire, died in 1937, his estate paid 70 percent. Since then, the rates have fluctuated, but this is the first time the tax has been repealed altogether.
John D. Rockefeller's estate was taxed at 70 percent.
Of course, since the guy died with a couple of billion to his name, his kids had to make do with a paltry few hundred million -- and oh, how it crimped their lifestyles. I grew up about five miles from the Rockefeller estate in Pocantico Hills, New York, and I can tell you: The family owned 7,000 acres of pristine, beautiful land only 30 miles north of New York City. Chauffers drove the brothers, Nelson and David, to their offices every day. Security guards armed with salt guns patrolled the property to keep kids like me out. Nelson managed to get elected governor of New York and became vice-president of the United States (before dying of a heart attack while having sex with his secretary). David was the chairman of Chase Manhattan Bank. The brothers donated an original Chagall window to their tiny church in the nearby town, and bought their wives brand new Rolls Royces every year.
Their kids have managed to survive on the tiny remants of that fortune, too. And their kids' kids.
The point is, the 70 percent estate tax didn't wipe out John D. Rockefeller's wealth or harm his family's future. There was plenty left. That's the thing to remember when we talk about taxing the rich: They always wind up with plenty left.
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