The WaPo: Still Wrong on Death Tax

You gotta give the WaPo credit -- on some issues they are consistent, even if consistently wrong. One of those issues is the death tax. They editorialized on it again today -- wrongly -- and Michael Kinsley wrote an op-ed on it earlier in the week, ably dismissed by Carter Wood over on ShopFloor.org.

Here's the continuing rub that the Post just doesn't get: While $10 million sure seems like a lot of money (to everyone but Congress), a $10 million manufacturing company is typically a very small company. Manufacturing is a capital-intensive industry and that capital can be damned expensive. One piece of machinery alone can cost many millions or tens of millions of dollars. When a company owner dies, he or she then saddles the company with an enormous death tax burden, even though nothing else has changed and the company continues as is.

It would be understandable for a sale to be a taxable event, but death? In fact, all too frequently, the company has no choice but to liquidate -- or take on a debt load disproportionate to their size or earnings. Here's a great document, the "Death Tax Chronicles" from 2005 that is still relevant today, tells the tale of many real live people (anybody remember real live people here in Washington?) and the real life impact of the death tax. Here's a death tax fact sheet from 2006 -  a little dated in terms of the legislation it mentions, but the points are still good.  

So while the WaPo tries to be a little too cute about small business, all the while showing its contempt for this enormous job engine, they ought to at least get their facts straight. The death tax is bad for manufacturing. Bravo to the brave souls in the Senate that have resisted attempts to roll it back.