What does a dead, stuffed, bald eagle have to do with the current wealth tax debate? A lot, actually. The eagle is part of a piece of art created in 1959 named “Canyon.” This famous work was part of a famous estate tax case in 2012. The original owner who left the estate died in 2007.
A bald eagle, or parts thereof, cannot be sold under federal law. Given that the art had no resale value, the estate tax valuation asserted by the estate for the piece of art was zero. The IRS contended that the piece of art was worth $65 million, and that an estate tax of $29.5 million was owed.
What does this have to do with the wealth tax?
The estate tax requires the valuation of all assets in a taxable estate at the time of death of the decedent (one of my favorite words I learned from the study of taxes). Some assets are very easy to value—cash in a bank account does not take much to value. But, some assets are incredibly difficult—like dead, unsalable eagles. These estate tax valuations are incredible difficult, and, they happen once in a lifetime. How difficult are they? In this particular case, the taxpayer became a decedent (died, kicked the can, bit the bullet, entered into their rest, etc.) in 2007. This case was still being litigated in 2012, when the linked article above was written. The wealth tax would require that these valuations happen annually. Imagine if the taxpayer had to value that eagle every year the taxpayer owned it while alive, and the IRS had to verify that valuation every single year—an administrative nightmare the IRS is not remotely ready to deal with.
To be clear, these administrative hurdles are not necessarily sufficient to mean one should oppose a wealth tax. If you don’t believe people have an innate right to the property they have earned, or that, on average, the very wealthy don’t rightfully earn the property they own, you might favor a wealth tax, and are willing to punt on the tricky administrative details. But those details are tricky, as we learn from this dead stuffed eagle.
(HT to Jennifer Blouin for reminding me of this interesting tax case).
