COLLATERAL READING
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At this point, I am going to step somewhat "outside the box", and recommend two books which, although not, strictly speaking, oriented toward estate planning or business succession planning, are valuable for what they say to us about the bigger picture. One of my elemental convictions is that one needs to recognize the landscape, or background, against which any specific concern, task or problem is being viewed. In the case of estate and business planning, and related taxation matters, that background would include the modern socialized state; the information explosion (not yet matched by an explosion of wisdom), the fluidity and perishability of material wealth; and various governmental agendas which seek to keep the citizen distracted from what is truly going on. I believe that any planner who ignores this landscape is destined to achieve a non-optimum result. The books I will discuss here should go a long way toward aquainting you with the landscape.
The first of them is "Die Broke - - A Radical Four Part Financial Plan" authored by Stephen M. Pollan and Mark Levine, Harper Collins Publishers, Inc., ISBN #0-88730-867-8 (1997). The principal author, Pollan, styles himself "America's most trusted financial advisor" and claims to have written more than a dozen other books, but doesn't say what they were. These lapses of taste and candor notwithstanding, this book deserves your attention. It is a quick and easy read. There are about 70 chapters in its total of 300 pages, some of them only a page or two long, which cover a rather extraordinary array of financial, career, lifestyle choice, and other practical questions. Although there is a tendency toward the sensational and even occasionally the intemperate, it will clearly give any thoughtful person a fresh, and I believe generally much needed, perspective on a lot of things that are unwisely taken for granted by most of us. Even when the language is lurid, it is entertaining, as witness this brief excerpt from the chapter on long-term care insurance:
"I really want to be able to tell you to take out long-term care insurance as soon as possible. . .but I can't. . . .The industry is a snakepit of lying salesman, onerous provisions obscured by arcane language, fly-by-night insurers. . .and horror stories. There's little. . .regulation. . .and what few rules are in place are hardly ever enforced. It really is a disgrace".
To balance the provocativeness and the usefully contrarian slant, there are a number of factual (including a couple of quite egregious) errors, but, on balance it is excellent food for thought and would be quite a useful introduction, either as a first step to someone who has not done any financial or estate planning or as a reality check to one who has done some planning but is not certain he has touched all the bases.
The second book I want you to consider is "The Greedy Hand - How Taxes Drive Americans Crazy. . ." The author is Amity Shlaes, who is a tax policy editorialist for the Wall Street Journal. It is published by Random House (New York) ISBN #0-375-50132-0 (1999). A lot more scholarly and a lot less contentious than Die Broke, The Greedy Hand talks broadly about the current tax environment and its origins and evolution. It brightly illuminates the subjects of tax withholding, payroll taxes, the income tax "marriage penalty", sales taxes, real property taxes, retirement planning, tax progressivity, alternative minimum tax, Medicare and Medicaid, estate and gift taxes, and a number of others as well. All of this is entertainingly done, using actual reported cases and factual situations and amply sustaining, I believe, the book's underlying thesis that America's present tax system is patchwork, outworn, inefficient, unfair and counterproductive. The final chapter deals with death taxes. It does not say a whole lot, but what it does say is right on the money. Here are a few excerpts:
"The estate tax and its sibling, the gift tax, are unusual creatures in the world of the federal tax code, for several reasons.
The first is that they are a wealth tax. A wealth tax is an intrusive thing that seems more appropriate for Europe with its institutionalized class warfare than the United States. It punishes taxpayers just for having money, no matter how they acquired it. If this seems hard to understand, just think of the estate tax as a tax on virtue. . .
The second thing estate taxes do is undermine families by sundering the physical things that have come to hold meaning for them. . . [In]. . . a modern retelling of Shakespeare's King Lear,. . .the. . .patriarch doesn't want the government to cut up the farm he has spent his life building. The prospect of estate taxes drives him to divide his property and give it to his daughters before his death. . .
The third thing about estate taxes is that they catch us at a vulnerable moment. The government collects its estate tax from people at the moment they are often least equipped to object: the moment of their death. Opponents of the estate tax call it "the death tax". The title sounds hyperbolic, but in this instance it is justified. . .
Strange as it may sound, the theory here is that death is the least painful moment for the greedy hand to do its work. The tax writers [describe] the moment after death as an ephemeral interlude, the interregnum when the money and property involved belong to "no one" - neither to the dead person nor yet to his heirs. At that moment, the government says, "this money is no one's, so it is mine."
Actually, the thoughts expressed here are not exactly novel, however well they have been laid down by Ms. Shlaes. The famously amoral British politician, David Lloyd George (1863 - 1945), wrote in 1933 that "Death is the most convenient time to tax the rich". I suspect that the thought did not originate with him either, but have not managed to trace it any farther back.
This book is not simply an anti-tax Philippic; it is richly set against a background of our national history and our cultural and political development, and its conclusions are very difficult, perhaps even not possible, to gainsay. Its 250 pages conclude with an astonishing bibliography, which alone would be worth the price of the book to anyone seeking to make a detailed study of how we got where we presently are in the area of taxation.
In closing, let me turn the platform over to one of my favorite poets. One of the principal cultural ornaments of my home State of Maryland during the twentieth century was a man named Frederic Ogden Nash. His humorous verse, always humane and kind, made him a household name and a devoted following. He touched on both trivial and serious things, but always with lightness and grace. Even when he contemplated taxes, he couldn't bring himself to bear down too hard. Here he is on that unhappy subject:
Abracadabra, thus we learn
The more you create, the less you earn.
The less you earn, the more you're given,
The less you lead, the more you're driven,
The more destroyed, the more they feed,
The more you pay, the more they need
The more you earn, the less you keep,
And now I lay me down to sleep.
I pray the Lord my soul to take
If the tax-collector hasn't got it before I wake.
-Ogden Nash
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