This morning it was announced that George Steinbrenner, the long-time and controversial owner of the NY Yankees, passed away from a heart-attack. While almost every baseball fan fell into a love-him-or-hate-him category due to his style of ownership, I'm sure all baseball fans pass on their condolences to his family. There will be a lot of talk over the next few days, memorializing his life, and what his contributions to the game of baseball have done, for better or worse.
But there is a public-policy aspect of his passing that also needs to be discussed. I'm sure the stories will be posted in the next few hours, as reporters digest the fact that the NY Yankees and their media empire are worth over $1.5 billion per Forbes magazine in 2009, and find out who owns what portions.
Because there is no estate tax this year.
In terms of estate planning, George Steinbrenner passed away in the best possible year, with no estate tax affecting the vast wealth and fortune he is passing on to his children. And it will be tempting for those on the right to use his passing as a case against the estate tax. He bought the Yankees, he re-invigorated them, he paid the players & coaches who came here and won, he built them into the economic power house and paid his income taxes along the way - He deserves to pass along his wealth, including ownership of the Yankees to his children.
Note: I know his son is running the team, but I don't know if or how Mr. Steinbrener took actions to transfer ownership or control of the team and media networks to his children already. His wife is also still living, so she would inheirit everything tax-free regardless, if he chose not to pass along assets to his children at this time.
And it rubs people the wrong way, even though there are normally multi-million dollar exemptions that protect people from having to pay any estate tax at all, unless they are very wealthy. And the standard reply of the right that it threatens family farms is false - there have been no family farms that have been shown to have gone under because the family can't pay an estate tax. None.
But when people say that Steinbrenner has already been taxed on this money, we have to ask, was he? I'll assume he paid all his personal income taxes, but what about property taxes? How much property tax expemption did he get from the city and state of New York for his stadiums? How much did New York pay for those stadiums to begin with? How much did he and the NY Yankees pay in income taxes, which are really profit taxes, deducting various business expenses? And how much does this taxation compare to the increase in value of the Yankees, over his ownership?
How much did NYC pay for improved streets, subways, highway exits, etc., for fans attending the game? How much did he put in? I know there are arguments that Major Sports and their stadiums are an economic benefit for the city, but most analysis indicates it's a close call. But as we discuss the estate tax, that is something that also has to be remembered - economic growth and accumulation of wealth doesn't occur in a vacuum.
We have infrastructure investment built by government. We have regulation that doesn't just hinder business - it makes sure products are safe and trusted by consumers. We have investment in research into new technologies and medicines at various universities and companies. There are thousands of ways the government has actually helped big companies and their multi-billionaire owners accumulate that wealth.
The Forbes 400 list of richest people in the world now have an average wealth over $2.5 billion per person. That's over $1 trillion now, and will only grow over time.
I understand people have earned their wealth. But they had a lot of breaks along the way helping them, especially in the U.S. And the estate tax alows us to re-coup some of those breaks they get along the way, before they pass along the wealth to their children.
God Bless Mr. Steinbrenner and his family today.