Death of estate tax welcomed

Mathis Winkler

NEWPORT BEACH -- The city’s movers and shakers welcomed Wednesday’s

decision by the House of Representatives to phase out estate taxes by

2011.

The move, which is expected to cost about $185.5 billion, would

eliminate the taxes heirs have to pay. Since inheritances of up to

$675,000 are already exempted from the tax, only the estates of about 2%

of people who die each year would be affected by the repeal. With 58

Democrats joining nearly all Republicans in the decision, the vote was

274 to 154.

While Newport Beach’s business leaders cautioned that the proposal is

likely to face a battle in the Senate, they said the repeal would benefit

the city’s small business owners.

“In many instances, it doesn’t make sense to pass on businesses under

the current tax laws,” said Richard Luehrs, the president and chief

executive officer of the Newport Harbor Area Chamber of Commerce.

As a result, “we lose productivity and the family loses valuable

assets to the government,” he said. “We’re happy about [the decision.]”

Others didn’t hesitate to second the feeling.

“I think that’s a great decision,” said Rush Hill, the chairman of

Hill Service Cos., which includes an architectural firm and Internet

services.

“It always seemed to me tremendously unfair for the government to use

the estate tax for redistribution of income,” he added.

Some business magnates, such as financiers George Soros, Warren Buffet

and William Gates Sr., the father of Microsoft founder Bill Gates, have

warned that eliminating the estate tax would discourage people from

donating to charities and nonprofit organizations. But Hill said he

didn’t think taxes were Americans’ main reason for philanthropy.

“I think people give because they believe in a cause,” he said. “I

don’t think someone makes a donation to Orange Coast College because of

the tax advantage.”

However, former Mayor Clarence Turner, who’s a real estate developer,

said he could see a drop in the number of people setting up foundations

to benefit charities after their death.

But overall, this shouldn’t affect the amount of donations very much,

Turner said, adding that he saw the repeal as a having a “very positive

effect on business.”

Most rich people, such as Broadcom Corp. co-founder Henry Samueli, set

up foundations during their lifetime after “making a lot of money all at

once,” Turner said.

“It’s advantageous to them to sell stock, contribute to charity and

take a huge reduction,” he said. “They didn’t wait to die.”