Billionaire Warren Buffett is ahead of the curve in life and in death. Because the Oracle of Omaha still lives in his beloved-Nebraska, his heirs will be exempt from a state death tax (also known as the estate tax). Whereas the Jeff Bezos estate would…
Billionaire Warren Buffett is ahead of the curve in life and in death. Because the Oracle of Omaha still lives in his beloved-Nebraska, his heirs will be exempt from a state death tax (also known as the estate tax). Whereas the Jeff Bezos estate would lose an extra $12 billion in estate taxes if he dies while living in his home state of Washington, Nebraska does not have an estate tax.
That said, dying is easily one of the most expensive activities any billionaire can do.
Even though he would be exempt from a state death tax, Buffett would owe roughly the total net worth of Space X in federal taxes. As of 2019, an estate worth $11.4 million or more owes the maximum 40% in federal taxes.
With Warren Buffett’s net worth hovering around $82.6 billion, he would owe about $33,040,000,000 to the United States if he died today. That’s enough to buy SpaceX, Spotify, or Airbnb.
Some states, in fact, most states, have no death tax at all. While most states with estate taxes charge different rates depending on the size of the estate, some states, like Vermont, have a fixed rate.
Meanwhile, even though Warren Buffett wouldn’t owe any state death tax, Nebraska does have an inheritance tax. This tax does not apply to spouses. It does, however, charge immediate family members an inheritance tax of 1%. It charges extended family members 13% and everyone else 18%.
If you’re a rich person who wants to avoid any state-related death taxes, you still have plenty of good options. In fact, there are currently only 17 states that charge an estate or inheritance tax.
According to a recent study by Enrico Moretti of the UC Berkeley and Daniel J. Wilson of the Federal Reserve Bank of San Francisco, some billionaires have decided to flee these tax-hungry states. The study states:
“Billionaires tend to leave states with an estate tax, especially as they get old … By year 2010—namely 9 years after the reform—21.4% of individuals who originally were in an estate tax state have moved to a non-estate tax state; while only 1.2% of individuals who originally were in a non-estate tax state have moved to an estate tax state.”
If we see Warren Buffett move to California or Montana in the coming years, you’ll know why.
Maryland is hands-down the worst place for a loaded person to kick the bucket. It’s the only state that charges an estate tax and an inheritance tax. Washington Nationals owner Ted Lerner was ranked as the richest person in Maryland by Forbes in 2019 with a net worth of $4.9 billion. Chump change, obviously. And yet, if Lerner were to pass today, he could owe a total of up to 66% of his estate in taxes. That’s over $3.2 billion.
If you’re a proponent of taxing the wealthy, you can rest easy knowing that America gets a substantial cut in the end. For some of the uber-rich folks, it might be harder to find that peaceful rest once they see their tax bill.
This article was edited by Gerelyn Terzo.
Last modified: January 11, 2020 2:31 PM UTC