Yankees owner, George Steinbrenner is now not only notorious for the hundreds of wins he achieved with the New York Yankees but has emerged victorious against the IRS as well; both feats that few people can claim. Steinbrenner died from a heart attack on Tuesday July 13th at age 80. To every tragedy though there is a silver lining and in this case one that is worth an estimated $450 million dollars.
Steinbrenner certainly knew a thing or two about timing as 2010 is the first and only year since the Federal Estate Tax was enacted in 1916 that this tax has been fully eliminated.
The Estate Tax, which quickly adopted the name, the death tax, is a federal tax that is applied after a person’s death to their estate regardless of whether or not the property was handed down in a will. During the Bush Administration, the Economic Growth and Tax Relief Reconciliation Act of 2001 was implemented in order to combat current economic hardships. Through this act, the Federal estate tax was to be slowly phased out each year, leaving it completely diminished by 2010. The impact that this tax gap has had is undeniable and is estimated to ultimately cost the federal government close to $14.8 billion dollars.
Unfortunately, unless Congress has a change in heart, this act is due to return on January 1, 2011 and will be stronger than ever. Prior to 2001, the estate tax applied a 45% tax on all assets valued at over $3.5 million but for 2011 it is due to be reinstated at a rate of 55% with an exemption of $1 million per estate. While opponents of the bill criticize is for unfairly taxing income twice, it is unlikely to be repealed in the following years given the governments desperate need of funds. However, you are not completely off the hook if you die in 2010, as for some, state imposed estate taxes cannot always be avoided. While it may be the best year to die, do you live in the best state? George Steinbrenner seemed to have lucked out again as his Florida residence truly let him hit a home run when it came to avoiding taxes. Not everyone may be as fortunate. Below are some of the worst states to die in based on state death taxes:
- New York
- New Jersey
George Steinbrenner took a risk that certainly paid off in 1973 by purchasing the dwindling New York Yankees team and in a matter of close to four decades turned the $10 million dollar team into one valued at $1.6 billion. Steinbrenner demanded nothing less than perfection from his team, an expectation that was made very clear in his cut throat decisions and is infamous for changing the manager of the Yankees 20 times in 23 seasons. This no nonsense attitude, allowed the business savvy owner to claim seven World Series championships, 16 American League East titles and 11 American League pennants. Steinbrenner was not afraid to put his money where his mouth was and established a new spending initiative when it came to recruiting players, making it no surprise that in 2009 the Yankees trumped all other baseball teams’ payroll with one nearing $210 million dollars. This success is estimated to have earned him a net worth of nearly $1.15 billion dollars, an amount that will now be passed down to his heirs. Had George Steinbrenner died in 2009, the 45% estate tax would have been applied meaning that his heirs would have approximately $450 million dollars less. George Steinbrenner proved that even after death he would not be defeated.