There have been a number of exotic rationales introduced in defense of the Republican tax bill that passed the Senate in the early hours of Saturday. None, however, sparked quite the same reaction as one introduced by Sen. Charles E. Grassley (R-Iowa).
“I think not having the estate tax recognizes the people that are investing,” Grassley told the newspaper, “as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
The argument, then: If, instead of blowing your money on booze and “women,” you were to invest it, you too could have an estate large enough to qualify.
How much are we talking about? Well, in 2017, the estate tax applies only to estates worth $5.49 million or more. In the interest of providing life advice to our readers, we decided to figure out just how much you’d need to cut back on your booze and moving pictures to save enough to qualify for that tax.
The most popular liquor in Iowa, according to the Des Moines Register, is Black Velvet Canadian whisky. (Note: The Post spells the name of the drink as “whiskey” unless it’s Canadian or Scotch.)
Local grocery giant Hy-Vee doesn’t list prices for the drink on its website, so we called a Des Moines-area Walmart. There, a 1.75-liter bottle costs $17.67. So we can do the math.
For an Iowan to save enough to qualify for the estate tax simply by cutting out her favorite liquor, she would simply need to buy 310,697 fewer bottles of it. If she usually goes through a bottle a day — an unhealthy habit, to be sure — she simply needs to stop doing so for 851 years to save the $5.5 million or so.
Or, if she is perhaps instead the generous type, she should cut down on giving out free shots to other people. How many shots? 310,697 bottles of Black Velvet generate about 12.3 million shots — enough to provide about four shots for every resident of the state.
Sorry, Iowans, you’ll have to buy four shots of whisky (or whiskey) out of your own pocket. This lady over here is trying to build an estate.
Some people have questioned what, exactly, Grassley means by spending money on “women.” I saw one person on social media mention “escorts,” which I’m a bit confused by. If you wanted to, though, you could save for your estate by deciding against buying 2,501 used Ford Escorts near Des Moines — not to mention what you’d save on parking.
Let’s instead assume that Grassley meant that you should cut down on taking women on dates. (At no point in time did I describe my courtship of my wife as “spending money on women,” but who am I to judge?) We found a list of 25 date ideas in Des Moines, including a night at a restaurant called Django, which appears not to be a theme restaurant related to the Quentin Tarantino movie.
At Django, figure you would spend about $66 on two entrees, an appetizer and a couple of drinks, plus tax and tip. To instead have enough money in the bank to qualify for the estate tax, you’d simply need to go to Django 83,182 fewer times. If you usually go every weekend evening, just stop going for the next 800 years. Put that money in the bank, and then you, too, can pay the estate tax, assuming it doesn’t change between now and the year 2817.
(Don’t worry; we’re getting to the “investment” thing. One more cost savings to suss out, though.)
Let’s say that instead of saving for your estate, you want to see a movie. Let’s say that, in particular, you want to see “Justice League,” the 24th of 38 movies about comic books released in 2017.
If you live in Des Moines, you can see an evening showing at the AMC Classic Southridge 12 for $10.48. To have $5.5 million by the time you die, you’ll just need to avoid repeat viewings. About 523,855 repeat viewings, to be exact.
“Justice League” is just shy of two hours long, meaning you’ll have to forgo watching the film in theaters for 115 straight years. Or, if you are the generous type, just change your plans to buy out a 300-seat theater for the next 140 days, 10 hours and 8 minutes continuously. Sure, it would be fun to treat 299 other people to a comic-book movie with a 41 percent Rotten Tomatoes score for every minute between now and 9:03 p.m. April 23, but this is your future we’re talking about.
What about investment?
Grassley’s point, though, was that this money would be better used on investments, not that you could simply stop buying Ford Escorts and suddenly be rich enough to qualify.
So let’s say that you are a 30-year-old woman of average height and weight who drinks a bit (Black Velvet, in particular). Actuarial tables estimate that you’ll live another 51 years. One estimate for return on investment over the next few decades is 7 percent annually, assuming investments in large-company stocks. There’s no certainty of that, of course, but let’s use it for our example.
To have $5.49 million by 2068, the year the woman in our example sadly leaves us, she would need to invest about $174,500 in the stock market right now.
Meaning, in other words, that she needs to buy 9,875 fewer bottles of Black Velvet, or 2,644 fewer dinners at Django, or 16,651 fewer showings of “Justice League” or 79 fewer used Ford Escorts. Then, she has the $174,500 she needs to invest, sees annual 7 percent growth and qualifies for the estate tax at the end of her life.
Unless, of course, the estate tax limit goes up.
Update: The senator replies by email.
“My point regarding the estate tax, which has been taken out of context, is that the government shouldn’t seize the fruits of someone’s lifetime of labor after they die. The question is one of basic fairness, and working to create a tax code that doesn’t penalize frugality, saving and investment. That’s as true for family farmers who have to break up their operations to pay the IRS following the death of a loved one as it is for parents saving for their children’s college education or working families investing and saving for their retirement.”