State and federal tax policies will cost the family of popular musician Prince more than half of his wealth, with state and federal government tax collectors taking about 56 percent of his property after the rock star’s death.
Prince, born Prince Rogers Nelson, died in April. The heirs to the wealth Prince accrued over his decades-long career in popular music, who are yet to be officially determined, will be required to pay 16 percent of the estate’s final evaluation to the Minnesota Department of Revenue and an additional 40 percent of the evaluated amount to the Internal Revenue Service (IRS), the federal government’s tax collection agency.
The estate tax, commonly referred to as the “death tax,” is the only wealth tax levied by the federal government. Estate taxes are charged to individuals inheriting money, on top of taxes already collected on that money during the original earner’s life.
‘There Would Be Outrage’
Grover Norquist, president of Americans for Tax Reform, says the estate tax involves the government effectively stealing from the dead.
“If it was reported on television that thugs had broken into Prince’s house and stolen 56 percent of his stuff, there would be outrage,” Norquist said. “They would be demanding that the police went after these people, and [they would be] saying, ‘How could anyone possibly do this? The guy just died, and some criminals come and take 56 percent of his property?’
“Well, the government of Minnesota is going to take 16 percent, and the federal government is going to take 40 percent, and people act as if nothing happened,” Norquist said. “It’s an outrage. It should not happen; not to Prince, not to farmers, not to small businessmen and businesswomen.”
‘Offensive and Invasive’ Process
Pat Soldono, founder of the Policy and Taxation Group, says federal and state tax policies place a huge additional burden on families at an already trying time.
“What is happening to him, what happened to Michael Jackson, and what happens to anyone who has a sizable estate or assets is that everything is being valued: every piece of furniture, every piece of clothing,” Soldono said. “It’s a pretty offensive and invasive process that the IRS goes for and that the family or heirs are required to do within nine months of the date of death.”
Impact on Farmers
Soldono says the death tax can destroy farms and other small businesses.
“The families it really hurts are the families who can’t afford it,” Soldono said. “They might be above the threshold of $5 million per person, but they have an illiquid farm with farming equipment and crops. Trying to come up with a 40 percent payment, in cash, to pay that tax nine months after date of death is a pretty difficult thing for family businesses and farms.”
Elizabeth BeShears ([email protected]) writes from Trussville, Alabama.