“I question how in the world is the IRS going to have the wherewithal to contest it and enforce it,” Wright said. “The IRS doesn’t have much in its arsenal.”
The IRS currently audits about 30% of estate tax returns of people worth at least $10 million when they die, which matches the rate Zucman suggests to enforce the tax. But only 1,283 estates worth that much were examined in 2018. Extending examinations of about one-third of the 75,000 wealth tax returns that would need to be filed each year would add an additional 25,000 audits to the IRS’s workload.
The process of paying the wealth tax could also be expensive for the wealthy, before even accounting for how much they owe. Appraisals for real estate can cost as much as $10,000. Business appraisals can range from $10,000 to $50,000, depending on the complexity.
“You’re talking $150,000 to do the valuations every year,” John Mezzanotte, a managing partner at accounting firm Marcum, said. “That’s a conservative estimate.”
However, for those who make their living valuing other people’s businesses, the wealth tax is a money-making opportunity, according to Crane, the New York-based appraiser.
“It would be a windfall for the rest of eternity,” he said.
This article was provided by Bloomberg News.