When my father passed away five years ago I was named the administrator of his estate.  Dad was a widower, and his will stipulated that his estate would be distributed to his three children and four step-children.  I remember one of the heirs made a comment to me about whether there would be anything to distribute once taxes had been paid.  As a matter of fact, I responded, there would, since no tax would be levied on his estate at all.

My father was not a wealthy man, but he lived a very comfortable upper middle class lifestyle.  Still, the total value of his estate at the time of his death was well below $1 million, the threshold below which no estate taxes were levied back then.  From a financial standpoint, my siblings, step-siblings, and I received a nice, five digit bump in our finances that year, all tax free.

I was reminded of this experience this morning as I read the business section of the Chicago Tribune.  This year, for the first time in nearly 100 years, there is no federal estate tax at all.  That is great news for the heirs of George Steinbrenner.  His estimated net worth at the time of his death earlier this week was $1.15 billion.  Last year, Steinbrenner’s heirs would have distributed the healthy sum of $630,000,000 among themselves (not counting possible state taxes).  This is the amount their inheritance would have been after federal estate taxes had been levied.  As nice as $630,000,000 sounds, it’s nothing compared to what Steinbrenner’s heirs will receive now, since the billionaire Yankees owner chose this year to die.  His heirs will now receive $1,150,000,000 (less possible state taxes).  This is money that they personally did little or nothing to earn.

At the beginning of 2010, there were about 400 billionaires who were citizens of the United States.  Four of those billionaires have died this year.  One of them, Dan Duncan, had a net worth of $9.8 billion.  The tax on his estate last year would have been $4.4 billion, leaving his heirs the healthy sum of $5.4 billion to share.  Since Duncan died this year, however, they will share the entire $9.8 billion.  Of course, as oilman Bunker Hunt famously said following his and his brother’s failed attempt to corner the silver market in the early 1980’s, “a billion dollars isn’t what it used to be.”  (Bunker Hunt would have known all about the evils of estate taxes, since he inherited his wealth from his father, H.L. Hunt, and he still came out a billionaire.)

Due to the elimination of the estate tax on billionaires this year, the national treasury has received about $6,133,000,000 less from just four estates than it would have received last year.  Add to this amount the value of estate taxes on the nation’s millionaires who have passed away this year, and the total would come to between $25,000,000,000 and $30,000,000,000.

This is about 30 times the total 2010 budget for the Small Business Administration.  Think about that when you try to get a loan for your next entrepreneurial venture.

It is more than twice the total 2010 budget for the Department of the Interior.  Think about that when you see the sad state of repair and lack of ranger services in some of our national parks, forests, and sea shores.

It is about the same or a little more than the 2010 budget for the Department of Energy.  Think about that when you wonder why the United States does not invest more in alternative energy sources.

It is more than half the amount allocated to the Department of Education.  Think about that when your school district eliminates music and arts programs, and you wonder why the United States is laying off qualified teachers rather than increasing pay so that we can attract the very best to this all-important profession.

It is almost half the amount budgeted for the Department of Transportation.  Think about that the next time you drive on a crappy, poorly patched highway, or complain that Amtrak trains go only half as fast as the trains in Europe, Japan, and even China.

Don’t worry about the Department of Defense, though.  The estate tax would have only funded about 5% of its $663 billion budget, an amount that is as large as the rest of the world’s defense spending combined.