The Tax Foundation's blog notices a Los Angeles Times article about a dispute between the IRS and Michael Jackson's estate about the value of the estate. One key issue is the value of Jackson's image, or "likeness":
The estate valued Jackson's likeness at just $2,105.
The IRS put it at $434.264 million.
The Tax Foundation comments:
This of course feeds into another major issue with the estate tax: the Jackson estate will be willing to pay a lot in legal fees in order to prevent the IRS from valuing the estate to be over a billion. One of the major problems with the estate tax is that is raises very little revenue for the U.S. government (approximately .42 percent of total federal collections), but it costs perhaps more than this in compliance costs (legal fees, estate planning, accountants, and life insurance providers). This is money that would have been otherwise spent in more useful ways than in fighting the IRS.
These valuation issues, especially on intangible assets such as a "likeness," are among the reasons a wealth tax on the living is a bad idea.