Death Tax Mahele: Sens. Akaka and Inouye Vote to Take Tutu's House

by Andrew Walden, August 7, 2006

With their votes against cloture on the Death Tax repeal Aug. 4, Senators Daniel Akaka and Daniel Inouye (D-HI) condemn thousands of Native Hawaiian families to turn over 30 percent to 50 percent their property to the United States federal government when the inevitable occurs.

Under the Death Tax a lifetime of property accumulated through hard work is forcibly transferred to the United States government -- unless one knows the tricks to avoid it.

It is well known that many native Hawaiians die without writing a will. The failure to write a will results in property being divided amongst several surviving children. Rural Hawaii and even Honolulu is dotted with such properties. They often become run down because any investment in or sale of the property requires the consent of all the owners. Some lots and buildings are owned by more than 30 descendants as one or more generations die without a will.

In contrast, rich liberals with names like Kerry or Kennedy make it their business to know tax law inside and out -- or if their brains are a bit soggy, they hire attorneys who do it for them. In fact many observers believe wealthy liberal elected Democrats purposefully write the tax law in the most complex possible manner in order to give themselves an advantage in otherwise useless knowledge, which then translates into an advantage in wealth.

The Death Tax is no exception. For those in the know, it can be avoided by legal tax strategies such as: Credit Shelter Trusts, Marital Deduction Trusts, Generation Skipping Trusts, Lifetime QTIP Trusts, the 2503(c) Minor's Trust, the Irrevocable Life Insurance Trust, or the Crummey Power Trust.

Hire an estate planning attorney to implement one of these strategies and voila -- no Death Tax -- for those with the inside track on the law. Of course if Tutu isn’t one to write a will she certainly isn’t going to form a 2503(c).

In the old days the Death Tax was not a concern because Hawaii real estate was not so valuable. Most estates were well under the $1 million Death Tax cut off point. But this is 2006. Many Hawaii property owners -- including tens of thousands of Native Hawaiians -- are property millionaires simply because they own their own home. Others are millionaires several times over because they own their own home and a few rental units, their own farm, or a small business.

Democrats call the Death Tax a tax on the rich, but the only rich people who get hit are those who do not have the connections or experience to know about Lifetime QTIP Trusts or other legal tax avoidance schemes. The Death Tax has a bulls-eye painted on the blue-collar rich -- those who have lived the American Dream and worked their way up.

This includes many property owners of the older generation of native Hawaiians and other kamaaina now in their 70s or 80s. On Maui and Kauai, about half of all homes for sale right now are priced over $1 million. On Oahu or in the Kona, Kohala or Hamakua districts of Hawaii Island, anybody owning two houses or a few acres is a millionaire. They will be the first generation to die millionaires simply because of their Hawaii real estate. They are the generation that elected the Democrats to power in Hawaii. Thanks to Akaka, Inouye, and the Death Tax, their lifetime of loyally voting Democrat will be rewarded by Democrats stealing their property as soon as they aren’t around to do anything about it.

In 1848 King Kamehameha III ordered what became known as “the Great Mahele” establishing private property in the Hawaiian Kingdom. Coming only 28 years after the advent of Christianity, few Hawaiian commoners understood the meaning of property ownership. Many of these newly minted property owners lost their allotments of “kuleana” homes and land to con artists armed with cash and a title transfer form.

One hundred fifty eight years later, the confiscations are set to begin again. This time it is spiraling real estate values which are giving wealth to people who may not realize it. It will be the IRS backed by the votes of Akaka and Inouye who come around with confusing paperwork to take property from the grieving families of homeowners who never heard of a QTIP Trust.

The motion for cloture gained 57 votes -- three short of a needed 60. Akaka and Inouye provided two of those three votes. Because of them the Death tax remains in effect for another year. In the House, which passed Death Tax repeal legislation both Neil Abercrombie (D-HI1) and Ed Case (D-HI2) voted for repeal.

During his failed effort to push through his namesake “Akaka Bill,” Dan Akaka said about Hawaii seceding from the United States: “I'm leaving it up to my grandchildren and great-grandchildren.” If Hawaii residents want their family to keep their hard-earned property what is needed are three more Democrats to "secede" from the Senate on Nov. 7.