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  • Maybe Only the Little People Pay Taxes. But Everybody Dies.

Maybe Only the Little People Pay Taxes. But Everybody Dies.

Kelly Phillips ErbAugust 20, 2007

Maybe it’s the line of work that I do – I do a lot of estates related work – but I’ve often thought about how I might be remembered after I’m gone. Maybe that seems morbid to some folks, but it’s something that I deal with week in and week out, how folks are remembered and essentially, how, in the end, your life is generally summarized in a few words on paper.

I guess that Leona Helmsley didn’t care how people viewed her. She was known as “the queen of mean” throughout much of her life and even so at death. She died today, at age 87, of heart failure at her summer home in Greenwich, Connecticut. The headlines all scream about the death of “the queen of mean.” I half expect a little song and dance a la The Wizard of Oz.

Helmsley’s image as “queen of mean” was forever cemented in popular culture when, during her tax evasion trial, a former employee testified that Helmsley said: “We don’t pay taxes. Only the little people pay taxes.” By “we”, she meant not only herself but Harry Helmsley, who she married in 1972, her fourth marriage (by contrast, Harry left his wife of nearly 30 years for Leona). Harry was, by then, one of the richest men in the world. Together, Harry and Leona built a vast empire, making the Helmsleys incredibly wealthy. In 2007, despite fines and lawsuits, her fortune was estimated at $2.5 billion.

Perhaps the Helmsley fortune is what it is because of their business practices. She reportedly remarked, “That’s how the rich get richer,” after making a sales clerk rewrite a bill for earrings to save $4 in sales tax.

But it was how she commingled her home and business practices that became her undoing, of sorts. In 1983, the Helmsleys bought a home in Greenwich, Connecticut. The cost of the property was $11 million – with another $8 million in renovations. Helmsley was reportedly frustrated by the pace and quality of the renovations and balked at paying the bills, including a number of contractors. The contractors filed lawsuits against the Helmsleys alleging, among other things, that work to the Helmsleys’ personal home was being charged to other properties as a business expense so that the Helmsleys could lower their tax bills.

The lawsuits caught the eye of the IRS. After a lengthy investigation, in 1988, the Helmsleys were indicted on 188 counts of tax fraud. Leona also faced federal charges of extortion and mail fraud.

By the time the case went to court, Harry’s health had deteriorated considerably. Nearing age 80, Harry was deemed incompetent to stand trial. Leona, however, went on to trial, was eventually convicted of evading $1.2 million in federal taxes. She was convicted of 33 felony counts of fraud, including mail fraud, tax evasion and filing false tax returns. Initially, she was sentenced to 16 years in prison and fines of $7 million. Upon appeal, her sentence was reduced to four years in prison, though she served only a total of 21 months. She was released from prison in 1994 and was sentenced to community service – which, allegedly, her employees performed for her.

She lived the remainder of her years building her wealth – I guess we all need a hobby. By most counts, she died with only a few friends and many enemies.

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Kelly Phillips Erb
Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.
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4 thoughts on “Maybe Only the Little People Pay Taxes. But Everybody Dies.”

  1. The Dog says:
    August 20, 2007 at 3:43 pm

    Yes…only the little people like us pay taxes but we all die, even rich meanies.

    The taxes the little people pay are really miniscule compared to the taxes rich meanies will pay upon death.

    First: They can’t take their wealth with them.

    Second: It is easier for a camel than a rich man to pass through the eye of needle.

    Third: Where the rich go after dying is mighty hot.

    Reply
  2. Allison says:
    August 20, 2007 at 4:39 pm

    Isn’t it ironic that someone who was often called a heartless bitch died of heart failure? Lol!

    Reply
  3. Kelly says:
    August 20, 2007 at 5:24 pm

    Allison,
    That is priceless.

    Reply
  4. Jon - The DC Traveler says:
    August 22, 2007 at 12:15 pm

    She will probably forces to spent eternity in a Budget 8 Motel with no room service, no housekeeping, a TV that doesn’t work and an air conditioner that only puts out a rattling noise.

    Reply

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