What is the mission of the Washington, D.C.-based Tax Foundation? Even a quick review of the Tax Foundation’s output makes it perfectly plain: to help make average Americans see the richest among us as terribly overtaxed.

Hardly a Tax Foundation report goes by without one iteration or another of this overtaxed claim. Just last fall, the Tax Foundation produced a study that had billionaire Warren Buffett paying taxes at a rate of over 1,000 percent.

A few years back, early in the Biden years, I deconstructed another Tax Foundation claim, that the passage of tax changes the Biden White House was then pushing would leave the estate of a hypothetical taxpayer worth $100 million facing a tax rate of 61.1 percent. My response detailed the absurdity of that claim.

But what if that 61.1 percent had turned out to be an appropriate calculation? Would that 61.1 percent rate have really amounted to an oppressive tax levy? The Tax Foundation sure wants people to think so.

So let’s take a closer look at the Tax Foundation’s mythical ultra-rich taxpayer and let’s tweak the Tax Foundation’s hypothetical facts to make them just realistic enough to work with.

Suppose we assume our mythical taxpayer originally paid $1 million for the asset that ended up worth $100 million at her death 25 years later. That would leave $99 million of taxable gain. And a $1 million asset appreciating to $100 million after 25 years would have an average annual rate of return of 20.23 percent, a realistic rate for the sort of “home run investments” the ultra-rich actually make.

Let’s also ignore the exemption from federal estate tax — currently $14 million per individual, $28 million for a married couple — and treat the entire amount remaining from the $100 million after payment of income tax as subject to a 40 percent estate tax.

Applying the Tax Foundation’s methodology from that point, we would end up with a total effective tax rate just shy of 65.8 percent, nearly five percentage points higher than the 61.1 percent rate that had our friends at the Tax Foundation clutching their pearls. Wow! Sounds stunningly oppressive, huh?

Actually, no. The reason: The Tax Foundation’s presentation deceptively ignores the tax reduction magic of buy-hold for decades-sell, the tax loophole that causes the effective annual tax rate on the growth in the........

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