by hilzoy
From Time:
"Federal troops aren't the only ones looking for bodies on the Gulf Coast. On Sept. 9, Alabama Senator Jeff Sessions called his old law professor Harold Apolinsky, co-author of Sessions' legislation repealing the federal estate tax, which was encountering sudden resistance on the Hill. Sessions had an idea to revitalize their cause, which he left on Apolinsky's voice mail: "[Arizona Sen.] Jon Kyl and I were talking about the estate tax. If we knew anybody that owned a business that lost life in the storm, that would be something we could push back with."If legislative ambulance chasing looks like a desperate measure, for the backers of repealing the estate tax, these are desperate times. Just three weeks ago, their long-sought goal of repeal seemed within reach, but Katrina dashed their hopes when Republican leaders put off an expected vote. After hearing from Sessions, Apolinsky, an estate tax lawyer who says his firm includes three multi-billionaires among its clients, mobilized the American Family Business Institute, a Washington-based group devoted to estate tax repeal. They reached out to members along the Gulf Coast to hunt for the dead.
It's been hard. Only a tiny percentage of people are affected by the estate tax—in 2001 only 534 Alabamans were subject to it. And for Hill backers of repeal, that's only part of the problem. Last year, the tax brought in $24.8 billion to the federal government. With Katrina's cost soaring, estate tax opponents need to find a way to make up the potential lost income. For now, getting repeal back on the agenda may depend on Apolinsky and his team of estate-sniffing sleuths, who are searching Internet obituaries among other places. Has he found any victims of both the hurricane and the estate tax? "Not yet," Apolinsky says. "But I'm still looking.""
"Legislative ambulance chasing"? This is legislative hearse chasing in support of a measure that was indefensible even before Katrina. Now, faced with unforeseen costs that will run into the hundreds of billions of dollars, the idea of repealing the estate tax is insane: the cost of doing so over a decade (2012-2021) would be nearly a trillion dollars.
Luckily, they'll have a hard time finding the particular sort of corpse they're looking for. According to the Congressional Budget Office (pdf), working from 2000 tax returns, at today's $1.5 million exemption, only 13,771 of the estates that filed in 2000 would have owed any estate tax at all. If we recalculate using the exemption that goes into effect next year, the number drops to 6,337 estates, in the entire country. And very few of these are either family-owned businesses or farms. Using today's exemptions, the numbers are 300 farms and 223 family-owned businesses; using next year's exemption, only 123 farms and 135 family-owned businesses would have owed any estate tax at all. That's in the entire US; you can imagine the difficulty of finding the two or three such people who live in areas affected by the hurricane, and finding out if any of them lost their lives.
So if, in the days to come, some Congressperson trots out the relatives of some business owner who lost his or her life in Katrina, and whose tearful relatives are now facing the ravages of the estate tax, bear in mind that in all likelihood that business owner is probably the only such person who died as a result of Hurricane Katrina, and that those relatives are only available to the media because, in the aftermath of a catastrophe, ghouls went out looking for them.
I feel for the guys at Fafblog and The Onion. Parody is redundant. There is no more scope for spending cuts and no justification for restoring any taxes. Perhaps some money can be raised by leasing the air force to the Chinese, so that they can conquer Taiwan?
Posted by: Kevin Donoghue | September 18, 2005 at 12:01 PM
Heh.
Posted by: Gary Farber | September 18, 2005 at 12:12 PM
Gary: sometimes I don't know why I bother, since you are always already on the case...
Posted by: hilzoy | September 18, 2005 at 12:26 PM
I always thought that they should make the estate tax rate 35% and lower the exemption to something like 50,000 (or lower). It's a tax, everyone should pay (the exemption being for things that just aren't worth dealing with).
Posted by: Ugh | September 18, 2005 at 12:34 PM
"Gary: sometimes I don't know why I bother, since you are always already on the case..."
A) You generally add tremendous value; I generally add only a bit of value or no value.
b) Lots of people, with cause, listen to you; far fewer, I expect, listen to me.
c) Literally lots more people apparently read ObWi than Amygdala.
d) You write and think purty. I occasionally get off a line.
e) I'm very episodic; I've been in low-blogging mode the past week, after a major manic effort during the prior couple of weeks or so; I've posted on very few of the many extremely important bits of the past week (which is self-reinforcing -- the more crucial bits there are, the harder it is to find time and passion and coherence for any). This one just happened to be easy and obvious. (I'm still kinda stoppered up with Outrage Overload over everything connected to Gretna; I feel a need to say much more, but continue to not feel much more articulate than a desire to start shrieking curses and whirling like a dervish, smacking all responsible with bloated corpses smeared with feces.)
But I'll enjoy continuing to tweak when I posted on the same link yesterday, or earlier enough to have been noticed, so long as it remains at all funny, not just repetitive.
The estate tax is something I have a bunch of links saved up about, and the issue so outrages me that any justification at all for repealing it sets me off. It's so damned un-American. I wasn't raised to believe we're the country of nobility and permanent classes, where inherited wealth is the value we most cherish, and the poor we remain indifferent to.
Posted by: Gary Farber | September 18, 2005 at 12:56 PM
What fascinates me about this story is how the voice mail got out. Was Apolinsky so horrified that he went to the press? Or did he tell the American Family Business Institute about Sessions great idea and someone there was so disturbed that s/he put it over the transom? I can't believe that someone is clueless enough to think that pointing this out is anywhere related to good strategy, unless that person is so convinced that this is a good idea that it doesn't matter how the evidence is assembled and put together.
Posted by: liberal japonicus | September 18, 2005 at 01:05 PM
The estate tax came up in a conversation with my (heavily Republican) father, my (independent, but currently rabidly anti-Bush) mother and my (heavily Democratic) grandparents.
My mother and my grandparents were initially opposed to the estate tax, while my father supported it. I got the best understanding when I compared it to the gift tax, and pointed out that it wasn't so much "Estates" that were being taxed, but what amounted to new income for heirs.
I found the "Fairness" argument to be most compelling -- if I get a million new dollars in income, or from capital gains, or given to me by a friend, I pay taxes on it -- why should it be any different if Uncle Bob died and left me the million? It's a million bucks I didn't have yesterday, and every other method of handing it to me requires me to pay taxes.
Once we got it sorted out that the idea was that, in general, you tax income and then explained the rather high trigger requirements and the value of estate planning, my grandparents changed position.
The Democrats really don't have a coherent argument for the estate tax, and they should. Pointing out how few people it actually affects is an okay start, but it really needs more -- wealth concentration, tax fairness (everyone pays on income, regardless of the source), and the other reasons really need to be drawn together into a coherent whole.
Posted by: Morat | September 18, 2005 at 01:07 PM
"But I'll enjoy continuing to tweak when I posted on the same link yesterday, or earlier enough to have been noticed, so long as it remains at all funny, not just repetitive."
Got old for me sometime last month.
So my dad's wife had a sextuple bypass a few weeks ago, and her son lost his house on the coast and has moved up to Knoxville (where there are other assorted trials and tribulations of no interest here). The insurance company is saying that his hurricane insurance policy doesn't cover the damage to his home, which was caused by flooding. How's that for ghoulish.
Posted by: rilkefan | September 18, 2005 at 02:31 PM
Morat,
I think the fairness arguments would be more compelling for replacing the estate tax with an inheritance tax, and if the gift tax was the responsibility of the recipient and not the giver. At least the logic would be more consistent.
Posted by: Jay S | September 18, 2005 at 03:20 PM
why should it be any different if Uncle Bob died and left me the million? It's a million bucks I didn't have yesterday, and every other method of handing it to me requires me to pay taxes.
The same thing applies to dividend tax that was repealed, not that our "Double Taxation" Preznit could understand that though.
Posted by: Fledermaus | September 18, 2005 at 04:33 PM
Frankly, it doesn't really matter which side pays the taxes -- as long as the taxes get paid when money changes hands. Taxing the estate would, I imagine, simply the law and the tax situation quite a bit. An inheritance tax itself would depend on the income brackets of the recipients (not to mention the fact that the extra income might bump them up one or more brackets and screw them on tax-day) and generally complicate everyone's life. If you tax the estate proper, life's a lot easier for the heirs.
Posted by: Morat | September 18, 2005 at 07:11 PM
"and every other method of handing it to me requires me to pay taxes."
Well, it's not like the Republican intellectual class and the Norquistian government-haters haven't been thinking about how to sequence their attacks on our government.
Consider the Pandora's Box opened by eliminating the estate tax. As I understand it, when shares of stock change hands after a death in the family, instead of estate tax, we will now owe captial gains tax on our holdings. You can imagine in a few years when folks start to calculate their stock splits and so on. This will engender a whole new wave of hatred for government, this time for the capital gains tax.
Exactly what the doctor ordered for adding to the Republican electoral cheering section for eliminating taxes and government.
Let's consider the capital gains tax estate tax, particularly the pronouncements of unAmerican people like Lawrence Kudlow. He calls for reducing it at every turn, claiming the government will collect more revenue from a reduced tax. However, he also believes it should be eliminated; exactly how much revenue will be generated by zero tax?
Look, many of the people wading through water on the second floor of their totaled homes in New Orleans whine about their precious tax burden all the time. The Federal government has failed them. Grover Norquist, Karl Rove and the rest have gained voters.
I'll say it again: A virulent, radical, angry tax revolt from the Left is required on a national basis, at all levels of government. Shut it down. Take it away from the Republican Party. Let's show them how scary it gets when a large segment of the population wants their government dead.
And, by the way, I hope Sessions does a Weekend With Bernie. I hope he sets up the dripping corpse of the estate tax payer in a witness chair at a hearing before Congress.
Who doubts that is coming next?
Posted by: John Thullen | September 18, 2005 at 07:46 PM
"capital gains estate tax" should read "capital gains tax" in my post, he said with revolutionary fervor.
Posted by: John Thullen | September 18, 2005 at 07:52 PM
The emotion they play on is people's desire to provide for their children even after they gone. But in the U.S. inheritance is NOT the main way this is done. Most people are middle aged, well on their way to their own career--are closer to retirement than getting started--have children of their own, etc. when their parents die.
The single biggest way middle class & upper middle class families provide for their children is financing their education.
Posted by: Katherine | September 18, 2005 at 08:26 PM
The insurance company is saying that his hurricane insurance policy doesn't cover the damage to his home, which was caused by flooding. How's that for ghoulish.
Yes, well, I pointed that out earlier at...;^)
But seriously, is he from Mississippi? I note that the Mississippi AG is filing suit against the insurance companies. Later Barbour (I think) was asked about it and made the point that all of the policies they had seen did not specifically rule out 'storm surge'. Some news links here, here and here. Richard Scruggs, one of the lead lawyers in the class action suits against tobacco companies, is also getting involved
I'm following this story because it provides an interesting window into some of the differences between MS politicians as well as highlighting rifts in the conservative south. For example, Alabama is not filing suit, of course, Mobile was not as badly hit.
Insurance industry response is here and here. These article have comments, and one of them references FL Valued Insurance Policy Law.
I thought that there would be a rift between Barbour and Lott, and so thought that jumping on the insurance companies might have been an attempt to forestall that. However, Barbour has come out for negotiations over lawsuits and party affiliation is being noted for the AG and the insurance commissioner. However, George Dale, the insurance commssioner, earlier said">http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20050914/NEWS0110/509140363/1260">said
The industry will pay what they owe," Dale said. "They will not pay what the policy did not provide because (policyholders) didn't pay a premium for it."
If a sizable number of people have been forced to sign waivers in order to get any money (which is really ghoulish), this may explode in Barbour's face. It would be so nice to have MS vote Dem after this so I could go back and visit a blue state (an ex-pat can dream, can't he?)
Also, watch Gene Taylor, a Dem rep from the area. He got a rave review on Dkos from Armando, and this New Hampshire article suggests that he has some bipartisan chops. (I think the Union Leader is the famously right leaning paper, and a previous editorial recently attacking Bushwas heralded as a sign of the times) Also of interest are the comments in the Dkos section about reservations about Taylor's stances on other progressive issues. *sigh*
There is also this tidbit about tax laws and rebuilding that might be of interest.
Posted by: liberal japonicus | September 18, 2005 at 08:35 PM
I guess he's from Bay Saint Louis, which seems to be in Mississippi.
Hey, PTB, why not elevate lj's comment above to the front page?
Posted by: rilkefan | September 18, 2005 at 08:40 PM
Posted by: Jay S | September 18, 2005 at 09:11 PM
So, Rilkefan, I take it you were also following the Crooked Timber thread about how best to sustain comments.
Not to get all meta again--well, okay, exactly to get all meta again--the implicit promise that good comments would make their way up onto the front page was one of the things that initially excited me about blogs. This bloggish translation, if regularly and impartially practiced, would encourage more substantive and researched comments.
Posted by: Jackmormon | September 18, 2005 at 09:32 PM
Jackmormon - I missed that thread - just great minds etc. I was remembering that I first read hilzoy here in a promoted comment. And if I hadn't, the comment in question would still seem post-worthy.
Posted by: rilkefan | September 18, 2005 at 09:42 PM
It's like old times at RedState.
Posted by: rilkefan | September 18, 2005 at 10:06 PM
I don't know about old times, that logo of the Peace Movement flanked by a hammer and sickle and dripping with blood, most recently marking a post entitled 'The Blond Ditch Project' (get it, D-itch?) makes me really long for the good old days. They've set up a separate site to collect all of these observations. Too creepy.
And rilkefan, thank you for noting my comment positively, that is the nicest compliment I've gotten in quite some time.
Posted by: liberal japonicus | September 18, 2005 at 10:32 PM
"D-itch"? "Ditch" seems more than yucky as it stands.
Posted by: rilkefan | September 18, 2005 at 10:42 PM
This great article about the situation in Mississippi.
About 'ditch', I was struggling to find some orthographic convention to suggest what I think the author is implying.
Posted by: liberal japonicus | September 18, 2005 at 10:53 PM
"Blond [sic] Rhymes-with-witch" is, uhh, kinda lame. "Ditch" seems more dehumanizing to me. The blood stuff just seems at best childish. Hey, von, what's up with that?
Posted by: rilkefan | September 18, 2005 at 11:17 PM
There is also the b word, which suggests a undercurrent of misogyny. Embarassing, that.
Posted by: liberal japonicus | September 18, 2005 at 11:38 PM
I see that Hating on Charles Bird also believes in promoting comments...
Posted by: rilkefan | September 19, 2005 at 01:21 AM
It's like old times at RedState.
Sigh. The man has a gift -- I suspect it's just being wasted over there.
Posted by: kenB | September 19, 2005 at 10:41 AM
Rilkefan, it's a media conspiracy!
Posted by: Jackmormon | September 19, 2005 at 11:59 AM
Brad DeLong praising SH to the skies.
Posted by: rilkefan | September 19, 2005 at 12:25 PM
Morally equivalent to the exploitation of Casey Sheehan.
Posted by: a | September 19, 2005 at 11:51 PM