Saturday, August 29, 2009

Jacob Weisberg calls for abolition of inheritance tax in Slate

Wow. Jacob Weisberg of Slate now comes down hard in favor of permanent repeal of the inheritance tax.
The Republican Death Machine
Who's really pulling the plug on Grandma?

By Jacob Weisberg

Posted Saturday, Aug. 29, 2009, at 7:11 AM ET

Republicans charge that Democratic health care reform would, in Sen. Charles Grassley's words, "pull the plug on Grandma." According to Sen. Jon Kyl, the bills before Congress would ration medical treatment by age. Rep. John Boehner says they promote euthanasia. Alaskan abdicate Sarah Palin has raised the specter of "death panels." Such fears are understandable. It's not preposterous to imagine laws that would try to save money by encouraging the inconvenient elderly to make a timely exit. After all, that's been Republican policy for years.

It was Sen. Grassley himself who rammed the GOP's most astonishing pro-death policy through the Senate in 2001. The estate-tax revision he championed reduces the estate tax to zero next year. But when the law expires at year's end, the tax will jump back up to its previous level of 55 percent. Grassley's exploding offer has an entirely foreseen if unintended consequence: It's going to encourage those whose parents and grandparents are worth anything more than a million bucks to get them dead by midnight on Dec. 31, 2010. This would be a great plot for a P.D. James novel if it weren't an actual piece of legislation.

As economists will tell you, when you don't tax something, you get more of it. Various studies have shown that this logic applies to life and death, as well as to more modest behavioral choices. In a 2001 paper titled "Dying To Save Taxes," Wojciech Kopczuk and Joel Slemrod examined 13 tax changes since 1917 and concluded that "for individuals dying within two weeks of a tax reform, a $10,000 potential tax savings … increases the probability of dying in the lower-tax regime by 1.6 percent." A 2006 study done in Australia, which abolished its inheritance tax in 1979, reached the same conclusion: "a statistically significant effect of the abolition of inheritance taxes on the number of deaths." More than half the people who, according to statistics, ordinarily would have paid the Aussie inheritance tax in its final week managed to evade it by living a bit longer. Here, Congress has created an incentive for Grandma to stick around through Jan. 1, 2010, then snuff it before the end of next year.

Obviously, if Mr. Weisberg believes what he wrote here, then he must regard it as a moral imperative that this death incentive be removed from tax policy once and for all.

But I bet what he means by this argument is that Republicans are just as bad as Obama Democrats in wanting Grandma to die. That in itself is an admission that Obama Democrats do, in fact, want Grandma to die.

The rest of the Weisberg piece is standard liberal Democrat tripe. For example, he says that wanting to privatize Social Security means wanting Gramps and Nana to kick it, since they’d obviously have lost their Social Security nest eggs in the recent stock market collapse. Of course, the privatization plan would have had no impact on anyone nearing retirement, applying only to younger workers. But if Mr. Weisberg wants to look retroactively, he might ask how much a current retiree might be getting today had his Social Security taxes paid over the last 40 years (age 25 to 65) had been invested in the S&P 500 over that span.

It’s wonderful that liberals believe they are so much smarter than the rest of the populace that they don’t think twice about blurting out the very arguments that completely undermine their own stated positions.

No comments: