“Been There, Done That” or “Reflections on the Estate Tax”

I read somewhere that certain magazines publish the same article about once every eighteen months. The text is never identical and there might be a new twist, but it’s pretty much the same old fare. (Think Modern Bride with the headline Pale Ivory This Year’s Color for Summer Brides.) And you really can’t even fault the magazines. Really, what is there to say about a wedding that hasn’t been said already?

This is how I’ve come to feel about the estate tax over the course of the last couple of weeks. The tax is back in the news because President Obama’s proposed budget announced that he would retain the tax with its current rate and exemption levels, rather than allowing the tax to expire in 2010. The House voted to retain the 2009 version of the tax, but the Senate has voted to lower the top rate from 45 to 35 percent and to increase the exemption from $3.5 million to $5 million (and thus from $7 million per couple to $10 million per couple).

I guess you can stay tuned, but don’t expect to hear much that you haven’t heard before. The New York Times is writing about “enrich[ing] the heirs of America’s biggest fortunes.” The Wall Street Journal is writing about “lower[ing] the incentive to reinvest in family businesses.” I could elaborate, but I don’t see the point. Anybody who was paying attention back when George W. Bush introduced his first budget has heard it all before. The recession allows each side to invoke particular economic urgency and that (at least by Modern Bride standards) is enough for a new headline. But nothing is really new.

The whole thing has me thinking about perennial public policy debates and what makes them interesting to follow over the long haul. For me, it’s rarely the reasoned arguments on either side of the questions. These often remain fairly constant, even when a new study provides fresh ammunition for one side or the other. Rather, it’s the extent to which the outcome in each round of the debate reflects changing public attitudes and societal norms. This, for example, is what I find most interesting in Vermont’s evolution from civil unions to legislatively-created same-sex marriage.

Which brings me back to the estate tax, where there might be a small glimmer of hope. Over at WSJ Blogs, Robert Frank posited that anger over the estate tax has withered on the vine because Americans’ perceptions of wealth have fundamentally changed. Not so long ago, many of us were optimistic that someday we would be wealthy enough to pay the tax. Today . . . well, suffice to say that optimism doesn’t carry the day. To compound matters, many Americans are harboring quite a bit of resentment towards those who earned headlining-grabbing salaries and bonuses. Tax the wealthy? Please!

Now, this is the sort of postulating that makes even a jaded estates and trusts prof take a fresh look at the tax . . .

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1 Response

  1. ohwilleke says:

    One of the best ways to put drama into an otherwise evergreen story is to give it an impending deadline.

    Modern Bride is a far more interesting magazine when it is your wedding that is coming up and you have just three more months to plan it, then it is on the grocery store shelf on your fourteenth anniversary when you know no one who has a wedding coming up. Who knew there were so many ways to drop several thousand dollars on a plain white dress?

    The drama in the estate tax story comes from the fact that Congress is playing chicken with a self-imposed deadline that will repeal the law in 2010, and then reinstate it with a vengence in 2011. The estate tax bill is the mother of all extender bills. It is also class warfare at its most raw.

    This creates massive uncertainty, which the latest zag in the Senate greatly compounds after many observers had thought that Democratic control of Congress and an Obama Presidency had made Obama’s proposal a done deal. Now, we are back to playing a multi-billion dollar game of chicken again.

    The only way the story could be made more interesting would be to find the heir of a billionare who is terminally ill and likely to die in 2010 (ideally with dramatic episodes of dialog between the would be heir and key members of Congress) to personalize the drama.

    Also, the estate tax story is more courtly romance than Modern Bride. While the core plot may be as old as time, the tension is all in the tease — will he or won’t he get the girl? — as they try over and over again but never quite seal the deal. Like courtly romance, the deal never seems to be done as strong intentions are twarted by obstacles at every turn.

    Perhaps not surprisingly, Japan’s best selling romance manga of all time, Boys Over Flowers (54 million copies sold, thirty-nine volumes doled out over a decade in semi-monthly installments, and five movie adaptations and a TV series completed with another movie planned, etc.), involves (1) courtly romance, (2) the heir to the nation’s greatest fortune, and in the concluding portions (3) a seriously ill patriarch. What more could a T&E professor ask for?