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Financial Planning > Tax Planning > Tax Reform

On Embarrassment

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It seems like Senate Majority Leader Bill Frist finally is going to achieve his long articulated but equally long unrealized ambition to bring legislation to repeal the estate tax up for a vote in the Senate as soon as this week.

The esteemed senator and presidential wannabe from the great state of Tennessee knows he has no chance of getting this piece of ridiculousness passed. But what a chance to ‘embarrass’ Democrats before the mid-term elections and possibly breathe some life into the languishing fortunes of the Grand Old Party, not to mention the languishing campaign for president that Frist can’t seem to get off the ground.

Since his other accomplishments have been so meager, this is a grand opportunity for Frist to show his conservative bona fides to that small group of people who bankroll presidential campaigns. (Not that Frist, as wealthy as he is, needs much outside help in this department.)

For the life of me I can’t understand why any politician who opposes repeal of this tax (Democrat or otherwise) would be ‘embarrassed’ by voting to keep it on the books. But embarrassed or scared some of them will be.

This is due, of course, to the hugely successful scam that has been perpetrated on the public, which has transformed a tax on the tiniest sliver of the richest of the rich into something corrosively referred to as “the death tax.”

The overwhelming majority of the American populace will never have to worry about paying a cent of estate tax. But the ‘death tax’ PR machine has fired up all kinds of consternation in the likes of those who shop at Wal-Mart, have trouble scraping money together for a vacation and have maxed out their credit cards trying to realize the American dream.

This is one area, however, in which education really does work. So, when people are asked if they are for repealing the estate tax, many will say yes they are, and by golly it’s un-American not to be. But once a pollster goes a little deeper and explains who is affected (and not affected) by the tax, the percentage of those clamoring for repeal drops pretty dramatically. A little bit of knowledge…as my grandma used to say.

So, here’s my advice for all those senators who are the targets of being put on the spot on this specious issue: Vote against it and then let your constituents know loud and clear exactly why you voted the way you did. Once they learn the facts, you might go from being someone who has to run for cover to being a defender of the common good.

This is especially true if you also support reform of the tax and there have been a number of proposals in this regard.

Most of the effective ones would raise the current threshold for paying the tax so that something like 99% or more of the population would be exempt from it.

Last month Arthur Postal reported from the annual meeting of the Association for Advanced Life Underwriting that its president Roger Sutton said, “The most significant short-term threat we face is a vote on estate tax repeal…We continue to believe that repeal is a fiscally unsustainable policy.

“In the interest of providing certainty in the marketplace, AALU continues to support an estate tax reform proposal with a $2.5 million exemption and a 45% top rate,” Sutton said.

This is both reasonable and fair and–even more important to those senators who may be quaking in their boots–nothing to be embarrassed about.

Steve Piontek



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