Saturday, May 28, 2005

A Knave Admits Leading Fools

Via TaxProf, there's a link to the article Estate Tax Repeal: Who Stands to Gain? by Dustin Stamper, published by Tax Analysts. The article not only confirms what I have pointed out here, namely that estate tax repeal will hurt many of those who are supporting it, but that the cheerleaders for repeal are aware that this is the case.

For instance, the article notes that:
Digging down to the essence of estate tax repeal, the debate becomes less and less about how small businesses and farms are affected and more about the fairness of the tax itself. Some of the staunchest advocates are not afraid to admit that many of their supporters, in the end, have nothing to gain.

"For most of you in this room, this is not your tax," [Republican pollster Frank] Luntz said at [a] rally [last week]. "It's a principle and a moral issue."
To the extent that there is some policy reason behind the efforts to repeal the estate tax, it is an intent to distort market mechanisms. Thus:
The Seattle Times Publisher Frank Blethen, a long-time advocate for estate tax repeal, told Tax Analysts that he not only understands that [many small businesses will actually end up paying more taxes under the proposed repeal in 2010 and beyond than they would with the increased exemption proposed to be in effect in 2009], but embraces it.

"This is about holding on to businesses and farms," he said. "If you don't sell, you don't have to worry about basis."
Let's see: Repeal of the estate tax removes a tax burden on the really, really rich and shifts it onto individuals who are not as well off. The policy reason is to distort the market and to encourage families to hold onto their assets even though sound business judgment would warrant that they sell.

Could someone tell me what conservative priniciple Luntz et al. are talking about?


A brief Google search reveals that Luntz has shifted his rationale for attacking the estate tax. As recently as March, 2004, Luntz said:
The most frequent victims of the death tax come from the most credible professions in the country — farmers and small business owners.
Of course, this was untrue, but the falsity of the argument was not widely known. In the 2004 article, Luntz offered a compromise to opponents of estate tax repeal that he suggested opponents could accept:
Set the exemption high enough that virtually all farms and small businesses won’t be affected. Set a rate that simplifies the tax structure and doesn’t force would-be payers to sell their businesses or hire high-priced tax attorneys.
Now, once it has become well known that Luntz's principle argument for abolition of the estate tax has already effectively been embodied in the tax statute, in arguing for complete repeal he is forced to rely on, ah, principle?

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