Stanford Law Review Online: The Dirty Little Secret of (Estate) Tax Reform
posted by Stanford Law Review
The Stanford Law Review Online has just published an Essay by Edward McCaffery entitled The Dirty Little Secret of (Estate) Tax Reform. Professor McCaffery argues that Congress encourages and perpetuates the cycle of special interest spending on the tax reform issue:
Spoiler alert! The dirty little secret of estate tax reform is the same as the dirty little secret about many things that transpire, or fail to transpire, inside the Beltway: it’s all about money. But no, it is not quite what you think. The secret is not that special interests give boatloads of money to politicians. Of course they do. That may well be dirty, but it is hardly secret. The dirty little secret I come to lay bare is that Congress likes it this way. Congress wants there to be special interests, small groups with high stakes in what it does or does not do. These are necessary conditions for Congress to get what it needs: money, for itself and its campaigns. Although the near certainty of getting re-elected could point to the contrary, elected officials raise more money than ever. Tax reform in general, and estate tax repeal or reform in particular, illustrate the point: Congress has shown an appetite for keeping the issue of estate tax repeal alive through a never-ending series of brinksmanship votes; it never does anything fundamental or, for that matter, principled, but rakes in cash year in and year out for just considering the matter.
He concludes:
On the estate tax, then, it is easy to predict what will happen: not much. We will not see a return to year 2000 levels, and we will not see repeal. The one cautionary note I must add is that, going back to the game, something has to happen sometime, or the parties paying Congress and lobbyists will wise up and stop paying to play. But that has not kicked in yet, decades into the story, and it may not kick in until more people read this Essay, and start to watch the watchdogs. Fat chance of that happening, too, I suppose. In the meantime, without a meaningful wealth-transfer tax (the gift and estate taxes raise a very minimal amount of revenue and may even lose money when the income tax savings of standard estate-planning techniques, such as charitable and life insurance trusts, are taken into account), one fundamental insight of the special interest model continue to obtain. Big groups with small stakes—that is, most of us—continue to pay through increasingly burdensome middle class taxes for most of what government does, including stringing along those “lucky” enough to be members of a special interest group. It’s a variant of a very old story, and it is time to stop keeping it secret.
Read the full article, The Dirty Little Secret of (Estate) Tax Reform by Edward McCaffery, at the Stanford Law Review Online.
August 14, 2012 at 10:00 am
Tags: Congress, death tax, estate tax, Politics, special interests, tax, tax law, taxes
Posted in: Current Events, Empirical Analysis of Law, Law Rev (Stanford), Politics, Tax, Uncategorized
Print This Post
Responses (2)
Tom - August 14, 2012 at 7:07 pm
This is exactly why we need The Neutral Tax (www.neutraltax.com) so we can end the special interest tax lobby in Washington and start shedding more light on our state governments as well.
Don R. Kinney - August 15, 2012 at 5:07 pm
This article misses the largest impact on taxpayers if the estate tax is eliminaqted; that is the step-up in basis afforded to 99% of taxpayers. For estates under $10 million, there is no estate tax and assets could be sold with a fair market value, so no taxes would likely be due. With no estate tax, 99% of taxpayers will be subject to a basis that was the decedents (if you can even find what that might be)and will pay capital gains taxes when assets are sold. When our representatives lie to us saying the estate tax hurts small farmers and businesses, it is just not true.
Leave a Reply