Death Panels and the Estate Tax

By :: August 14th, 2009

I’ve been struggling to understand the overheated rhetoric surrounding the proposal that allows Medicare to pay for end-of-life counseling. I think I get it now: It is all about the death tax.

Here is the story the government doesn’t want you to know. The 2001 Bush tax cuts will repeal the estate tax next year, but only for a year. Starting in less than 18 months, estates in excess of $1 million will once again be taxed at a stiff 55 percent. This will cost the children of the very wealthy tens of billions of not-so-hard-earned dollars. And it creates a huge incentive for these offspring to, shall we say, accelerate nature’s course. You see where I'm going here.

The “death panels” of Sarah Palin’s fevered fantasy could do a marvelous job enhancing this process. Just imagine: Rich Uncle Ralph gets a case of the flu next winter and his n’er do well nephews drag him before Palin’s dreaded government bureaucrats. A few dollars judiciously spread around, perhaps the promise of Ralph’s soon-to-be-unused Redskin tickets, and those compliant pencil-pushers will render the desired decision: Pull the plug.

This may save the taxpayers some money—all those years of Ralph’s foregone Medicare benefits, after all. Of course, knocking him off in 2010 will cost Treasury a bundle in lost estate taxes. Once the tax is back in 2011, however, sending seniors off on the ice flow will be a win/win for the feds. They’ll not only save those Medicare bucks, but they’ll once again be able to grab all that estate tax dough as well. I even heard the bureaucrats will get a bounty for every senior they bump off. Read it on a Website somewhere. 

I can see it now. The death panel elbowing its way into the intensive care unit, urging Ralph to throw in the towel. The IRS estate tax guy right behind, ready to grab Ralph’s assets at his last breath. Meanwhile, a tearful Aunt Shirley struggles to get past all these cheap suits to whisper a final goodbye to her beloved brother. It is a powerful image. And given the past success of the anti estate-taxers and the outsized attention the death panel fanatics are getting (many of the same people, I suspect), it is pure PR genius.

The thing is, of course, none of it is true.  

3Comments

  1. Anonymous  ::  12:21 pm on August 15th, 2009:

    The Bush repealing of the estate tax was actually an opportunity for states to collect the state estate tax – most states have an estate tax on the books but it's waived so that the federal gov. can collect it's estate tax. I guess the real debate should be WHO should collect the estate tax – the state where you made your life or the federal governemtn? Why should the Federal Govenment collect the estate tax? You do not live your life in the federal government – you live your life in the state where you live.
    Should anyone have to pay more than 1/2 of what they were able to acquire in their lifetime in estate taxes? Should anyone have to even pay 1/2 of what they have made in their liftetime? Does anyone see a problem with that?
    Have you read the Health Care Bill? There are a lot of people commenting on bills that they HAVE NOT read!

  2. Anonymous  ::  4:41 pm on August 17th, 2009:

    The dead don't pay taxes, their drugged out and drunken hiers do – or at least should.
    On the topic, I was under the impression that many states played follow the leader and cut their estate taxes when the feds cut theirs. In other words, for these states, its not an either-or kind of thing.

  3. Anonymous  ::  5:35 pm on August 17th, 2009:

    Linda, A couple of points of clarification. The federal government never collected estate taxes for the states. It did, however, offer a tax credit that offset all of the state tax in most states, so it made state level taxes essentially free to those subject to the federal estate tax. By repealing the federal credit, it made it much harder for states to continue the taxes (and some automatically disappeared when the federal credit phased out), but I think about half of states still have an estate or inheritance tax.
    The overwhelming majority of estates owe no federal estate tax, and that was true even before the exempt level increased starting in 2001. Because of deductions and exemptions, even wealthy decedents typically pay less than one quarter of their estate in tax.