Editore"s Note
Tilting at Windmills

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June 5, 2006

THE WRONG GUY TO MAKE THE CASE....A Senate vote on a full repeal of the estate tax is slated for this week (probably Thursday), and as part of its coverage, the Washington Post ran dueling op-eds on the issue from Sebastian Mallaby and Sen. Jeff Sessions (R-Ala.). Readers can decide for themselves who makes the stronger case, but I think Ezra captured the heart of the debate when he noted that it's "a bit like setting a monkey in intellectual combat with his banana."

Nevertheless, picking Sessions to take the lead on this is an odd choice for Senate Republicans, especially in light of the Alabama senator's embarrassing background on the issue.

Federal troops aren't the only ones looking for bodies on the Gulf Coast. On Sept. 9, Alabama Senator Jeff Sessions called his old law professor Harold Apolinsky, co-author of Sessions' legislation repealing the federal estate tax, which was encountering sudden resistance on the Hill. Sessions had an idea to revitalize their cause, which he left on Apolinsky's voice mail: "[Arizona Sen.] Jon Kyl and I were talking about the estate tax. If we knew anybody that owned a business that lost life in the storm, that would be something we could push back with."

If legislative ambulance chasing looks like a desperate measure, for the backers of repealing the estate tax, these are desperate times. Just three weeks ago, their long-sought goal of repeal seemed within reach, but Katrina dashed their hopes when Republican leaders put off an expected vote. After hearing from Sessions, Apolinsky, an estate tax lawyer who says his firm includes three multi-billionaires among its clients, mobilized the American Family Business Institute, a Washington-based group devoted to estate tax repeal. They reached out to members along the Gulf Coast to hunt for the dead.

They found plenty of Katrina victims -- but none that was hit with the estate tax.

For what it's worth, despite the hyper-wealthy conservative interests who have bankrolled this fight for years, it appears proponents of a full repeal are a few votes short. There's still an irresponsible "compromise" measure under consideration, but if things go as they should, this absurd initiative should be defeated by week's end.

Steve Benen 11:38 AM Permalink | Trackbacks | Comments (34)

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Comments

Please think of us children!

Posted by: Paris Hilton on June 5, 2006 at 11:54 AM | PERMALINK

Please repeal the estate tax. It's bad for business.

Sincerely,
Paris Hilton's coke dealer

Posted by: The Aristocrats on June 5, 2006 at 11:56 AM | PERMALINK

"a bit like setting a monkey in intellectual combat with his banana."

Which is why we keep re-electing Jeff Session. We don't want no smarty-pants politicians telling us what to do with our money. We're all so rich the federal gubmint going to just tax us to death if we don't have Jeff Sessions fighting for us.

Posted by: Martin on June 5, 2006 at 11:57 AM | PERMALINK

I'd rather pay my taxes after I'm dead than while I'm alive.

Posted by: Red State Mike on June 5, 2006 at 12:00 PM | PERMALINK

Too bad only poor people died from Katrina.

Posted by: Hostile on June 5, 2006 at 12:02 PM | PERMALINK

While our children are being killed in Iraq at the hands of a ruthless enemy out to destroy our way of life, leave it to the libs to worry about our phantom foes at home - the successful people who ave worked so hard to acquire their wealth.

Posted by: American Hawk on June 5, 2006 at 12:08 PM | PERMALINK

Hey American Hawk - We're not talking about the one's who have worked so hard to acquire their wealth. We're talking about slothful children who have done nothing but wait for the parents to kick-off so they can enjoy the wealth without having to do anything. Your girlfriend, Paris Hilton, who chimed in above, would be a good example who we're talking about.

Posted by: One who got his own on June 5, 2006 at 12:18 PM | PERMALINK

Re: Estate Tax--

"Do not handicap your children by making their lives too easy." -- R.A. Heinlein

Proof of concept: G. W. Bush.


Posted by: koreyel on June 5, 2006 at 12:20 PM | PERMALINK

Paris Hilton is not A.H.'s girlfriend. That little chihuahua she carries around, however,...

Posted by: brewmn on June 5, 2006 at 12:23 PM | PERMALINK

Hey A.H. How about this way: While our children are being maimed and killed in "OUR" Iraq, leave it to the Repugs to worry about rich kids not getting taxed, exxon-mobil getting bigger tax breaks, and those dam homos getting married.

Posted by: neil on June 5, 2006 at 12:34 PM | PERMALINK

Everything I read opposing the estate tax is about how we shouldn't be cutting taxes with wars, deficits, etc. But nobody is making the more important point that removing the estate tax will create large hereditary fortunes, something the U.S. has never had before. Sure, there are wealthy Rockefellers and Morgans, but the tax law forces those families to diversify their holdings and encourages them to form philanthropic foundations. Raise your hand if you think we have the Rockefeller Foundation, the Ford Foundation, the Carnegie Endowment, etc., because those guys were just so darned civic minded.
Creating an aristocracy of wealth is fundamentally un-American and will eventually lead to serious political instability.

Posted by: Wally on June 5, 2006 at 12:38 PM | PERMALINK

Heh, If its a few votes short, it will be held open until its no longer a few votes short.

Meritocracies are for poor people. All you get are a bunch of supremely competent people creating real wealth. Aristocracy is where the entertainment is at.

Posted by: Mysticdog on June 5, 2006 at 12:48 PM | PERMALINK

Benen is right; the Post's side-by-side estate tax commentary is a mugging. Sessions' column is merely a paste-up of individual talking points, and I'd bet good money he didn't write the thing himself.

There is hardly a better example of an issue on which the people benefiting directly and financially from a change in federal policy are running the show.

Posted by: Zathras on June 5, 2006 at 12:49 PM | PERMALINK

Tragically, the un-moneyed dead are of no use to Senator Jeff Sessions' political ideology. Only the moneyed dead butter his bread.

What a filthy disgrace to public service.

Posted by: Jon Karak on June 5, 2006 at 12:50 PM | PERMALINK

While I think that eliminating the Estate Tax is a good beginning, we need to finish the job by establishing a hierarchy of heridatry Dukes, Earls, Counts, Barons, and whatnot. Just think of the possibilites: Robert de Gates, 14th Earl of Microsoft; Baron Humphrey Wal de Mart, Duke of Arkansas; and so forth. I mean, first of all, this experiment in a so-called "classless society" has (let's face it) been a complete washout -- time to go back to the tried-and-true old ways. If we're gonna have the reality of heriditary nobles, why not the form?

Plus, the Treasury could make a bundle selling minor titles (grander titles are reserved for major contributors to the party in power, of course.) And non-heriditary knighthoods are a fun way to reward the worthy: Sir Robert Dylan. Sir Kenneth Lay. Sir Snoop Dogg. Sir Thomas Cruise. Sir Steven Jobs. Dame Natalee Holloway (posthumous). And so forth.

Is there anyone who thinks the majority of Americans wouldn't lap this up? Look how they go go-ga over the Windsors and our current, second-rate, de facto royalty, Hollywood stars. There's never a shortage of people interested in the trivia of what Baroness X wore to Prince Y's last soiree, etc.

The future lies ahead!

Posted by: Herostratus on June 5, 2006 at 12:57 PM | PERMALINK

Wally: But nobody is making the more important point that removing the estate tax will create large hereditary fortunes, something the U.S. has never had before... Raise your hand if you think we have the Rockefeller Foundation, the Ford Foundation, the Carnegie Endowment, etc., because those guys were just so darned civic minded.

Wally makes a very good point above. Concentrating wealth in the upper 1% is neither a sound financial strategy nor particularly equitable, but with a little encouragement from the government, the richest can be "inspired" to invest in something other than yacht's and hedge funds.

Posted by: cyntax on June 5, 2006 at 1:10 PM | PERMALINK

This issue is quite simple - We all agree to repeal the Estate Tax once the national debt (not just the deficit) is zero. I will whole heartedly support it then.

Posted by: Robert on June 5, 2006 at 1:13 PM | PERMALINK

The estate tax should NOT be repealed. The "percentage-size distribution of income" is not changeable, and life is not a game. There is no reason to reward the wealthiest beyond their lifespans. We will see the arising of an hereditary aristocracy, and the further destruction of our democracy.

The estate tax falls on a vanishingly small percentage of the population, and this tiny group has been solely responsible for a marketing and lobbying campaign to bring this attempted repeal to the floor of the Congress.

In this campaign, ordinary Americans have been led by their natural optimism about the future to believe that they, too, can all become rich enough to be subject to the estate tax. They have been led to believe that their own lack of ability is the only obstacle. And they have been led by their natural suspicion of government to believe that a tax of this sort must be unfair.

None of these things could be further from the truth.

The current shape of the "distribution of income," (or the percentage of rich-to-poor,) has been nearly the same for at least a century, and perhaps longer. Why is this? This distribution fluctuates slightly, and there has been a little increase in inequality over the last 25 or so years. But on the whole, it has not budged for a century. Are we to presume that the natural abilities and luck of individuals in every generation account for the fact that the top 5% of the income-earners always end up with around 28% of the annual income, and that the top 5% of the asset-owners always end up with around 58% of the total assets? (There is perhaps a good deal of overlap by these two five-percents of income and assets.) No: It seems likely that ability and luck do NOT determine the shape of the percentage-size distribution of income and wealth -- or rather we should say, that ability and luck determine WHO GETS the slots, not relatively HOW MANY slots there are.

Let us suppose instead that this shape is endemic, or typical to our system. The percentage-size distribution of income and wealth is not a failure -- it is a property of the perfect, allocatively efficient, market price system. Perhaps it is some sort of "fractal shape," the result of millions of single-step decisions throughout the economy of the industrial age, coupled with the institution of private ownership. It is a "bio-social" pattern which is inescapable to our way of life.

That is all well and good: it allows us freedom and creativity; it gives us economic growth. We like it. In addition, it gives us a cause for celebration, when a small person makes it big. It's even fun--we all love a good party! But we should not make the mistake that everybody can get there. This is NOT a game. A game has several parts to its definition. Participation in a game is voluntary, and there is always a beginning and an end. Game winners are temporary. Games are played again, with possibility of a different winner from the same participants, the next time. THAT is the definition of a "game."

So, IF the distribution of income is NOT a market failure, and the whole of life is NOT a game -- BUT we want to keep our system of free markets for its economic benefits -- we are left with only a few conclusions.

"Equality of opportunity" is not entirely honest, if economic outcomes will always be vastly unequal. Further, the claim that people have a absolute right to their snagging of the limited supply of great outcomes can not carry on absolutely. We wish for all people to provide well-being for their loved ones. Beyond that, they should be encouraged to leave their wealth to charity, or to build institutions magnificent and useful to everyone when they're gone. But there is little reason to honor the ablest, luckiest recipients of our system beyond their charity and public works, and beyond the point of their effectiveness to the system that HELPED TO MAKE THEM.

The House of Representatives has disgraced itself, and they should be voted out in the next election. The Senate should not follow their example.

Posted by: Lee A. Arnold on June 5, 2006 at 1:16 PM | PERMALINK


some perspective:


18 families worth a total of $185.5 billion have financed and coordinated a 10-year effort to repeal the estate tax, a move that would collectively net them a windfall of $71.6 billion. - PUBLIC CITIZEN

Posted by: thisspaceavailable on June 5, 2006 at 1:28 PM | PERMALINK

This is NOT a game. A game has several parts to its definition. Participation in a game is voluntary, and there is always a beginning and an end. Game winners are temporary. Games are played again, with possibility of a different winner from the same participants, the next time. THAT is the definition of a "game."

Uhhh, while I'm against repealing the Estate Tax (I prefer paying my taxes after I'm dead) that is a pretty sloppy definition of a "game".

Posted by: Red State Mike on June 5, 2006 at 1:34 PM | PERMALINK

Fair enough. Your turn?

Posted by: Lee A. Arnold on June 5, 2006 at 2:21 PM | PERMALINK

"...the successful people who ave worked so hard to acquire their wealth."

Well, of course Paris Hilton is the poster girl for the hard work the uber rich do. But did the Walton kids have such a hard time, too, getting born into wealth? Or the Mars candy heirs? Of course it's obvious it's terribly difficult to be born a Kennedy--it drives them all to drink.

Coupled with their policies (like capital gains tax reduction) that have shifted the tax burden to those who get money by working and from those who get money by clipping coupons, this oh-so-important elimination of the estate tax shows just how much the Republican'ts bow to the God of Mammon. F&#&ing hypocrits.

Posted by: Cal Gal on June 5, 2006 at 2:46 PM | PERMALINK

Fair enough. Your turn?

I'm cool with much of what you wrote. As for what a "game" is, in the traditional sense that means a decision problem where (at least) two players are involved, and it is zero sum. My gain is your loss. It can be single play. It need not be voluntary. War is a game. Life can be considered a game. But I think you meant was that, "this is serious, not play".

The other thought is that distribution of wealth appears to obey a power law, so that as you double income, you quarter the number of people that make that much. Or some other rate. things like estate tax help keep that power law rate reasonable.

Posted by: Red State Mike on June 5, 2006 at 2:57 PM | PERMALINK

"In the traditional sense," GAME means "amusement, delight, fun, mirth, sport." (Oxford English Dictionary, definition #1, first appearance in Beowolf, circa 1000 A.D.) Your definition is of CONTEST or CONFLICT, though of course "game" has been long used for this, originally perhaps ironically. "Game theory" notwithstanding.

Posted by: Lee A. Arnold on June 5, 2006 at 3:34 PM | PERMALINK

OK, I meant game as in "game theory".

Posted by: Red State Mike on June 5, 2006 at 3:37 PM | PERMALINK

Just heard from Leona Helmsley. She said only the little people should pay estate taxes.

BTW, on WTOP radio this morning there was an ad from a Paris Hilton soundalike supporting the repeal of the estate tax, sponsored by a group opposing its repeal. It was pretty funny.

Posted by: Vincent on June 5, 2006 at 5:02 PM | PERMALINK

Sessions is number four on my list of prissy Senators:

1) Hatch
2) McConnell
3) Frist
4) Sessions

Posted by: Hedley Lamarr on June 5, 2006 at 5:40 PM | PERMALINK

finally, proof that republicans are morons. consider: if they estate tax were repealed, how on earth would harold "estate tax lawyer" apolinsky earn a living? it's like a trial lawyer being in favour of tort reform.

Posted by: snuh on June 5, 2006 at 8:24 PM | PERMALINK

The rise of a landed aristocracy possibly hangs in the balance of this bill. Certainly, King George and his minions want to see it put into practice permanently. Oh, for a Congress that will run these throwbacks out of town!

Posted by: parrot on June 5, 2006 at 8:57 PM | PERMALINK

If I give my nephew 3 million dollars, the money is taxed. If I give my nephew 3 million dollars by dying it is not. Is that fair? True fairness requires that we millionaires be able to move our money where ever we wish without having to pay taxes

Posted by: Homer Abernathy on June 6, 2006 at 12:13 PM | PERMALINK

You are missing an important point: it's not necessarily wealthy people who benefit from repealing the estate tax.

I'm a good example: I've never earned more than median income, or owned a liveable house. I've lived in shacks without running water, trailers, tumbledown houses infested with roaches. By any coherent standards, I grew up poor and am now working class. But almost half the value of my great-grandmother's estate--a house and some investments--went to pay estate taxes and probate costs: I got enough out of it to get through college by pinching pennies ferociously. (Try splitting a $5 mm estate, reduced by 50%, among 50 people). If it hadn't been for the estate tax, maybe I'd have gotten enough to take an internship instead of having to work every summer.

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