Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Monday, June 05, 2006

The Debate Over the Estate Tax: "A Monkey in Intellectual Combat with Its Banana"

Over at the Washington Monthly:

The Washington Monthly: Guest: Steve Benen: 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.

"Setting a monkey in intellectual combat with its banana." That is good.

Note that things are no better on the right as you try to ascend the intellectual chain of being: estate-tax repeal advocates--Ed Prescott, Greg Mankiw, Jeff Miron--all talk about how some deficit-neutral combination of estate-tax repeal and other tax increases, or estate-tax repeal plus some combination of spending cuts would be a good deal. But that's not what's on offer, is it? They never make the case that the benefits to estate-tax repeal are bigger than the costs of adding another 0.4% of GDP or so to our long run fiscal gap.

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