Friday, January 8, 2010

The Year of Living Dangerously

The unholy crucible of Washington compromise has worked this oddity into tax law: there is no estate tax in 2010. And there promises to be a large one in 2011. Stephen Moore, writing in the Wall Street Journal about 2010 tax issues more generally, spends some time on the estate tax.

Moore of course would prefer to remove the oddity mentioned above by avoiding a resumption of the estate tax in 2011. Not so Sen. Max Baucus, who, apparently and tragically undiminshed from his health care labors, aspires to "raise the estate tax back to between 35% and 55% this year, and to make that change retroactive to Jan. 1." The better to pay for that other thing, I suppose.

But can that be done? Here's Moore: "Can Congress impose a new estate tax, say in April, on someone who was already dead and buried in February? Let's hope not." Moore has been around long enough (which requires only a month or so) to know hope is all we can do.

But let's hope Baucus fails in his ambition, and, for entertainment purposes, that Moore does, too. In that case, we can behold the pageant of moral hazard that will reign among heirs apparent this year.

Early on the pressure will likely manifest itself in elliptical ways. For example, encouraging the old tycoon to take up rock climbing. Should he prove surprisingly competent at that, late summer might see more direct efforts. For example, "Surprise!" yell the descendants as they spring from behind the matriarch's bedroom curtains (when she first wakes and on a day not her birthday).

And the closing window that will be New Year's Eve could well loose the inner Utilitarian of anyone standing vigil by the bedside of an old and infirm moneybags. And there may be many such folks standing vigil. Hospitals, more likely than Times Square, may set attendance records that night for visitors.

Without the intention of causing the outcome, the muti-motived authors of this mess are encouraging, in this limited context, the sort of inter-generational suspicions regnant in Orwell's 1984.

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