Death and taxes meet again
If you lower the tax on death you'll have less of it:
Starting Jan. 1, the estate tax -- which can erase nearly half of a wealthy person's estate -- goes away for a year. For families facing end-of-life decisions in the immediate future, the change is making one of life's most trying episodes only more complex. On Jan. 1, the one-year halt to the estate tax begins...."I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days," says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. "Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?"
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One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes. "Whenever he wakes up," says his lawyer, "He says: 'What day is it? Is it Jan. 1 yet?'"Estate-tax experts didn't expect Congress to allow the tax to lapse, and are flabbergasted that it is actually happening.Read it all in the Wall Street Journal.
Noting that the tax has a sunset provision, Paul Krugman looks a little farther forward:
[W]hen I dubbed the first Bush tax cut the Throw Momma from the Train Act of 2001, I didn’t really think that we’d get to the point where there would be strong financial incentives for wealthy heirs to bump off their parents before the legislation expired, and the estate tax was reinstated [in 2011]. I expected one of two things to happen: Democrats would restore a sensible estate tax, or Republicans would achieve the political dominance needed to permanently abolish the tax.Read Krugman here.Lest you think real people don't make such calculations based on taxes, consider that they do make them with respect to timing of births:
"It's phenomenal what's happening in late December," said Amitabh Chandra, a Harvard economist who provided many of the numbers here. "December is not really a particularly busy time for babies to be born. So to see a spike that's equal to September is astounding." [September is traditionally high because 9 months earlier it's cold and people find things to do in bed.]Late December babies are more likely to be induced or delivered by Caesarean than at other times of year. And avoiding a Christmas Day birthday isn't the full reason.
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So to see if taxes were truly the culprit, Chandra and another economist, Stacy Dickert-Conlin of Michigan State University, devised some clever tests. They found that people who stood to gain the most from the tax breaks were also the ones who gave birth in late December most frequently. When the gains were similar, high-income parents — who, presumably, are more likely to be paying for tax advice — produced more December babies than other parents.
Our twins were born a month early on New Year's Eve 1993. When we joked with our OB about the double tax deduction, he laughed and said he'd actually had parents offer to pay him to deliver their baby before Jan 1.
Coming into the world when they did, offering two additional tax deductions, we figure our boys started life in the black, but it;s been red ink ever since.
They'll be 16 tomorrow and are getting more expensive to maintain everyday. It's a good thing they're wonderful.
Heidi Shott
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December 30, 2009 10:58 PM