December 31, 2009

The Rich Are Different From You and Me

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Thanks to a combination of Republican idiocy (in 2001) and Republican obstinacy (in 2009), the estate tax will go away completely in 2010, only to return in 2011. So if you’re rich, and you’re close to death, you’d do well to hang on for another couple of days before you expire. Or so the story goes:

“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?”

….To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. “We have done this at least a dozen times, and have gotten more calls recently,” says Andrew Katzenstein, a lawyer with Proskauer Rose LLP in Los Angeles.

Of course, plenty of taxpayers themselves are eager to live to see the new year. 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?'”

This seems crazy to me. Congress has long had the power to retroactively change tax rates, and they’ll almost certainly reinstate the estate tax sometime in 2010. The Journal says that the odds of a successful court challenge to a retroactive increase “is a subject of debate in the estate-planning world,” but it’s hard to believe that anyone really takes that seriously.

But who knows? Maybe this is all a clever plan on the part of Democrats. Maybe they’re just waiting for some rich and unsympathetic person to die (think Leona Helmsley or someone like that) and then they plan to use this person as a poster child for Republican greed and pandering to the rich. The ads write themselves: “You pay taxes on everything you earn. But conservative mogul Richard Mellon Scaife just left $1.2 billion to his kids and they don’t have to pay a single cent on it. Today’s Republican Party: protecting billionaire contributors while you keep the country running.”

Eh. Probably not. But you never know. Someone might be able to make hay out of this.

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