Death and Taxes

I should first stipulate the following post has nothing to do with my own trip with my father (not least because, alas, there is no inheritance to speak of, especially after his trips to various distilleries in Scotland yesterday). Here’s a part of a short article on the end of the estate taxes later this year, which will give people of a certain income a dangerous incentive before the end of the year…

As economists will tell you, when you tax something less, you get more of it. Various studies have shown that this logic applies to life and death as well as to more modest behavioral choices. In a 2001 paper titled “Dying To Save Taxes,” Wojciech Kopczuk and Joel Slemrod examined 13 tax changes since 1917 and concluded that “for individuals dying within two weeks of a tax reform, a $10,000 potential tax savings … increases the probability of dying in the lower-tax regime by 1.6 percent.” A 2006 study done in Australia, which abolished its inheritance tax in 1979, reached the same conclusion: “a statistically significant effect of the abolition of inheritance taxes on the number of deaths.” More than half the people who, according to statistics, ordinarily would have paid the Aussie inheritance tax in its final week managed to evade it by living a bit longer. Here, Congress has created an incentive for Grandma to stick around through Jan. 1, 2010, then snuff it before the end of next year. … I do not wish to alarm older, wealthier readers, but you may find family gatherings becoming increasingly tense over the next year. Do not be surprised if your heirs and assigns try to sit you down for a “conversation.” You may want to have a witness or security guard present. 

This murderous strain, of course, is but the logic of capitalism at its best. We are told often that we can’t have single payer health insurance since doctors, apparently, would rather let people die than take a pay cut. Now, off to have a convo with dad…