connecting*the*dots

5 Responses to “death tax 2.0…”  

1. 1 jen Aug 7th, 2006 at 3:10 am

   Uh huh. The minute I clicked over there and saw the estate tax bill listed as the “death tax” bill should have been clue #1… as it was my first clue was seeing the “average family” savings! Huh?? THEN, after I commented, the “death tax” title hit me over the head and I realized something stank.

   Thanks.

2. 2 Jim Harper Aug 7th, 2006 at 9:32 am

   This is astute criticism. It’s true that the methodology we use doesn’t report tax or spending “incidence,” using averages instead, and this legislation has particularly narrow incidence. We have a caution about this (among several others) on WashingtonWatch.com’s “about” page and the comment section is there for you to point out issues like the narrow incidence of a tax cut like this one. That said, dynamic economic analysis of costs and savings would tend to “spread” tax and spending incidence across the population, so averaging is not as bad as people might assume for getting a sense of what’s going on in D.C. Thanks for the criticism.

3. 3 Sean Coon Aug 7th, 2006 at 11:49 am

   i understand the broad methodology and find it valuable, but in cases where incidence is extremely narrow (less than 1% of the dying population pays the estate tax now), it would be great for your methodology to include tiered results as well.
   maybe your result could show what the repeal would do for estates currently worth more than $3.5 million dollars (the current estate tax line) and for those worth less?

   as a related aside, repealing the “death tax” would save that less than 1% of the population (and their families) a ton of cash, while the rest of the population wouldn’t be affected directly by the repeal. that said, we all know that as soon as uncle sam finds that he needs that missing annual chunk of change, taxes will somehow be increased somewhere to bridge that divide. so when that happens, the average person actually kicks in *more* taxes.

   that’s obviously based on an assumption, but it’s a healthy one (like saying that a person swimming at the bottom of a pool will need to come up for air at some point).

4. 4 Jim Harper Aug 7th, 2006 at 12:19 pm

   Agreed on the criticism. Silver lining: When the broad tax increase comes to cover the revenue lost from the estate tax, the current methodology will work! But I have 500+ bills in the database, each of which has different incidence. Perhaps I could figure a way to account for incidence in ’special’ bills, but it would be an enormous task to calculate incidence accurately in general. (I want to do it - must have a community and at least some ad revenue first!) For now, I must leave it to the community to point out that the beneficiaries of the estate tax cut are, primarily and directly, the rich. Thanks again for your thoughtful critique.

5. 5 Sean Coon Aug 7th, 2006 at 1:22 pm

   well, good luck with the service, jim. you’re off to a great start. hopefully you can get some funding to support your efforts (but not take away your vision). again, best of luck.