Saturday, July 19, 2008

Are You Ready For "Estaticide"?

I first thought of this idea while on the Steve Stockman Show in Houston, Texas and recently found myself discussing it with my friend on the Wall Street Journal Editorial Board, Steve Moore. The concept is "Estaticide." Estaticide is the extermination of individuals because of how punishing the tax implications.

This possible phenomenon is spurred on by the best of intentions. In 2001, President Bush wanted to provide relief to families that are devastated by the death of a family member. It is bad enough that mom or dad have passed away, without picking their pockets in the process. This led to the creation of the Taxpayer Relief Act of 2001 (which modified a similar act in 1997). This law would lead to a gradual increase in the tax credits associated with estate taxes and a reduction in the maximum rate until 2010 in which the tax would be repealed. The bad news is that the rate would go back to 2002 levels in 2011. That means the rate would go from zero to a maximum rate of 50 percent in one year.

Steve Moore, at a recent RightOnline.com event, pointed out that it would literally make this jump over night from New Years Eve 2010 to the new 2011. In his speech, he paints a morbid picture. You can see a family surrounding a dying love one in December 2009. Loved ones knowing he will pass away, but praying he makes it to January 1 when the maximum rate plummets from 45 percent to zero. Fast forward to one year later and you find a different family whose patriarch is on the death bed with hours being left before the tax rate goes from zero, back to 50 percent and without the credits. You can see them surrounding the bed and looking at their watches.

This leads to the concern about "estaticide." People mysteriously passing just before the tax laws change. Stranger things have happened. A better thing that could happen is if lawmakers would put an end to the insanity of severely penalizing people for dying once and for all. People work hard to provide for their families for both now and for future generations. It is one of the drivers that make people work harder and economies productive.

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Kevin Price is Host of the Houston Business Show (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at HoustonBusinessShow.com. Visit the archive of past shows here.

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