How Any Further Estate Tax Cuts Will Pay Plutocrats TWICE by The Other Katherine Harris

The Other Katherine Harris

by The Other Katherine Harris

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Dandelion Salad

The Other Katherine Harris’s blog
Jan. 1, 2008

Next time the vampire of estate tax “reform” rises, threatening to drain us of billions to satisfy the three families in a thousand who have to pay any, here’s a chunk of garlic that might help drive it underground:  A secondary market in large life insurance policies has developed — which means any coverage not needed to cover tax liability can be offloaded now.  At a huge profit.

While I was researching something else this morning, a fortuitous path opened to this little-known fact. As detailed HERE, an 83-year-old widow recently sold a $20 million policy on which she’d so far paid about $1.7 million. Its cash surrender value would have been less than half a million, but an investor coughed up $4.3 million and almost surely won’t have to wait long to collect nearly five times as much.

Both buyer and seller made out like bandits in the deal — and imagine how this newly contrived marketplace will sizzle, if more estate tax cuts are enacted, too.  We might as well make that “if” a “when”, as far as the firm behind the press release is concerned (specialists in bringing such parties together).  The Ashton Group predicts Congress will raise exemptions and slash rates sufficiently for “billions of dollars’ worth of existing life insurance policies to be sold over the next several years.”

Obviously, as with all these devious schemes that financialize paper, only the filthy rich can play (unless mutual funds start buying into them).   Also pretty obviously, life insurance companies will soon wise up and stop selling gargantuan policies based on old statistics that show five of every six life insurance policies lapse before any payout is due.  They’re on the hook for all extant policies, though — and bound to raise everybody’s premiums.  Depending on how badly they’re stung, we could get stuck with the tab for another bailout to benefit the ultra-wealthy, too.

Adds extra dimension to the cause of opposing estate tax reduction, doesn’t it?

There’s also the niggling notion that this ghoulish market could expand, as tapped-out folks formerly on the upper end of middle class look to their life insurance as a life-raft for coping with debt they can no longer bankrupt out of.  Not a pretty picture.  Except of course to the blood-suckers.  What do you bet they’d be pleased to buy it, never mind the prospect of destitute kiddies and widows?  Death is something investors can bank on a lot more securely than subprime mortgage payments, particularly if the seller is getting on in years or suffering health problems.

12 thoughts on “How Any Further Estate Tax Cuts Will Pay Plutocrats TWICE by The Other Katherine Harris

  1. The beauty of the estate tax is you never have to pay it – you are dead when it is paid.
    However there are those who wish to call it the death tax as a way of trying to villify it. Well if you were given the choice of paying tax while you were alive, or paying tax after you died it is frankly no contest for 997 out of 1000 people which they will choose. However the 3 in 1000 will continue to try and promote their self interest

  2. Pingback: Top Posts « WordPress.com

  3. Er, Mr. “Doe” — on what possible grounds do you call John Edwards a fascist? I like Kucinich, too, and think most of their positions are very similar.

    About Ron Paul, I do admire his views on our corrupt banking system, but in other ways he’s plenty scary. He doesn’t believe in Social Security or even public education.

    Thanks for taking time to read and comment,
    Erin

  4. To Chris

    Calm down your going to have a stroke, Rush is right, liberlas are angry and pissed off all the time, sux to be you, of course your probably mad becuase your not rich.

  5. John Edwards is a fascist not a liberal. Guess who supports cutting estate taxes to benefit plutocrats. Ron Paul, thats who. I agree we need to take back the money the plutocrats have stolen from the American people through tax cuts for the wealthy and corporate welfare. We need to tax the hell out of the superwealthy criminal plutocrats and end the tax burden on the poor and working class as well as small business.

    Support Dennis Kucinich the only candidate that serves the working class and small business people.

  6. I always think of the Death Tax as a way for the very rich to finally pay in death some of the taxes they avoid paying in life.

  7. Joe, who do you suppose takes up the slack, whenever taxes on the rich and on corporations are cut? All the rest of us have to pay more — or do without services and infrastructure — which makes it a drain on us.

    For instance, when I was a kid, corporations paid nearly half of all income tax collected. Now they pay about six or seven percent. because of using offshore tax havens and other loopholes.

    Even principled grillionaires like Buffet now complain about how far out of balance things are, when he’s taxed at half the rate of his secretary and has special breaks to save him even more. He also doesn’t believe that America should be run by an aristocracy based on inherited wealth. Most of his is going to good causes, as maybe you’ve noticed.

    In my opinion, it *is* decidedly vampirish that the average American makes less today, in real terms, than his counterpart in 1970 — while all the gains from increased productivity have gone to those at the top, who aren’t even paying their fair share of taxes.

    Sorry you don’t care for my style in this case, but I do actually have a degree in English (among other fields) and have made my living principally as a writer for 30 years.

  8. Chris, you obviously have me confused with the Republican Katherine Harris in Florida. I’m left-wing, not right, and I live in New Mexico. I loathe Shrub and His Thugs.

    Please read what I wrote; don’t just react to the name. It’s a very common one.

    Thanks,
    Erin (short for Katherine)

  9. Tex,

    Who are they? Please be specific. Oh, I am sorry, you can’t name a single person. I am so surprised! You can take off your tinfoil hat now. You right wing authoritarian kool-aid drinkers are going to destroy the greatest country ever created (mostly by liberals I might add-maybe you missed it but FDR led us to victory in the greatest war ever fought while your hero George W Bush can’t beat a man in a cave who outsmarted him and hijacked 4 airliners under his nose and rammed 3 of those into the most prominent building in the country). Right wing authoritarians like yourself have led us to torture using the same techniques as the Nazis did during WWII (after which we subsequently hanged them). Right wing authoritarians like yourself have shredded the constitution to the point where the government spies on all of us. The republic is in danger of being lost and all you can do is whine about imaginary liberals getting rich and not paying extra taxes. Only stupid, kool-aid drinking, conspiracist right wing authoritarians like yourself would make such a lame, whiny argument when our country is in such a dangerous position. It is a good think that most of America ignores right wing authoritarians like yourself now. It was certainly terrible for our country when stupid ideas like yours had their moment in the late 1990’s and early 2000’s and but Americans, for the most part, have wizened up now. Stupid Republican right wing authoritarian ideas have weakened our military, economy, culture and political environment and Americans everywhere have taken notice. That is why Republicans lost control of BOTH houses of congress and will now lose control of the executive (unless Republicans find some way to steal it again). That is why soon there will be a Democratic majority the size of which that has not been seen since the New Deal in only a few years. Republican right wing authoritarian ideas have failed miserably and have been a disaster for our country and Americans have taken notice. Step aside, the grownups are back in charge!

  10. Yawn . . .

    “Next time the vampire of estate tax “reform” rises, threatening to drain us of billions to satisfy the three families in a thousand who have to pay any, here’s a chunk of garlic that might help drive it underground:”

    So you view the taking by the government of an excessive percentage of an estate’s value as “Draining us of billions”?

    You invalidate any argument that you might be trying to make by starting your “article” with such a bizzarely distortive statement.

    Please try again when you have passed 200 level College Composition.

    Thanks for playing . .

  11. It never ceases to amaze me how Liberals always complain about Tax cuts and IRS loopholes. Yet when they become Wealthy they seem to take advantage of “every” last one of them.

    When do you think was the last time Ted Kennedy or John Edwards told their Accountants I want to pay the absolute maximum income Tax I can? O and while you are at it when I die lets give Uncle Sam and Aunty IRiS a huge chunk.

    Tex

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