Will Michael Jackson's Death Be the Final Nail in the Estate Tax's Coffin?
It is hardly news that conservatives have been trying for years to abolish the estate tax. Well-funded efforts to re-brand the tax have had some effect in changing the terms of the debate, no matter the merits. Nonetheless, the Republicans have not yet succeeded in eliminating the tax (other than its scheduled one-year disappearance in 2010, which will probably never come about), even when they held the White House and both houses of Congress. In a bizarre twist, however, I now anticipate the political exploitation of Michael Jackson's death for the purpose of reigniting the push for estate tax repeal. And it just might work.
(Note: This might already be happening. If so, I have not seen coverage of any moves in this direction.)
The always exhaustive TaxProf blog has included a number of interesting posts since Jackson's death about the legal ambiguities surrounding the late singer's huge estate. (See links here.) TaxProf also provided a link to an Associated Press article that speculates on the amount of tax that Jackson's estate might owe. Based on very sketchy information -- and acknowledging that the bill could ultimately be $0, depending on the facts -- the AP article runs through some numbers and comes up with a guesstimate that Jackson's net worth in 2007 might have been $236 million. If that number was right, and if it were still correct on the relevant date for computing the estate's value, the estate tax bill could be around $83 million.
The political spin then begins. In what purports to be a news article (not an editorial), the AP writer then says: "Once paid, the tax bill could dramatically shrink the inheritance passed on to the pop star's heirs — his 79-year-old mother and three children. 'It's going to mean less money going to the beneficiaries,' said [a] tax and estate [attorney]. 'They're the ones that are going to suffer.'"
So, if the estate is worth $236 million, the elderly woman and her grandchildren will come into $236 million minus $83 million, "dramatically shrinking" their inheritance to $153 million. I realize that lawyers are sometimes prone to overstatement, but describing this as suffering seems a bit ... shall we say ... rich. The objective journalist at the AP did not, of course, bother to balance that description with an opposing point of view, but he did make sure to trot out the widows and orphans trope.
As ridiculous as all of that may be, it might have political legs. Up until now, the most prominent African-American to publicly oppose the estate tax was Robert Johnson, the billionaire founder of the BET network, who organized an anti-estate tax letter in 2001 signed by a few dozen black businessmen, a letter that made the claim that the tax is racist. (He also gave cover to President Bush on Social Security privatization, who accordingly claimed that that program is also racist.) Johnson is, however, a bit player in American politics at best, unknown to most people and not at all influential among the African-American community. Michael Jackson, of course, is quite different.
I am not saying that I saw this coming. On the day that Jackson's death was reported, my thought was that this would be a one-day story and that the odd and ugly stories that have dominated "Jacko" coverage for the past twenty years would result in coverage of his death that was muted at best. Not quite. In the endless, over-the-top coverage of everything about Jackson that has followed, it is difficult not to be in awe of the tranformation of his legacy in the public mind. We now have prominent African-Americans like Jamie Foxx and the Rev. Al Sharpton making a very big deal about Michael Jackson being part of the black community. ("We want to celebrate this black man," Foxx said ... . "He belongs to us, and we shared him with everybody else." (emphasis in original).)
This, therefore, may provide the political adrenaline that has been missing for proponents of estate tax repeal: a major element of the Democratic coalition emotionally turning (against its own economic interests -- even more so than nearly everyone else who opposes the estate tax) against the most progressive tax on the books. Never mind that Jackson's mother and children will (assuming the estate is large enough even to be subject to the estate tax) remain unimaginably wealthy. We will, I fear, only hear variations on the theme that they are "suffering." I anticipate seeing sign with slogans like: "IRS, hands off Michael's money!"
Needless to say, I hope that I turn out to be wrong about this -- as wrong as I was about the media's reaction to Michael Jackson's death.
-- Posted by Neil H. Buchanan
(Note: This might already be happening. If so, I have not seen coverage of any moves in this direction.)
The always exhaustive TaxProf blog has included a number of interesting posts since Jackson's death about the legal ambiguities surrounding the late singer's huge estate. (See links here.) TaxProf also provided a link to an Associated Press article that speculates on the amount of tax that Jackson's estate might owe. Based on very sketchy information -- and acknowledging that the bill could ultimately be $0, depending on the facts -- the AP article runs through some numbers and comes up with a guesstimate that Jackson's net worth in 2007 might have been $236 million. If that number was right, and if it were still correct on the relevant date for computing the estate's value, the estate tax bill could be around $83 million.
The political spin then begins. In what purports to be a news article (not an editorial), the AP writer then says: "Once paid, the tax bill could dramatically shrink the inheritance passed on to the pop star's heirs — his 79-year-old mother and three children. 'It's going to mean less money going to the beneficiaries,' said [a] tax and estate [attorney]. 'They're the ones that are going to suffer.'"
So, if the estate is worth $236 million, the elderly woman and her grandchildren will come into $236 million minus $83 million, "dramatically shrinking" their inheritance to $153 million. I realize that lawyers are sometimes prone to overstatement, but describing this as suffering seems a bit ... shall we say ... rich. The objective journalist at the AP did not, of course, bother to balance that description with an opposing point of view, but he did make sure to trot out the widows and orphans trope.
As ridiculous as all of that may be, it might have political legs. Up until now, the most prominent African-American to publicly oppose the estate tax was Robert Johnson, the billionaire founder of the BET network, who organized an anti-estate tax letter in 2001 signed by a few dozen black businessmen, a letter that made the claim that the tax is racist. (He also gave cover to President Bush on Social Security privatization, who accordingly claimed that that program is also racist.) Johnson is, however, a bit player in American politics at best, unknown to most people and not at all influential among the African-American community. Michael Jackson, of course, is quite different.
I am not saying that I saw this coming. On the day that Jackson's death was reported, my thought was that this would be a one-day story and that the odd and ugly stories that have dominated "Jacko" coverage for the past twenty years would result in coverage of his death that was muted at best. Not quite. In the endless, over-the-top coverage of everything about Jackson that has followed, it is difficult not to be in awe of the tranformation of his legacy in the public mind. We now have prominent African-Americans like Jamie Foxx and the Rev. Al Sharpton making a very big deal about Michael Jackson being part of the black community. ("We want to celebrate this black man," Foxx said ... . "He belongs to us, and we shared him with everybody else." (emphasis in original).)
This, therefore, may provide the political adrenaline that has been missing for proponents of estate tax repeal: a major element of the Democratic coalition emotionally turning (against its own economic interests -- even more so than nearly everyone else who opposes the estate tax) against the most progressive tax on the books. Never mind that Jackson's mother and children will (assuming the estate is large enough even to be subject to the estate tax) remain unimaginably wealthy. We will, I fear, only hear variations on the theme that they are "suffering." I anticipate seeing sign with slogans like: "IRS, hands off Michael's money!"
Needless to say, I hope that I turn out to be wrong about this -- as wrong as I was about the media's reaction to Michael Jackson's death.
-- Posted by Neil H. Buchanan