Nate Silver makes an observation:
Because of a law that the Congress passed in 2001, the estate tax, which at is 45 percent this year with an exemption up to $3.5 million in assets, will be entirely repealed in 2010 before abruptly returning to its former rate of 55 percent rate in 2011.
Think there might be a few rich grannies pulled off a few respirators on December 31, 2010?
See, I think it's funnier if you take the word "rich" out of there. Because it's not like public understanding of the "death tax" is exactly comprehensive: while the truth is that fewer than 2 percent of estates are subject to the tax, which as noted above kicks in only at $3.5 million, thanks to a relentless and effective campaign paid for by some of the country's wealthiest families, the perception is that it affects a far larger share of the public. This, of course, significantly goosed support for total repeal of the tax--which was the point. A 2006 paper on the estate tax and public opinion by three researchers at Yale provides some of the details:
People know very little about estate tax levels and rates and rules, as evidenced by a January 2000 Gallup poll, in which most people (53 percent) admitted they simply did not “know enough to say” whether the “federal inheritance tax” was too high, too low, or about right. Obtaining accurate information can be difficult, especially when people have an incentive to mislead you. With little background knowledge, many people seem to guess that nearly everyone is taxed at death—a misperception sometimes encouraged by question wording. For example, in a 2003 National Public Radio / Kaiser Foundation / Harvard Kennedy School (henceforth NKK) survey, two–thirds of respondents either thought “most people have to pay” the estate tax (49 percent) or said they did not know (18 percent); and 62 percent of those opposing the estate tax said one reason was because “it affects too many people.” Controlling for socio–economic and demographic factors, and general attitudes towards the tax code, Slemrod (2003) uses results from this survey to estimate that the misconception that most families pay the estate tax “increases the likelihood of favoring abolition by 10.6 percent.”
I also remembered, in the course of Googling around on this subject--yes, I'm quite bored this evening--that Larry Bartels released a paper years ago titled "Homer Gets a Tax Cut," which of course is both wonderful and awful. Bartels' findings suggest that as a people, we're not only ignorant but painfully illogical as well:
The results of my analysis suggest that most Americans support tax cuts not because they are indifferent to economic inequality, but because they largely fail to connect inequality and public policy. Three out of every four people say that the difference in incomes between rich people and poor people has increased in the past 20 years, and most of them add that that is a bad thing—but most of these people still support Bush’s tax cuts and the repeal of the estate tax. People who want to spend more money on a variety of government programs are more likely to support tax cuts than those who do not, other things being equal. And people’s opinions about tax cuts are strongly shaped by their attitudes about their own tax burdens but virtually unaffected by their attitudes about the tax burden of the rich—even in the case of the estate tax, which only affects the wealthiest one or two percent of taxpayers. Some of these peculiarities appear to be mitigated by political information, but others seem perversely resilient.
So here's my pitch. It's December 22, 2010, and four lower middle-class couples in Anytown, USA are having a pre-Christmas dinner party. The mood is a bit subdued because three of the four couples have elderly parents in the hospital with various ailments that are chronic but not immediately life-threatening. Their costs for care are rising, with familial assets dwindling down. As the evening wears on and everybody starts to get a little drunk, somebody imperfectly remembers a campaign commercial from the midterm elections a couple months before about the insidious Death Tax and how it would ruin family farmers and small businessmen--but it doesn't kick back in until New Year's Day. Another guest observes that his father was a farmer once, so he probably would see the damned gummit take everything if Dad is still around when Dick Clark gets wheeled out. (This naturally assumes that Dick's heirs aren't having the same conversation, even though it's actually relevant for them...) And, goodness, a couple of their parents had owned, or still own, small businesses: they might be failing, but this would be the last nail in the coffin--and as this metaphor is voiced, everybody suddenly goes quiet... and then they burst out laughing. The plot is on!