The Media's Favorite Tax

...The estate tax has spawned a really significant industry that thrives on it," says Harold Apolinsky, an estate tax lawyer at the Birmingham, Alabama, firm of Sirote & Permutt...

...Take a January 29 front-page New York Times story by David Cay Johnston (recent winner of a Pulitzer prize for reporting on tax loopholes...

...The reform bills do not allow for inflation or economic growth pushing people into higher brackets...

...AALU and the National Association of Insurance and Financial Advisers have formed and funded a coalition called Americans for Sensible Estate Tax Solutions (ASSETS), which opposes repeal and instead backs "reform" of the estate tax...

...Johnston quoted "experts" warning that Bush's plan to repeal the estate tax would reduce charitable giving and enable the rich to avoid other taxes...

...People get older, businesses get bigger, and the premiums get larger for new policies," says Apolin-sky...

...In much press and television coverage, proponents of the 11-year phase John Berlau is a writer for Insight magazine...

...Often, such policies are complicated and costly...

...When parents die, their children are expected to pay a tax of up to 55 percent on the value of the family farm or business...

...Like Johnston, the media generally ignore the wealthy Americans who earn their living off the tax...

...The group "is spending all necessary resources in order to reach the most favorable outcome possible...

...The estate tax hits hardest families who are property rich and cash poor...

...Even some who work in the estate tax industry are ready to see the tax go...

...Yet the well-financed opposition to the phaseout is going unreported...

...ASSETS pushes reforms along the lines of a House bill sponsored by New York Democrat Charlie Rangel and a Senate bill sponsored by Mississippi Republican Thad Cochran and North Dakota Democrat Kent Conrad...

...Repeal of the estate tax would largely eliminate this life insurance market...

...Johnston says he didn't think mentioning the financial interests of estate tax supporters was that important...

...Hoffman and ASSETS members often state that raising the exemption would repeal the estate tax for 99 percent of Americans...

...In a story that runs nearly 40 paragraphs, only one sentence hints at possible vested interests: A lawyer is paraphrased to the effect that "arranging new ways for the wealthy to capitalize on the changes would become a major business for lawyers like him, who now concentrate on estate tax planning...

...The interests of those who want to keep the tax are seldom mentioned...

...Not so the financial interests of estate tax foes: His lead paragraph notes that repeal would "save the wealthiest 2 percent of Americans about $236 billion over the next decade...

...Such arguments may have convinced 58 House Democrats to join most Republicans in backing the estate tax phaseout...

...But the experts were hardly neutral...

...Life insurance policies help such heirs hold onto their assets by providing liquidity to pay the tax and sheltering some items from taxation...

...Some segments of the industry aren't taking their potential loss of customers lying down...

...I would be totally shocked if I found oncologists opposed to finding cures for cancer," he adds...

...Besides, since people cannot foresee what their estate will be worth when they die, they would still try to protect their assets with strategies such as buying life insurance...

...out—passed by the House in April and likely to be passed by the Senate this week—are portrayed as multimillionaires selfishly bent on protecting their holdings...

...Eric Hoffman, executive director of the anti-repeal coalition, explains that the insurance groups prefer reform because "they want to help their members and their members' clients lock in certainty of relief so they can help plan estates...

...Edelman Public Relations is handling publicity, and former Wyoming senator Alan Simpson, who is close to Vice President Cheney and former president Bush, is on board as counsel...

...These would raise the amount exempt from the estate tax (from $675,000 to $2 million in 2006, in the Senate bill...

...In the '90s, we have all this explosive growth, and the $600,000 [exemption set in 1981] becomes basically meaningless," says Dan Blankenburg of the National Federation of Independent Business...

...There will be some disruption, but as a practical matter, no business ever stays the same," says estate lawyer Apolinsky, who also holds a paid position as general counsel to the anti-estate tax American Family Business Institute...

...They were estate planners and other professionals who make money helping people cope with the tax and its complexities...

...One of the main beneficiaries is the life insurance industry...

...So if large life insurance companies were lobbying all-out against President Bush's phaseout of the estate tax—a measure that would free thousands of Americans from having to buy expensive policies—you'd expect the press to be all over the story...

...By reducing the amount of capital available in the economy, estate taxes ultimately reduce the amount of wealth that ends up in the hands of workers," concluded a 1998 study by Congress's Joint Economic Committee...

...by John Berlau NEXT TO BIG TOBACCO and the NRA, insurance companies top the media's list of villains...

...It just wouldn't be seemly...

...But for how long...

...The best sources on how the tax laws work in the real world are tax lawyers, whose vested interest is obvious to anyone," he wrote in an e-mail...

...While this would be a boon to the insurance industry, many economists deplore it...

...In a February letter to members of the Association for Advanced Life Underwriting (AALU), the association's president, Sidney Friedman, expresses his concern: "Since last year, AALU has been proactively working on your behalf on the estate tax issue," Friedman wrote...