CNBC’s John Carney discusses “death elasticity” in response to changes in the estate tax.
“Death elasticity,” Carney writes, “does not necessarily mean that greedy relatives are pulling the plug on the dying or forcing the sickly to extend their lives into a lower taxed period.”
“Not necessarily,” but apparently this happens. The rich really are different.
Carney says “death elasticity” in response to estate-tax changes is measurable:
Economists Wojciech Kopczuk of Columbia University and Joel Slemrod of the University of Michigan studied how mortality rates in the United States were changed by falling estate taxes. They note that while the evidence of “death elasticity” is “not overwhelming,” every $10,000 in available tax savings increases the chance of dying in the low-tax period by 1.6 percent. This is true both when taxes are falling, so that people are surviving longer to achieve the tax savings, and when they are rising, so that people are dying earlier, according to Kopczuk and Slemrod.
If I understand that correctly, “every $10,000 in available tax savings increases the chance of dying in the low-tax period by 1.6 percent” and thus every $10,000 in additional tax costs decreases the change of dying in the high-tax period by 1.6 percent.
So all we need to do is raise the estate tax by $625,000, and rich people will never die.
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