‘Death elasticity’ and more scenes from the class war

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.

* * * * * * * * *

I only know what I hear on Fox News and what I hear on radio.”

“For Santorum and the conservative media, however, the question was not who would win or lose, but rather, how might they generate the most revenue.”

“I think when you define people who look differently than you as illegal aliens, and use that term over and over again, and talk about self-deporting them, that’s a tolerance issue.”

“Pardon me, madam, but I have been in your country of Australia for ten days and the only Aborigines I’ve seen have been drunk on the street, and at least if we were in my country they would be serving the drinks at this conference!”

“I’d still be leeching resources from a healthy body if I’d behaved myself.”

“The senators of the Mid-Atlantic did not vote against disaster relief for the Gulf Coast or for the people of Joplin, Missouri or for dealing with the Colorado wildfires or for flood victims along the Mississippi River.”

“If there are things we can do with the cheap money the world is flinging at us that would make the U.S. economy more competitive in the longer run, we should take advantage.”

The best plan for reducing the debt is full employment.”

“Come Dec. 31, Washington’s inaction could push the country’s milk prices to as much as $6 to $8 per gallon unless Congress passes a farm bill renewing federal support for agriculture programs.”

“The Senate version of the farm bill passed with relative ease over the summer, but House Republicans haven’t even brought a competing proposal to the floor for a vote.”

“As the defined benefit pension paradigm fades away, the natural and proper thing would be to rely more on Social Security as a vehicle for ensuring adequate living standards for senior citizens.”

“For 200 years the existence of the union movement has been wedded to the rise of democracy.”

“GiveDirectly remains an outlier in the development arena, perhaps the only organization that distributes private donations, made online, directly to the poor with no strings attached.”

  • Guest

    “A survey released by Fairleigh Dickinson University earlier this year determined that Fox News viewers were actually less informed that Americans who watched no news at all.”

    So Fox News really does make people dumber? I know people have said that before, but I assumed it was a joke.

  • DorothyD

    “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” 

  • http://twitter.com/FearlessSon FearlessSon

    I am pretty much convinced that Fox News is Milgram’s Experiment put into practice as psychology applied to branding.  By setting themselves up as authority figures that the audience can trust (simultaneously undermining trust in other potential authority figures) they can get people to believe things which are untrue, simply by continuing to assert the truth of these fabrications (which like any fiction work best if they contain at least a kernel of truth albeit one grossly and inaccurately extrapolated from.)  Once they have someone buying that, even a little, cognitive dissonance does the rest, getting the person to rationalize that untruth themselves until they believe nothing else.  

  • http://www.facebook.com/people/Ann-Unemori/100001112760232 Ann Unemori

    Sooner or later even the richest folk will get around to dying, it’s not the kind of thing you can put off forever.
    100% of all smokers die.
    So do 100% of all non-smokers.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “So all we need to do is raise the estate tax by $625,000, and rich people will never die.”

    eliminate it completely and they will die when they want and not have to suffer from greedy kin or their own sense of duty to their non greedy kin. The estate tax is insane. How can you tax dying? People already pay taxes. 

    ““Come Dec. 31, Washington’s inaction could push the country’s milk prices to as much as $6 to $8 per gallon unless Congress passes a farm bill renewing federal support for agriculture programs.””

    we’ll all go vegan then. I’m willing to eat that gross ice cream to spite the horrible farm lobby.

    gtg I’m knee deep in this Hagel thing

  • EllieMurasaki

    The problem that the estate tax is meant to solve is the thing where Jack Sr works hard and gets rich and accumulates a pile of money, because Jack Sr is a good conservative or at least a person approved of by good conservatives, and Jack Jr’s life consists of spending Jack Sr’s money, because Jack Jr has no personal familiarity with the need to work in order to acquire money and is therefore the kind of person good conservatives are supposed to disapprove of.

    Also the thing where Jack Sr’s money is what gets Jack III, Jack IV, and Jack V into the Senate.

  • Null_void

    So far, humanity has a 93% mortality rate, assuming 100 billion people throughout history.

  • DorothyD

    Sooner or later even the richest folk will get around to dying, it’s not the kind of thing you can put off forever.

    Oh, Fred’s just being silly. 

    If I understand that article, “death elasticity” means that certain events can have an effect on whether someone who perhaps is already on death’s door will “decide” to die a day or two sooner or later. The researchers were looking specifically at historic instances of changes in the estate tax laws and linking that with death rates before and after the changes took effect. The effect they found may have something to do with misreporting of time of death, but apparently there is some precedent:

    It’s well-known that people can delay death, for example, in order to live through significant dates—birthdays, holidays, anniversaries. In the first week of 2000, local New York City hospitals recorded an astonishing 50.8 percent more deaths than in the last week of 1999, according to the New York Times. Apparently, a significant
    number of people delayed their deaths in order to see the new millennium.

    Fascinating.

  • Sgt. Pepper’s Bleeding Heart

    What’s your point?

  • Sgt. Pepper’s Bleeding Heart

    It’s more than Jack Sr pisses and moans about his hard work being taxed, so we keep relatively low rates of taxation on the wealth he acquires while he’s still around to sit on it. Jack Jr didn’t work for that money so he has less sympathy when he complains about taxes being taken from his inheritance.

    Estate tax is a sop to people who want to minimise the taxes they have to pay when they could be otherwise spending (or accumulating) the money. If Chris wants to eliminate the estate tax, that’s fine as long as there’s an equivalent rise in capital gains taxes.

  • EllieMurasaki

    I was actually trying to frame it in a way Chris Hadrick might see the point of, but yeah.

  • Lliira

    The number of commenters saying “we should not let Florida or Alabama or Texas or etc. have any disaster relief!” on that Booman post is sickening. You wanna punish me for some dumbass senator I didn’t vote for? How about the children in my apartment building? Or, since you apparently hate us all passionately and believe we have a hivemind and should all (especially poor people, as they are hit worst by disasters) be punished for the political sins of others, what about the environment? If you can’t give a damn about human beings, maybe you can give a damn about manatees.

  • Nirrti

     “They are still grieving, The grieving process should only be six months. If it goes on
    for more than six months, it could go into a major depression.”

    Oh boo effin’ hoo.

    I came down with an honest to god depression several years ago and had to go to the only hospital in my area who’d take the uninsured, a state-run facility the state repubs have tried their dardest to shut down.

    They initially put me on the state’s behavioral health plan to pay for my meds and oupatient treatment. That is..until the repubs cut the state’s behavioral health insurance program. So I was left to pay $250 a month for meds plus doctor’s fees. If you ain’t got the money, no mental health care for you. Of course these clueless shit birds wouldn’t know nor care about that anyway.

  • Sgt. Pepper’s Bleeding Heart

    Re the first part of the post and economic timing of life…

    In mid-2004 the Australian government introduced the Baby Bonus, a $3000 lump sum payment to parents of babies born on or after 1 July 2004. A couple of economists (one now an MP) did some interesting research on what happened: http://andrewleigh.org/pdf/BabyBonus.pdf

    More babies were born on 1 July 2004 than any other day in Australian history. There were many fewer births in late June than expected. It looks like about 1000 planned births (inductions and elective cesareans) had their date shifted so that the baby would be born into the eligibility period. A similar thing happened 2 years later when it was announced the payment would be higher from 1 July 2006. More of the babies born in early July were high birthweight than those born in late June.
    Here’s the thing: delayed birth beyond full-term and high birthweight are both health risks for newborns (as is elective cesarean in the absence of complicating factors, but that’s another story). So the data suggested that parents were changing their plans in response to an economic incentive, even though it created extra risk for their child’s health, and that medical staff went along with it en-masse.

    When this research was pointed out to politicians they blustered about how dare anyone suggest that mothers make decisions based on anything other than their baby’s health outrage outrage to which the bewildered response was…but, data.

    I expect the same thing happens with the data about the other end of life.

  • Sgt. Pepper’s Bleeding Heart

    Good luck with that!

  • EllieMurasaki

    I’m an optimist.

  • Sgt. Pepper’s Bleeding Heart

    I hope the poor guy who wrote the piece about the Republican cruise was well paid because God, what an assignment.

  • EllieMurasaki

    If the risk of getting a medical complication from delaying birth long enough to get the three thousand dollars is exactly ten percent and the expense of treating that complication is less than thirty thousand dollars, then the reward is worth the risk on numbers alone. Numbers out ass obviously, but plug in the right numbers and the point holds.

  • Sgt. Pepper’s Bleeding Heart

    It’s Australia. If there are complications due to a delayed birth that cost $30,000, the parents don’t get a $30,000 bill.

  • EllieMurasaki

    Oh. Duh. Sorry. It makes even better sense that way.

  • Lori

     

    gtg I’m knee deep in this Hagel thing   

    WTH does this even mean? Is there some particular reason that you’re getting yourself all worked up about this?

  • Lori

    The death rate for elderly observant Jews is apparently higher after Yom Kippur. They hang on to do the high holy days one more time and then they’re ready to go.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Isn’t it possible the birth records were simply forward-dated?

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie= I get the argument for the estate tax, that junior should make his own fortune, but  I think the money belongs to the person who earned it and simply transferring it to another person is not a logical thing to tax. I’m a bit biased though as I am opposed to all taxes. 

    Lori- Hagel’s foreign policy views are about as good as it gets in the DC metro area so I am pulling for the nomination. The Israel Lobby is up in arms over it. Sorry to be so blunt but that is what’s happening. There are other opponents of the nomination but it’s a drop in the bucket compared to those guys. I’ll name names later. 

  • DorothyD

    The article says the “late” babies had a higher birth weight, so it seems the births actually were delayed.

  • EllieMurasaki

    Possible but, given that the July babies apparently had a higher average birth weight than the June babies, unlikely.

  • EllieMurasaki

    Every transaction is taxed, Chris. The taxes are waived in certain cases, such as for gifts of under thirteen thousand dollars in a year, or any merchandise sold in the state of Delaware, but every transaction is taxed. Why should transactions between a parent’s eight-figure estate and the inheriting child be tax-free? What benefit is there to society by waiving the tax in those instances?

  • http://www.facebook.com/people/Ann-Unemori/100001112760232 Ann Unemori

    Only that pretty much everyone dies eventually. I do understand about estate tax and all that, but just musing on the idea of rich people refusing to die. It’s not like they get an option not to.

  • Sgt. Pepper’s Bleeding Heart

    Isn’t it possible the birth records were simply forward-dated?

    You mean a coordinated effort on behalf of the medical establishment nationally, overlooked by the statistical auditors, to defraud the Commonwealth? Not very likely.

  • Sgt. Pepper’s Bleeding Heart

    Ellie= I get the argument for the estate tax, that junior should make his own fortune, but I think the money belongs to the person who earned it and simply transferring it to another person is not a logical thing to tax.

    So we should burn all a person’s assets when they die?

  • Sgt. Pepper’s Bleeding Heart

    Your smoking example set off my hair trigger alert for bullshit anti-tobacco control propaganda. As you were.

  • stardreamer42

     The Federal estate tax doesn’t even begin to apply until your estate is more than $5,000,000. Just so you know.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    It can look like a conspiracy when there are hundreds of independent ad-hoc efforts by parents to get medical professionals to “adjust” birth records due to a certain incentive.

  • http://twitter.com/FearlessSon FearlessSon

    The estate tax is insane. How can you tax dying? People already pay taxes.

    I believe that the intent of the tax is to discourage people hording their wealth until they die.  The idea being, “You can’t take it with you, you might as well put it back into economic circulation.”  

    To keep the wealth concentrated in one spot, even if it is an individual family, encourages dynastic aspirations.  As a nation that refuses to recognize formal nobility, I can see why such a thing is in place in the U.S.

  • cminus

    The estate tax is insane. How can you tax dying?

    With reference to the fundamental philosophic underpinning of capitalism, Adam Smith’s “The Wealth of Nations”.

    It may, however, sometimes be otherwise with those children, who, in the language of the Roman law, are said to be emancipated; in that of the Scotch law, to be foris-familiated; that is, who have received their portion, have got families of their own, and are supported by funds separate and independent of those of their father. Whatever part of his succession might come to such children, would be a real addition to their fortune, and might, therefore, perhaps, without more inconveniency than what attends all duties of this kind, be liable to some tax.

    He was even more direct in his lectures, arguing “there is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death”, and “the most absurd of all suppositions [is] that every successive generation of men have not an equal right to the earth”.  Which makes sense, if like Adam Smith you understand that the concept of inheritance is actually quite antithetical to capitalism.  Capitalism works when capital is free to flow to its most productive uses; distributing capital based on familial ties is inefficient in itself, and the error tends to compound over generations.  I can’t find the reference with a quick Google-fu, but I seem to recall that one of Smith’s students suggested that, in theory, the ideal capitalist society would have a 100% inheritance tax as its only tax.

  • Donalbain

    Inheritance tax (not death tax, as once someone is dead, they cannot pay taxes) is, in my opinion one of the best forms of taxation. We tax income, that is just how the system works, (and if you oppose all taxes, then get the fuck out of our society, you whining fuck) and it just seems fairer to me to tax unearned income as opposed to greater taxation on earned income.

  • http://loosviews.livejournal.com BringTheNoise

     Nailed it. If I’m paying tax on the money I actually did something to earn, then why would I possibly get upset at paying it on money I get literally by accident of birth?

  • wendy

    The estate tax was originally thought up, and heavily lobbied for, by Andrew Carnegie. 

    His point was 

    1) A hereditary aristocracy would be a bad thing for America.

    2) Letting money accumulate in too few places keeps it from flowing through the economy. Also bad for America.

    3) People who’ve amassed great fortunes in their lifetimes probably know better than most of us how best to spend a great fortune. They absolutely know better than their children and grandchildren who contributed nothing to the amassing of that fortune. Putting a great big whopping tax on that pile once the person who amassed it is no longer there to personally direct it provides an incentive for the earner to DO SOMETHING USEFUL WITH IT before he dies. 

    Carnegie’s personal choice was libraries… but I suspect he’d be just as pleased about Bill Gates trying to eradicate polio and malaria and bring family planning to every woman in the world. 

  • DorothyD

    The current tax is 35% on estates of greater than $5,000,000. Barring congressional action it will revert to 55% on estates of greater than $1,000,000. Hence speculation of hastened deaths. 

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- I don’t see something being “good for society” as a reason to force someone to do it.  Respecting peoples private property is better for society. Carnegie was wrong so was Adam Smith. It’s not the end of the world though.

    Chuck Hagel for president.

  • Carstonio

    Respecting peoples private property is better for society.

     

    That’s almost an argument against all taxes, not just inheritance taxes. Government is somewhat like a giant cooperative where responsibilities are shared for the common good. It’s reasonable to require people to pay more taxes when they can afford to pay more. 

  • Donalbain

     Chris has already said he opposes all taxes.

  • Carstonio

    That’s a recipe for no roads, schools, libraries or defense. Or else all these would be funded by user fees. A society only for those who can afford it.

  • http://twitter.com/Didaktylos Paul Hantusch

    My proposal on reform of taxation of inherited wealth: don’t tax estates at all. Instead, the value of any BEQUEST in excess of what that person would have received had the decedent died intestate should be treated as part of that year’s taxable income.

  • Beroli

     

    Respecting peoples private property is better for society.

    You have no basis for believing you have any clue what is better for society. Everything you post is knee-jerk and circular: Taxes are bad because they are taxes, starvation is mildly regrettable but unless it’s caused by taxes it’s not really bad.

  • EllieMurasaki

    So no one should be forced to pay for the goods they acquire, on the grounds that it being good for society to pay your way isn’t a good enough reason to insist that people pay their way?

  • EllieMurasaki

    Which, if the decedent has a spouse, two kids, and thirty million dollars, means each of the beneficiaries gets ten million dollars tax-free, unless the decedent decides one kid is getting five million and the other fifteen, in which case the only tax is on five million of the kid with fifteen.
    No.

  • Donalbain

     No.. if we only had enough faith in the Holy Free Market, then all of those things would be provided by It’s beneficence.

  • wendy

    Carnegie was wrong? Do you really think he amassed that fortune with no help from society (through government?)

    The railroads that were the single biggest customer for his steel were heavily subsidized by government. His second biggest customer was pipes for city water mains, also a government purchase. When his steelworkers tried to unionize, when the miners who dug up the raw materials for steel tried to unionize, it was government troops who protected Carnegie’s interests. 

    How is society collectively, through government, not entitled to take back half of what’s left after he’s spent all he can spend in his entire life? 

  • cminus

     Carnegie was wrong so was Adam Smith.

    As a matter of logic, Adam Smith was not wrong.  His elucidation of how capitalism, properly understood and with all necessary preconditions met, provides for the most efficient distribution of resources has survived every challenge thrown at it for well over two centuries.  His identification of the necessary preconditions, and the grounds for their necessity, has proven similarly ironclad.

    Now, you may be of the opinion that Adam Smith’s failure is in the realm of ethics, not of logic — “even if inheritance taxes are the most appropriate form of tax for a capitalist society, they are inherently immoral and should not be levied”.  But once you make that argument, you have descended into the realm of subjective value judgments, and your assertions have no more inherent value than mine or Fred’s or anyone else’s.  And, frankly, in the court of public opinion your plan for a society without taxation — or, as it also known, “anarchy” — is certain to finish well behind Adam Smith’s, or even Karl Marx’s.


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