The Federal Estate Tax (aka, death tax) is currently repealed, due to a provision in the 2001 Economic Growth Tax Relief and Reconciliation Act (EGTRRA). However, on January 1, 2011, the tax comes back at the rate of 55 percent on all estates above $1 million.
Estate tax advocates often portray their fight as a struggle for fairness against greedy billionaires and spoiled heiresses, but as this American Family Business Foundation Issue Brief documents, it’s the multi-billion-dollar life-insurance industry who profits handsomely from the tax at the expense of family business owners and farmers, to whom they sell estate tax-related products.
It’s no surprise then that the life insurance industry, which stands to gain an estimated 10 percent of its revenues from estate tax policies, is leading the charge to ensure that the estate tax roars back to life.
Other findings in “Life Insurance Cash Cow: An Issue Brief on the Hidden Side of Estate Tax Lobbying,” include the following:
- The life-insurance lobby spent $10 million a month lobbying in the first half of 2010. During this same period, only three industries – pharmaceuticals, electric utilities, and oil and gas – spent more over the same period.
- The leader of the life-insurance lobby, the American Council of Life Insurers (ACLI), spent $2.32 million in lobbying in 2010’s second quarter. Only 10 industries spent more.
- The life-insurance industry exercises bi-partisan influence on the estate tax issue.
- Through most of 2010, the two leading life-insurance lobbyists – and thus the two biggest advocates for the death tax – were a former Republican governor and the wife of a Democratic Senator.
- Former Oklahoma Governor Frank Keating, President of ACLI until just recently, supported estate tax repeal until taking his position at ACLI in 2003.
- Out-going Senator Byron Dorgan (D-ND) has been a consistent and vocal supporter of repeal. His wife, Kimberly Dorgan, is the second-in-command at ACLI and an active lobbyist in favor of keeping the estate tax.
- ACLI and other lobbying firms have funded and lobbied for “grassroots” front groups to paint a “spoiled rich kid” image for those who support repeal.
- Warren Buffet, a major estate tax advocate, makes substantial profits through Berkshire Hathaway’s holdings in multiple life-insurance companies.
- While the majority of the life-insurance industry lobbies hard against repeal, the organization representing independent life-insurance agents actually favors repeal.