On January 1, the estate tax—now at zero—comes roaring back. Assuming congressional inaction, the tax kicks in at 55 percent for all estates over $1 million. In fact, it's unlikely that the tax will be back in full; this is one of the issues the lame ducks are supposed to be dealing with right now. But where and how new rates are fixed means there's a lot of cash at stake, which means there's a lot of cash being spent on the Hill.
Life insurance is a good way to work around a system of high estate taxes—payouts are untaxed, and likely to remain that way. This means the life insurance industry has a lot to gain in a world with high estate taxes. From a nice little paper [PDF] for the American Family Business Foundation by Tim Carney and Dick Patten:
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….
Life insurers paid more to lobby than even the securities and investment industry, and that period included the debate and passage of the financial regulation bill. Famously connected industries like tobacco, health insurers, and defense contractors all spent significantly less on lobbying than did the life insurance industry.
New York Life, Met Life, and Northwestern Mutual each spent about $500,000 per month on lobbying in the first half of 2010.
The industry also seems to believe that Republicans are serious about keeping estate taxes low or at zero, as evidenced by the trend in political donations:
Let's hope Republicans live up to the life insurance industry's low expectations.
Via Arnold Kling.