Two stories:
1. On February 2nd, a guy named Scott Lee Cohen won the Illinois Democratic primary for lieutenant governor. You probably know the rest -- this guy had a whoooooole bunch of skeletons in his closet. Cohen, under a lot of pressure, resigned after being made the butt of many a joke (and, if possible, making Illinois politics look even more ridiculous than it already did).
2. The Wall Street Journal yesterday published a story entitled "Why No Estate Tax Could Be A Killer." (A link is here.)
Is there a connection between these two stories? Yes, and that connection can be described in six words: THE FAILURE OF THE TRADITIONAL MEDIA.
As much as I make fun of Illinois Democrats over the Cohen affair, the fact is that his history -- steroid use and allegations of violent behavior -- was well-known to the Chicago media. They just chose not to report this history to Illinois voters, because... well... I guess they aren't very good at their jobs.
Ditto with the estate tax and the above WSJ article. Surprise surprise: having no estate tax (but a capital gains tax) will actually make even more estates subject to federal tax at death. You didn't know that? Talk to any estate planning attorney or accountant, and you would. Yet the article acts like this is some big, nasty surprise.
Here's a great quote from the article:
Under last year's law, estates up to $3.5 million, or $7 million for married couples, were exempt from federal tax. This year that law has been replaced by a fiendishly complex levy raising taxes on the assets of those with little as $1.3 million. It will affect the heirs of at least 50,000 U.S. taxpayers who die this year, whereas the old law affected only about 15,000 estates a year, according to the Tax Policy Center.
The article goes on to include this jaw-dropping statement: "This little-understood facet of the current law was enacted as part of a deal brokered in 2001...."
Wait -- so the media has known about this "little-understood facet of the current law" since 2001, but the Wall Street Journal is acting as though it's a huge surprise? On February 13th, 2010? Where has the Wall Street Journal been during the last nine years?
By reference, here's a section from my blog post dated June 3, 2005 on estate tax repeal:
... [I]f the death figures for 2010 are the same as in 2009, then we're trading an estate tax in 7,500 estates for a potential capital gains tax in the 56,300+ estates worth more than $1.3 million. The main question: How many of those 56,300+ estates will incur a capital gains "problem" (either a tax, or the need to expend substantial resources to compute the basis of inherited assets)?
Gosh, what an interesting question... for 2005. But again I ask, where was the Wall Street Journal and the rest of the traditional media?
