During my period of government service, I was subjected to occasional professional-grade lobbying and wasn’t highly impressed. A lot of the “pros” struck me as ill-informed and more eager to present a congenial image than back their clients’ positions with persuasive arguments. Still, their worst efforts tended to be merely ineffective, not seriously counterproductive – unlike one currently being pushed by the life insurance industry’s leading trade group.
As reported by the OpinionJournal Political Diary (subscription-only but more than worth $3.95 a month),
Sometimes it seems that the real purpose of the federal estate tax is to create jobs for accountants, lawyers and insurance agents who are employed to help Americans find clever ways around paying the tax. So it should be no surprise that the life insurance industry is engaged in a full-court press to lobby for retention of the tax. The Association for Advanced Life Underwriting (AALU) has engaged in a campaign to save the death tax by urging its members to warn Congress of the worrisome “fiscal implications” of the death tax repeal. “Our lobbyists have been busy communicating our important message,” says an “URGENT” memo to all AALU members. “Senate offices repeatedly tell us that pro-repeal forces are drowning them in constituent communications. It is crucial that our voices be heard!”
“Fiscal implications” may not be the most cogent argument for repeal of a levy that produced, before the EGTRRA phase-out began, about one percent of federal revenue and has since trended downward. What makes the AALU a Darwin Award candidate is that tax breaks for life insurance cost the feds as much as the estate tax raises. If the estate tax should be retained, despite its negative impact on small business and the economy, why shouldn’t income credited to life insurance policies be taxed currently, just like earnings on most other individual investments?
Were Congress to entertain the idea of fundamental changes in the tax treatment of life insurance (not at all inconceivable), the AALU would be quick to assert that all sorts of factors other than “fiscal implications” ought to enter into the policy equation, and I would agree with them. I wonder, though, how the group would or could respond to quote-backs from its own pro-estate tax propaganda.
I was sorry when former Oklahoma governor Frank Keating, who now heads the AALU, was passed over by the Bush Administration. If his organization’s latest campaign is indicative of his political savvy, maybe the Bush vetting crew knew its job.
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