The following is an excerpt from an article I originally wrote in June 2008. Today, with the Bush tax cuts set to expire, the insights of this article are more important than ever.
Moving on to a different area in human predictability, Gerald Prante of the Tax Foundation recommended a white paper that examines how people adjust major life decisions—including death itself—in response to tax incentives. Kopczuk and Slemrod’s 2001 paper, “Dying to Save Taxes: Evidence from Estate Tax Returns on the Death Elasticity,” is a fascinating look at these timing decisions.
In an article I penned for the March 2007 issue of the HS Dent Forecast, “Voting for Fertility,” I commented that government pro-natal policies were not likely to work. No government has enough money to convince reluctant adults to become parents unless they were already strongly considering it. Even Russia’s generous $10,000 “baby bonuses” do little to compensate parents for the money, time, and loss of freedom that children bring. Likewise, it is not likely that many couples would permanently forgo marriage to avoid the marriage penalty on their yearly 1040 or that a significant number of healthy people would commit suicide to escape the estate tax. Continue Reading →