Frank Keating, former conservative Republican governor of Oklahoma, might just save the death tax this week.
#ad#With a vote to repeal permanently the federal estate tax slated for this week, Republican senators have begun recently discussing a compromise (as they refer to it, of course) that would preserve the tax while raising the exemption and lowering the rates–an idea Keating has been pushing since he became the top lobbyist for the life-insurance industry.
Those who remember Frank Keating from his Oklahoma City days might be surprised that he could be the man to save the estate tax. He was a conservative governor of a conservative state. In 2000, many conservatives touted him as the best choice for George Bush’s running mate.
More to the point, Keating as governor was no fan of the estate tax. “I believe death taxes are un-American,” Keating wrote in the Spring 2002 newsletter of Americans for Tax Reform. “They are rooted in the failed collectivist schemes of the past and have no place in a society that values entrepreneurship, work, saving, and families. I commend President Bush for putting us on course to end the federal Death Tax. We intend to do the same in Oklahoma.”
But the Frank Keating walking the halls of Congress these days is a different man, who seems to have “grown” since coming to Washington after his term ended in Oklahoma City.
In 2004, Keating advocated preserving the “un-American” “death tax,” calling himself a “populist” and insisting “we don’t have a class system in this country.” On another occasion, he told a Seattle newspaper he wanted the estate tax preserved because, as he said, “I am institutionally and intestinally against huge blocs of inherited wealth. I don’t think we need the Viscount of Enron or the Duke of Microsoft.”
Keating is just representing his clients. The former Oklahoma governor now heads the American Council of Life Insurers (ACLI), and is a registered lobbyist for them on tax issues, including the death tax. He told Robert Novak last month that his recent visits to the Hill have been for other purposes, but that he talks to lawmakers about the repeal when he is asked.
ACLI wants the estate tax preserved. Aside from Keating’s personal populist and intestinal views on the tax, life insurers have a clear financial interest in preserving the estate tax. Life insurance done right is a prime form of estate planning, as are annuities–two products sold by the companies which pay Keating’s salary. Both products would become far less appealing if Uncle Sam weren’t threatening to tax a hefty portion of your estate upon your demise.
The life insurers’ fondness for the death tax might explain why ACLI’s PAC in recent years has shifted from favoring Republican candidates 2-to-1 before Keating took over, to slightly favoring Democratic candidates these days. The PACs of the three largest life insurance companies all have favored Democrats this year, too.
For their access to Democrats, the life insurers can also thank senior ACLI lobbyist Kimberly Dorgan, whose husband is Byron Dorgan, a pro-death tax Democratic Senator from North Dakota.
And so it appears Keating’s job is to work the Republican side of the aisle. His influence there might be why a few Republican senators were quietly suggesting that the best they could do was raise the exemption on inherited estates and lower the rate.
Most infuriating, if the conservatives lose and the estate tax survives, the media will paint it as a loss for the wealthy. Meanwhile, the conservatives are fighting against Met Life and Prudential. Alongside the insurers is Warren Buffett, who gets to frame his support of the death tax as a philanthropic concern while getting bargains on family-owned companies such as the Buffalo News and Dairy Queen that sell at bargain prices thanks to the death tax. Buffet’s Berkshire Hathaway is also in the insurance business.
This week there will be a battle for the hearts of Republican senators. On one side are the conservatives who will try to hold the GOP to their promises to abolish this tax President Bush has derided for years as unfair. On the other side will be big business, which sees in the death tax, as in so many cases, just how big government and higher taxes can serve its purposes.
–Tim Carney is the author of the forthcoming The Big Ripoff: How Big Business and Big Government Steal Your Money, to be released July 7 from John J. Wiley & Sons. He is also the Warren T. Brookes Journalism Fellow at the Competitive Enterprise Institute.