RUST COMMENTARY: WASHINGTON NEEDS TO GET SERIOUS ABOUT ABOLISHING DEATH TAX

Death's taxes: "I think it's irritating that, once I die, 55 percent of my money goes to the United States government. ... You know why that's irritating? Because you would have already paid nearly 50 percent. ... When you leave a house or money to people, then they're taxed 55 percent, so you've got to leave them enough so that once they're taxed, they still have some money." -- Oprah Winfrey, August 1997

Oprah's got that right. In this summer of tax-cutting campaigns, the estate tax is on the table, right where it belongs.

The House has included outright repeal of the death tax, as it has come to be known, in its tax bill. The Senate most likely will take up the matter when it gets to conference. Even Senate Democrats are on board, albeit in less satisfying form. The Associated Press reports that Michael Bean of the Environmental Defense Fund called the estate tax "highly regressive in the sense that it encourages the destruction of ecologically important land in private ownership."

Hear! Hear! While a few diehards still defend the tax most of us have come to recognize that this "plutocrats' levy" plays a damaging role in the lives and deaths of quite ordinary Americans.

Currently kicking in for estates valued at $650,000, the tax starts at a punishing 37 percent rate and moves up smartly to 55 percent. These top rates exceed that of tax hogs like Sweden, Germany and Belgium. The Japanese alone pay higher estate taxes than Americans. Money in a 401(k) or other tax-deferred retirement plan is also subject first to the income tax, say 50 percent, including state levies, and then an estate tax on whatever is left. Assuming the $650,000 is used up by other assets, such as a home, your heirs will get a fourth of this kitty, the government three-fourths.

Escaping this confiscatory regime has long been the preoccupation of American families. Their legitimate quest to preserve 401(k) nest eggs and other property has driven them to accountants and attorneys. These professionals have logged untold thousands of billable hours generating and perfecting a menagerie of estate-tax avoidance techniques. One has to wonder what would life on Earth be like without, to name two unlovely entities, the Charitable Remainder Annuity Trust or the Charitable Remainder Unitrust.

Washington from time to time has rewritten estate tax law, trying to render such creatures extinct. But, of course, fresh loopholes find their way into the code. Until 1981, for example, families incurred the penalty after the death of the first spouse. That year, Congress rejiggered the estate tax so it hit only after both spouses in a marriage had died, the theory being, we suppose, that couples were less likely to struggle against the levy from the grave.

As it emerged, the principal consequence of this so-called reform was a booming business in second-to-die life insurance, whose proceeds, when structured properly, escape the estate tax and enable heirs to pay off their other bills. Some well-engineered life insurance proceeds escape the estate tax, so instead of leaving money to your heirs, you can use it to buy insurance, with them as the beneficiary. A study for the Joint Economic Committee found that in 1998, compliance costs for the estate tax were $23 billion, about the same amount as the revenue generated by the tax.

Then there are the casualties in small business, particularly family businesses. Hardest hit are owners of asset-rich enterprises in areas like farming or timber that, while growing, may not throw off much cash. In theory, again, the law provides a break for these families. The reality though is that prohibitive estate taxes force heirs to dismantle their legacy to pay the taxes on it.

The Associated General Contractors of America points out that any contractor who purchased the three pieces of equipment basic to his trade -- the off-highway dump truck, the bulldozer and the front-end loader -- has already amassed assets valued at $1,050,000, or well beyond the current exemption.

It is worth noting that a good share of these vulnerable concerns are owned by two groups whom high-tax leftists claim to protect: women and minorities. A survey of black-owned businesses by Joseph Astrachan and Craig Aronoff of Kennesas State College in Georgia found six in 10 firms reporting that the estate tax makes the survival of their business after the current generation significantly more difficult or impossible; close to a third said their heirs would have to sell the business to pay the tax.

But the costs extend beyond any specific group. The JEC study estimates the existence of the estate tax this century has reduced capital stock of the economy by $497 billion, or 3.2 percent. Harder to quantify is the damage to the nation's entrepreneurialism, we still retain a tax targeted to punish those who choose to reinvest profits in growing businesses, rather than spend them.

Laying the estate tax to rest is not a Herculean task. Even in the Beltway budgeteers' irrelevant arithmetic, the tax "costs" only $27 billion, or less than two percent of federal revenue. There's no excuse here for not moving boldly. -- The Wall Street Journal

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Investigating the culture: The Family Research Council has sent a letter to the U.S. Senate supporting the efforts of Sen. Sam Brownback (R-Kan.) to create a special committee to respond to such tragedies as the Columbine High School shootings by investigating the decline of America's culture. Brownback says that private Senate discussions on the idea have been going on for at least a month, and a Republican leadership aide reports that the committee could be created as early as next month. The committee would be funded with existing funding, rather than new money. Senate aides close to the situation say that the entertainment industry is lobbying hard to stop the committee's creation in fear that they will be one of its targets.

Regrettable reports: It is saddening to hear reports that former speaker of the House Newt Gingrich has been involved in an adulterous relationship for at least three years with a 33-year-old congressional staffer. Earlier this month, Gingrich filed for divorce from his wife of 18 years. It was commonly understood that conduct like this was a factor among members of Congress who were inexplicably timid when President Clinton's adultery spilled over into allegations of perjury and obstruction of justice. Standing for the family and other moral principles requires far more than a good floor speech. It means staying true to one's commitments and guarding one's steps. -- Washington Update

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Alexander adieu: Lamar Alexander dropped out of the GOP presidential race, a victim of George W. Bush's popularity but also of those who want to purge money from politics. He and the voters deserve better.

We spoke with the former Tennessee governor about this one evening recently aboard his campaign bus, and his words deserve a wider audience. To the usual Beltway reformers, money is the original political sin. But to Mr. Alexander, it is the post-Watergate do-gooders who have screwed things up, especially with their insane $1,000 limit on individual campaign donations.

Because of those 1974 reforms, he told us, "The election is longer, there are fewer choices, and money is more important, not less."

Think about these counterintuitive points.

The limit on giving means candidates have to raise cash from many more people, which means they have to start earlier. Thus a candidate who isn't rich or famous has to begin years in advance to have any realistic chance. So campaigns are longer than they need to be.

Money also becomes more important, not less, because candidates have to spend such a large portion of their time chasing those $1,000 donors. This means there's less time to meet average people or talk about issues.

Finally, and most destructively to our politics, the limits reduce the quality of the candidates in any potential presidential field by putting a premium on moneygrubbing. All kinds of good potential presidents are out of the running simply because they won't, or can't spend eight hours a day dialing for dollars. "Think of who would be running for president this year if those 1974 reforms had never passed," Mr. Alexander said.

Maybe Colin Powell, or former Defense secretaries Dick Cheney and Donald Rumsfeld, or a slew of popular and successful governors: Wisconsin's Tommy Thompson, Oklahoma's Frank Keating or Tom Ridge of Pennsylvania. But all of them were at an immediate fund-raising disadvantage because, unlike Mr. Bush, they hailed from smaller states, lacked a famous name or couldn't campaign as a full-time job.

Contrast those names with the current remaining GOP field. Mr. Bush is a sitting governor, but the other four top finishers in Iowa's straw poll have never held elected office. Steve Forbes is a millionaire, Elizabeth Dole is a woman celebrity with a famous Republican name, Pat Buchanan is a TV host, and Gary Bauer is a ideological candidate who can afford to live off the ground because he has no realistic chance of winning. John McCain, meanwhile, supports starry-eyed reforms while refusing even to show up or spend his money in Iowa.

Consider the Democrats, with just two candidates today: an incumbent vice president and an ex-senator with a famous name. No Bob Kerrey or Paul Wellstone to create a real race. Or, for that matter, John Kerry, who would be staked by the Heinz fortune. What could possibly be corrupting about that? Instead of these interesting figures, a frustrated Warren Beatty threatens to self-finance a run. The anti-money reformers are turning politics into a circus.

A better system, says Mr. Alexander, would allow much bigger individual contributions but require complete disclosure, preferably right away on the Internet. The media and the voters would be able to see for themselves which interests were backing which candidates.

We don't think money is the only reason Mr. Alexander didn't catch on this time around. His tendency to stress political tactics over ideas meant he never built a firm GOP base. His signature education ideas were echoed by other candidates (though we hope some pick up his theme that "it is better to repeal" regulations than to pass them.) Mr. Bush appealed to the same voters who like Mr. Alexander, but with a fresher act.

And yet a man as dogged as he is wouldn't be dropping out six months before the first votes for delegates are cast if the campaign-finance rules didn't make it so hard for him to compete. We wish him well.

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Australia crime increase after guns are confiscated: It has now been 12 months since gun owners in Australia were forced to surrender 640,381 personal firearms to be destroyed, a program costing the government more than $500 million dollars. And now the results are in: Australia-wide, homicides are up 3.2 percent. Australia-wide, assaults are up 8.6 percent. Australia-wide, armed robberies are up 44 percent (yes, 44 percent). In the state of Victoria, homicides with firearms are up 300 percent. Figures over the previous 25 years show a steady decrease in armed robbery with firearms (changed drastically in the past 12 months). There has been a dramatic increase in break-ins and assaults of the elderly. Australian politicians are on the spot and at a loss to explain how no improvement in "safety" has been observed after such monumental effort and expense was successfully expanded in "ridding society of guns." Bet you won't see this data on the evening news or hear your governor or members of the state assembly disseminating this information. It's time to state it plainly: Guns in the hands of honest citizens save lives and property. And, yes, gun-control laws only affect the law-abiding citizens. Take note, Californians, before it's too late! -- Orange County Register letters to the editor

~Gary Rust is president of Rust Communications, which owns the Southeast Missourian and other newspapers.