Bipartisan estate tax profiteers

An estimated 10 percent of life insurance company revenues come from products designed to help customers avoid or minimize estate taxes.

This is why the life insurance industry spends so much money lobbying to save the death tax. While the effort – lobbying against your clients’ interests so they will have to keep purchasing your products to protect them from the taxman – is unseemly, it has this virtue: it’s bipartisan.

The two leading life-insurance lobbyists – and thus the two biggest boosters of the death tax – are a former Republican governor and the wife of a Democratic senator.

Frank Keating was a conservative hero as Oklahoma’s governor from 1994 through 2002. During his term in Oklahoma City, he called the death tax “un-American” and “rooted in the failed collectivist schemes of the past.” Then he became a highly paid lobbyist for the life insurance industry, serving as President and Chief Executive Officer of the American Council of Life Insurers (ACLI) until Nov. 3 of last year. In that position he adopted the mantra of egalitarianism, declaring himself “institutionally and intestinally against huge blocks of inherited wealth.” (ACLI’s new president and CEO is another Republican: former Idaho governor and senator Dirk Kempthorne.)

Kimberly Dorgan is ACLI’s senior executive vice president for public policy. Her husband, retiring Sen. Byron Dorgan (D-N.D.) has been a consistent and vocal advocate of the estate tax, even as his wife profited from it. In 2001 and 2002, Sen. Dorgan led the push to save the death tax from President Bush’s tax cuts, and later from GOP efforts to permanently kill the tax. “This is tax relief for billionaires,” he said, in keeping with the life-insurance industry’s script.

According to federal lobbying expenditure reports, compiled by the nonpartisan Center for Responsive Politics, the life insurance industry spends about $10 million per month lobbying, with ACLI leading the pack.

During some quarters, the Center for Responsive Politics has found ACLI’s lobbying tab has put them among the biggest spending lobbies in all of Washington. In the second quarter of 2010, for example, ACLI spent $2.32 million, outpacing the American Petroleum Institute (which was dealing with the blowback from the Gulf oil spill) and the Securities Industry and Financial Markets Association (while the financial regulation bill was before Congress).

In addition to its in-house lobbyists, ACLI also employs a stable of hired guns from powerful K Street lobbying firms. This is a bipartisan team as well.

Pamela F. Olson, as a former assistant secretary of the Treasury for tax policy under George W. Bush, testified before Congress in favor of repealing the death tax. Now she’s a lobbyist at Skadden Arps where she advances ACLI’s tax agenda, according to lobbying filings. 

Former Democratic congressman Vic Fazio is an ACLI lobbyist, as are at least two Democratic alumni from the staff of the tax-writing Ways & Means Committee. Jimmy Carter’s former domestic policy advisor Bert Carp bats for ACLI, as does Ronald Reagan’s former budget aide Steve Hart.

While the death-tax lobby has bipartisan personnel, its political giving has had a distinctive lean toward the party in power. In the recent election, for example, ACLI’s political action committee favored Democrats by a two-to-one margin. That’s a stark shift from a decade ago when ACLI’s PAC overwhelmingly favored GOP candidates.

With permanent estate tax repeal on the table, however, and Democrats clearly in control (until the November election changed all that), ACLI bet on its congressional friends.

While a majority of the new Congress appears to be opposed to the death tax – either signing the American Family Business Institute’s estate-tax repeal pledge, or voting against the tax in the past – supporters continue to paint it as a check on the super-wealthy.

What it really is, however, is a huge check for the life insurance industry. The bigger the death tax, the more the insurers profit.

Dick Patten is president of the American Family Business Institute, a trade association representing family owned businesses and farms.