New tax in 2006 budget?

The future's uncertain and the end is always near.

Or thus sung Jim Morrison a generation ago. It is as true now as it was for him in 1971. That's why many people purchase life insurance: to protect their families from the loss of the income stream should the wage-earner(s) die. In insurance industry terms, the concept is one of "indemnity," and it means setting to rights something that has been lost.

Life insurance benefits are not taxed by the federal government because they are not the "winnings" in a lottery -- money someone receives that he or she would never have realized had they not gambled. The proceeds from life insurance come from a pool of collective premiums kept by insurance companies in safe investments against the hazard of premature death. These monies merely replace most of what would have taken place had the wage-earner lived. In other words, the survivors are indemnified. They are given a chance at normal life.

There is word today that someone in the Bush White House may not understand the basic concept of life insurance. There are reports that the new 2006 budget seeks to levy a tax on at least some types of life insurance benefits. Our first warning came from an email contributor to George's daily update at UrbanSurvival.com . We went to the official documents at one U.S. government website and read, in ominous language on page 17 of the 27 page budget summary:

Apply an excise tax to amounts received under certain life insurance
contracts........................................................

There are no details.

Assuming there may be taxation fire in this bureaucratese smoke, What in hell are the Bush budget people thinking? Listening to the Republican rhetoric of the last eleven years, we thought the idea was to get rid of death taxes and, furthermore, to get government out of the picture when it comes to all estate planning.

Taxing life insurance benefits is an idea only a liberal can truly love. It would make a shambles of the careful financial planning that (admittedly a minority) of people have done over the years. Furthermore, how could we trust an administration to work for tax reform of any sort (including Social Security) if it tries to sneak something like this past us?

We will concede right now that we have nothing but our paranoia and a couple of ominous lines to justify any real panic, but that is enough to justify raising the taxpayer alert level to orange.

We'll keep looking for more information. If you know something or come across anything, pass it along at Oklahomily@cox.net.