WSJ

Brad DeLong delong at econ.Berkeley.EDU
Tue Jun 11 14:39:53 PDT 2002



>Can somebody send me today's editorial feces from the WSJ
>on the Estate Tax. I want to blog them.
>
>thanks,
>max

The Death Tax Senators

We are about to find out how many of the 12 Senate Democrats who voted for tax cuts last year really meant it. They'll get the chance to prove their sincerity when the Senate takes up a vote to make repeal of the death tax permanent, perhaps this month. Last Thursday, 41 of their Democratic counterparts in the House joined the 256-171 vote to make this punitive tax disappear forever.

Majority Leader Tom Daschle first tried to forestall a Senate vote, because he knows a clear majority favors passage there too. But he was forced to give in recently in return for some concessions on the energy bill. So now he's trying to hold off Senate passage with a filibuster that requires 60 votes before it can get to President Bush's desk. Supporters of permanent repeal figure they have at least 58 votes, and Mr. Daschle has been twisting arms to block what is the will of many even within his own party.

Almost every Republican voted for repeal the first time around, though Jim Jeffords has since sold his vote for dairy subsidies. Liberal Rhode Island Republican Lincoln Chafee is also in doubt, as is John McCain, who voted against President Bush's original tax cut and moves further left by the month; maybe the Arizonan should consider truth-in-advertising and jump to Team Daschle.

The complete gang of 12 Democrats who voted for the tax cut last year is listed in the table nearby. Six are up for re-election this November, and to their credit three of those running have already said they'll vote for repeal. It's probably no coincidence that all three are running in conservative states carried by Mr. Bush in 2000 and all of them face more than token competition this year.

Two others running in November, New Jersey's Bob Torricelli and Louisiana's Mary Landrieu, have already flip-flopped and announced intentions to vote against permanent repeal. Their excuse is that things are different now that the country is facing budget deficits and wartime expenses. But it's far more likely that they've changed because their re-election opposition has since all but collapsed. Mr. Torricelli was especially fond of just about any tax cut in his taxophobic state, until Justice declined to indict him for accepting illegal gifts and he concluded the New Jersey GOP couldn't muster serious opposition.

One vote still in the balance is Missouri's Jean Carnahan. She faces a strong challenge this fall from Republican Jim Talent, who has made the death tax a central issue in his campaign. She's doing a remarkable dodge and weave, claiming to favor repeal for small businesses and farms but she is undecided on the repeal that passed the House. Sounds to us as if she's waiting for orders from Mr. Daschle; if he doesn't need her for his filibuster, he'll give her a pass to vote yes and remove the issue for November.

One virtue of this death-tax debate is that it reveals what's really at stake in this November's Senate races. If Mr. Daschle retains his Democratic majority, further tax cutting is dead. But if Republicans pick up a mere one seat, for a 50-50 split, they'll be able to organize the Senate with the help of Vice President Cheney's vote and tax-cutting becomes possible again.

Mr. Daschle gave his Bush-state Democrats a tax-cut pass last year, but the perversity of Senate budget rules meant the tax cuts end after 10 years. This is crazy tax policy, since it increases uncertainty and would amount to the largest tax increase in history in 2010 if the law isn't changed.

It is absolutely insane in the case of the estate-tax repeal; the death tax declines slowly over the next seven years, disappears entirely in 2009, but then snaps back to its confiscatory 55% pre-Bush rate on January 1, 2010. So forget about rational estate planning. Far from the tax on the uberrich that Dems claim it is, only 5,200 of the 116,500 tax returns filed in 1999 were for estates worth more than $5 million. In any case, the main argument for repealing the death tax isn't economic, but moral. It's unjust for the government to double tax away, at death, the fruits of a life of work and thrift.

The death-tax repeal vote is also about truth in politics. A year ago these Senators voted to repeal the death tax, but only with a wink and an asterisk that it would all come back after 10 years. No wonder voters are cynical about politicians. The next death tax vote will separate the cynical from the sincere.

Updated June 11, 2002



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