McCain Will Now Support Estate Tax Reform

John McCain does not support the repeal of the estate tax, a thorn in his party’s side on this issue and a source of recent within party attacks on his position, including targeted ad campaigns. In a significant shift, McCain will now vote to support cloture and will work for a scaled down version of the estate tax reform package.  Political pressure from within the GOP motivated the change in position:

McCain and Taxes, by Robert Novak, Chicago Sun-Times (alternate link): Sen. John McCain will take a small step this week toward making peace with the Republican Party on the tax issue. He plans to vote for cloture to block a filibuster on the House-passed bill repealing the estate tax. ... McCain is not merely voting for cloture to enable an up-or-down vote on the estate tax. He is ready to support a significant scaling down of what Republican regulars call the "death tax" that is being crafted by his conservative colleague from Arizona, Sen. Jon Kyl. While McCain's rhetoric against the very rich passing on their wealth still sounds Democratic, his vote this week will be Republican.

The McCain problem is a major one for his party ... He is the most broadly popular possible Republican candidate, whom Democrats despair of opposing ... Yet, his ability to win closed Republican primaries is questionable because of his apostasy on several issues -- especially tax reduction.  When I asked McCain last week about his views on the estate tax, he made clear how opposed he is to repeal: "I follow the course of a great Republican, Teddy Roosevelt, who talked about the malefactors of great wealth and gave us the estate tax. I oppose the rich passing on fortunes." … I then asked what he will do when the bill comes to the Senate floor after Labor Day. McCain told me he will vote for cloture... McCain also told me he looks to Kyl for a compromise short of total repeal. He added he could support Kyl's plan to keep the estate tax rate at the capital gains rate (currently 15 percent) with an exclusion from taxation of an estate's first $5 million -- compared with 55 percent and $1 million in the basic law. … McCain has been bombarded all summer with attacks on him for opposing repeal. In mid-July, Birmingham, Ala., lawyer Harold Apolinsky, a longtime crusader against the estate tax, sent 23,600 letters to contributors who gave at least $2,000 to 15 senators opposed to repeal. McCain contributors were told: "Sen. McCain has shockingly failed to act on an issue of extreme importance to you." … it asked backers to "contact" McCain and lobby him for his vote. In August, the American Family Business Institute sent letters to all of McCain's supporters recorded as giving him $1,000 or more, requesting their help in changing his vote to support repeal. On Aug. 29, the Club for Growth revealed TV ads personalized for targeted senators -- four Democrats and McCain: "Sen. John McCain wants to keep the death tax. Isn't a lifetime of taxes enough?" The McCain ads are running in New Hampshire, the first presidential primary state.

...he may get away with diverging from the Republican consensus on campaign finance reform, global warming and the highway and energy bills, but tax policy is another matter. ... McCain's willingness to support cloture and a compromise bill signals he recognizes that political reality.

Comments

[Bruce Webb]

Classic innumeracy and obfuscation. If the issue really was family farms and small businesses we could have an honest discussion about the proper level to set the exemption. Personally I think $5 million and a 15% rate is more than generous and would exempt the overwhelming majority of estates subject to the estate tax.

But it is not about family farms. No more than Privatization is about retirement security. No more than the Flat Tax is about making life simpler for taxpayers. Norquist, Forbes and Kemp have an agenda and it has nothing to do with making things better for the middle and working class. Family farms and small business are props.

Bottom line, Rich people hate paying taxes. They also generally are lousy tippers, ask any waitress, and in my experience rarely buy a round for the house unless they are certain they will get drinks in return. There are exceptions, generally among people who were born working class and haven't forgotten where they came from. But taken as a group wealthy people just hate to give it up and are perfectly willing to use small farmers as useful dupes in the process.

[anne]

Though I rather like John McCain for any spark of independence, the sparks are all too short lived. Who knows though, a few days ago abolishing the estate tax was a done deal. Possibly there can be a compromise with an ample wealth exemption allowed. Possibly the initial test of Republican solidarity in new conditions.

[cl]

Yes, this too gives me pause about McCain. I like the idea of a maverick and it seems that he is cashing in that quality now.

It also gives me pause about the general public who seem to be too easily manipulatable.

[Bruce Webb]

There remains an odd notion that the people who are pushing for Flat Taxes or abolition of the Estate Tax would be content with some solution that leaves a top marginal rate in place, that some solution that works for almost everybody but leaves Steve Forbes and Paris Hilton exposed is acceptable. This is not about the ultra-rich pulling for the kinda rich or the almost rich, not a single one of these people are drying a single tear over the plight of the small businessman or the family farmer. Those people are just props.

When George Bush wanted to sell his tax cut he used a couple making $40,000 with two school age kids as his example. Strangely enough that was the precise family income and structure to derive the maximum benefit from the tax cut. Prior to the Bush tax cut they had an exposure of $1600, after $300 apiece and the $500 tax credit for each kid their overall tax went to zero! A family making less than that would not have had the same numeric savings, a family making more than that or without school age children would not have had the same percentage savings.

That was no accident or coincidence, these people have no shame.

When they talk about deficit reduction or tax fairness or retirement security it is time to check your wallet. Because they don't care about any of that in any serious way, they just want to collect and keep all the Benjamins they can.