Since one Arkansas senator, Blanche Lincoln, likely will be at the forefront of the fight to give more tax breaks to billionaires, it's worth mentioning that Paul Krugman (subscription only), is sounding the alarm on a coming vote on the estate tax. He notes the political timing -- massive tax breaks for billionaires when deficit reduction steps are reducing Medicare, Medicaid and education programs.
Any senator who votes to repeal the estate tax, or votes for a "compromise" that goes most of the way toward repeal, is in effect saying that increasing the wealth of people who are already in line to inherit millions or tens of millions is more important than taking care of fellow citizens who need a helping hand.
Who would benefit from this largess? The estate tax is overwhelmingly a tax on the very, very wealthy; only about one estate in 200 pays any tax at all. The campaign for estate tax repeal has largely been financed by just 18 powerful business dynasties, including the family that owns Wal-Mart.
You may have heard tales of family farms and small businesses broken up to pay taxes, but those stories are pure propaganda without any basis in fact. In particular, advocates of estate tax repeal have never been able to provide a single real example of a family farm sold to pay estate taxes.
Nonetheless, the estate tax is up for a vote this week. First, Republicans will try to repeal the estate tax altogether. If that fails, they'll offer a compromise that isn't really a compromise, like a plan suggested by Senator Jon Kyl, Republican of Arizona, that would cost almost as much as full repeal, or a plan suggested by Senator Max Baucus, Democrat of Montana, that is only slightly cheaper.
In each case, the crucial vote will be procedural: if 60 senators vote to close off debate, estate tax repeal or something close to it will surely pass. Any senator who votes for cloture but against estate tax repeal — which I'm told is what John McCain may do — is simply a hypocrite, trying to have it both ways.
Sebastian Mallaby of the Washington Post mentions Lincoln by name in his column noting a central question that the billionaire backers won't answer. How will the government make up the money lost by a giveaway to the billionaires?
People often remark on the perversity of popular support for estate-tax repeal. A majority wants to abolish the tax, even though only the richest 2 percent of households have ever had to pay it. Yet this shoot-your-own-foot weirdness is easily explained: Most people just don't know that, under the law's current provisions, a couple can bequeath $4 million without paying a penny to the government.
But I'm fascinated by the spectacle of elite support for this policy. How can the president and the abolitionists in Congress, who understand the tax and its details, possibly want to kill it? They all say they accept the principle that the tax system should be fair -- Bush officials are constantly claiming that their tax cuts are progressive. They all accept the principle that free trade and competition get the best out of American firms, so what about subjecting rich heirs to competition from ordinary Americans?
Repealing the estate tax is like erecting protectionist barriers around the hereditary elite. It is anti-meritocratic and unfair -- and antithetical to this nation's best traditions.