Robert Novak
WASHINGTON -- "If Al Gore had been elected, we could have gotten exactly the same outcome," an angry Rep. Jennifer Dunn told me this week. She was reacting to signs of retreat by the Bush administration from total repeal of the estate tax. That would connote a small victory for class warfare but a huge triumph for a secret lobbyist coalition. Dunn, an early and eager backer of George W. Bush for president and a mainstream Republican, would seem the last member of Congress likely to criticize him. But she is frustrated, along with other Republicans who have spent years building opposition to the "death tax" by portraying it as a noxious device that confiscates wealth that already has been taxed once and often twice. Repeal last year was vetoed by President Clinton, who would have signed the limited measure now being considered by his successor. If Bush embraces the same kind of bill that Gore advocated, it will not be because the president is swayed by left-wing class warfare. Rather, it will vindicate Nobel laureate economist Milton Friedman's bleak prediction that tax reform is perpetually doomed by the symbiotic relationship between lawmakers and the lobbyists who contribute to political campaigns. The warning came last weekend when John DiIulio, an independent Democrat named to head Bush's program of faith-based initiatives, declared against total elimination of the estate tax. Was this non-politician "the skunk at the picnic" (as he described himself to The New York Times), attacking part of the Bush tax program without higher approval? Maybe not. Sources say Andrew Card, White House chief of staff, told them total repeal might not be possible. Not much was said during last week's rollout of the Bush tax cut about the "death tax" that was pummeled by Republican candidates during the 2000 campaign. At Tuesday's House Ways and Means Committee hearing, Treasury Secretary Paul O'Neill did not list estate tax repeal among priority tax cuts. When I asked Rep. Bill Thomas, the new Ways and Means chairman, whether he favors full repeal, he replied, "I'm listening to all the arguments." This decline in enthusiasm follows an undercover campaign from the powerful little band of people who love the estate tax because they make money by enabling the rich to avoid it. The tax provides a living for accountants, tax lawyers, financial planners, life insurance salesmen and charitable fund-raisers. Loss in federal revenue from repeal does not bother them, because they are interested in maximum avoidance of tax revenue. They worry about repeal instantly wiping away their livelihoods. These practitioners obviously cannot openly make the argument that their own jobs are at stake. Nor would neo-Marxist ideas of confiscating "excess" wealth appeal to a Republican administration. Consequently, the basic argument being made against total repeal is that the rich will contribute generously to charity only for tax avoidance -- a cynical concept that appears to have been accepted by so distinguished a student of public policy as DiIulio. The end of the estate tax might well doom future establishment of foundations that invariably turn to the left even though their original benefactors were on the right. But it is scarcely imaginable that President Bush would buy into a cynical explanation of major charitable donations. The 55 percent top rate is confiscatory, and focus groups have shown that ordinary citizens who are not affected by it consider the tax unfair. In last year's congressional votes, 65 House Democrats voted for total repeal. Their numbers included such staunch liberals as Reps. Neil Abercrombie of Hawaii, Eva Clayton of North Carolina, Tom Lantos and Loretta Sanchez of California and Nydia Velazquez of New York, among others. True, these Democrats had a free vote, with an assured Clinton veto ahead. If Bush opts for a Clinton-like compromise maintaining this tax on estates as low as $1 million or perhaps $2 million, the Democratic supporters of last year would be off the hook. Less than a month in office, George W. Bush faces a test. Does he stick to total repeal of the estate tax as he and the Republican national platform promised? Or does he bow to powerful interests who profit from a complicated tax code? The choice will be duly noted by the lobby.

Robert Novak

Robert Novak (1931-2009) was a syndicated columnist and editor of the Evans-Novak Political Report.
 

 
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