McCain and taxes

Robert Novak
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Posted: Sep 05, 2005 12:00 AM

WASHINGTON -- 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 certainly no convert to this staple of Republican orthodoxy, but at least he is not standing athwart his party's progress on an issue that its members consider vital.

 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, and it is not because he would be a 72-year-old president if elected in 2008. He is the most broadly popular possible Republican candidate, whom Democrats despair of opposing and admit would demolish Hillary Clinton in a general election. 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." That does not fit the basic Republican mindset that wealth should not be punished and that earnings should not be double-taxed.

 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. That is good news for anti-death tax lobbying organizations, who list McCain as an opponent.

 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. That could surprise fellow senators who never have considered McCain and Kyl the Arizona twins. It also might surprise Kyl, who never has conferred with McCain on the estate tax.

 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." Contending that McCain's refusal to support estate tax repeal "may benefit and please the special interests, who've funneled millions of dollars into his many political campaigns," 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.

 "This one's all about political pressure," is an anti-estate tax lobbyist's comment about McCain. But that surely misreads the war hero who withstood torture and solitary confinement during six years in a communist prison camp. McCain has displayed immunity to letter-writing and TV ad campaigns.

 Likely to affect him more is advice from close supporters. They say 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. Nothing unifies Republicans more than the estate tax. McCain's willingness to support cloture and a compromise bill signals he recognizes that political reality.