Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth

11. Pushing against an Open Door

11 Pushing against an Open Door As we have seen, Republican effectiveness on the Hill was partly due to the party’s superior organization, leadership, and focus, but it also stemmed from the relentless pressure exerted by pro-repeal forces off the Hill—the think tanks, the grasstops, and the lobbyists who constituted or worked with the coalition. Coordinating with one another, and with House and Senate leaders, these groups managed to get repeal onto the agenda when few people took it seriously and then keep it there. They built momentum, sustained it through critical votes, and ensured that repeal remained a significant part of President Bush’s tax cutting agenda that eventually became law in 2001. A large part of the mystery surrounding repeal concerns why no countervailing pressure developed on the other side. Many stood to lose, directly or indirectly, if the estate tax was done away with. Some stood to lose a lot. Eventually, an organized movement of anti-repeal interests would surely arise. But, like the Democrats on the Hill, the private opposition was of the dollar-short-and-a-day-late variety. First we need to understand why, from the beginning, the repeal coalition found itself pushing against an open door. The estate tax is the most progressive part of the Internal Revenue Code. When President Bush proposed in 2001 to eliminate $138 billion from this tax over ten years (rising to $600–$700 billion over the next ten) to benefit the wealthiest 2 percent, traditional forces of the organized left surely should have been expected to rush to the barricades in its defense. So where was organized labor? Why didn’t they throw themselves into the fray? Whatever the merits of arguments about farmers and keeping small businesses in the family, what did the rank and file of the AFL-CIO and other constituencies of the left care about such niceties? Some of these groups indeed came to favor tax cuts in the new political and economic context after the mid-1990s. When Democrats and budget deficits on Capitol Hill were replaced by Republicans and budget surpluses, it became all but inevitable that tax-cutting of some kind would be on the agenda. Reading the obvious tea leaves, some on the left were determined to limit the regressive character of any cuts, and perhaps even ensure that they would be progressive. The Clinton administration understood the stakes well enough after the Republican takeover. Following the president’s reelection in 1996, the White House made a point of getting behind at least one tax cut every year to avoid being tagged as big spenders who always resist tax cuts. Many potential tax cuts would have benefited organized labor’s constituents . Some of these possibilities, such as the child tax credit and reductions in marginal income tax rates, eventually wound up in the 2001 Bush tax cut bill. Others—most obviously cuts in the payroll taxes, which for most workers are now more burdensome than income taxes—did not. In these circumstances, what was remarkable was the deafening silence from organized labor long before estate tax repeal was bundled with any less regressive tax changes that might muddy just who was benefiting. We have seen that there was plenty of legislative activity on the estate tax before 2001: the various Cox and Kyl bills gained increasing numbers of cosponsors in the mid-1990s; the Dunn-Tanner bill was introduced and referred to Ways and Means in May 1998; and stand-alone repeal bills were voted on in 1999 and 2000 in both chambers. During this entire time, organized labor did nothing. Nor did other traditionally left-leaning lobbyists or public interest groups emerge to mirror the work of groups such as Grover Norquist’s Americans for Tax Reform or Pat Soldano’s Center for the Study of Taxation. The important exceptions were Chuck Collins’s United for a Fair Economy (UFE), formed in 1995, and OMB Watch, a liberal advocacy group that has been monitoring the federal budget since the Reagan administration . But like the anti-repeal think tanks, these two groups were overshadowed by the repeal coalition and its allies. OMB Watch eventually organized Americans for a Fair Estate Tax, which brought together various labor, civil rights, child welfare, and liberal groups to promote reform instead of repeal—but this did not happen until after President Bush had come to power in 2001. Chuck Collins was quicker off the mark. Toward the end of 1997...