It is one of the great economic mysteries of modern America: A political party, backed by moneyed interests, manages to win majority power by persuading struggling middle-class men (and a few women) that "big government" is the root cause of their problems.
As a result, the rich gain tax cuts thanks to the backing of all those struggling guys, who get nothing but a hearty laugh from Rush Limbaugh.
The vote on Wednesday in the U.S. House of Representatives to repeal the tax on inherited estates is a perfect example. By a strong majority of 264-163, the House voted to eliminate a reasonable tax that affects just 2 percent of the estates left behind by people who die.
On the same day, the Republican-dominated House voted to reject a reform in the estate tax that would have shielded all families except the truly rich, one-half of 1 percent.
Ending the estate tax would cost an estimated $80 billion a year a few years from now. That's more than $700 from every household in the United States.
Anti-tax forces really want to shrink government. But considering we have government deficits as far into the future as the mind can calculate, the money will have to be raised some other way. Hint: Much of it will come from the 98 percent who will not have to pay Uncle Sam when Mom and Dad pass on, under any version of the tax.
And the House is the chamber supposedly most responsive to the people.
Whether the estate tax is worth keeping is only part of the issue. It's a worthy debate. But the deeper question is how Republican presidents, first a movie actor who believed his fictional script, and now a bumbling but charismatic son of aristocracy, have won the adoration of so many people who are hurt by their policies.
It is a political drama, but a decidedly economic mystery. Because of the success of populist Republicans, there might be more wealth in private hands, which isn't a bad thing in and of itself. But as a result, the rich have an easier time staying that way, some of the poor lose chances to get ahead, and the struggling half of the middle class is all the more filled with misplaced anger.
So, how do those clever Republicans get away with it?
"They scare people," said U.S. Rep. Earl Pomeroy, D-North Dakota, who sponsored a bill to reform rather than abolish the estate tax.
In other words, the opponents imply, or even state, that the tax will hurt the average family.
"It certainly is not the first time that gross misstatement has been used by the majority to justify their tax policies," Pomeroy said Thursday. "It is part of a radical agenda to overhaul the tax code, make it much more regressive."
The federal estate tax, if not the first example, offers the best glimpse at the process because most of its opponents have no hope of ever paying it.
Clearly, the levy hurts some powerful people who can afford to make their voices heard, and they are the ones backing the efforts to abolish it. They make a good point: Without reform, the tax unfairly hurts some family farms and businesses. But it has been reformed, and that should end the scare tactics.
It's an old tax, developed in response to the first wave of business barons a century ago. It was as high as 70 percent a few decades ago for some families. In recent years, the tax was as much as 60 percent of the value beyond $675,000 of any estate passed on to heirs. Under President Clinton, the threshold was raised to $1 million.
Under the 2001 tax reform act, the threshold will rise to $3.5 million, or $7 million for a couple, in 2009. The rate will drop to 45 percent in 2007. In 2010, for just one year, the tax will go away. Then, on Jan. 1, 2011, boom - it returns to its 2001 levels.
That, of course, is absurd, and raises gallows humor about sons and daughters murdering their elderly parents on the night of Dec. 31, 2010. The bill in the House Wednesday would have wiped out the tax from 2010 on.
Pomeroy, among many others, tried the common-sense approach of permanent reform. With a few adjustments, and with proper estate planning, the tax hurts very, very few businesses beyond what their owners can easily afford.
It's worth noting that even with the higher thresholds and the lower rates, the government would collect more than half of the $80 billion proceeds.
Deception offers some of the reasons for the opposition. But there's a murkier reason for opposition to the tax, one that author and activist Chuck Collins has examined.
"It also feeds on the mythology of individual achievement or individual success," said Collins, who is co-author, with William Gates Sr., of the book "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes."
"It's the `great man' theory of wealth creation," Collins said.
Hero worship is, indeed, crucial to the American ideology of conquering the frontier. And we all want to imagine it could be us someday. But as long as we need to raise money, does it really cut down the hero to tax his children when he dies?
Collins is co-founder of United for a Fair Economy, a Boston-based group advocating economic equity. One of the group's projects, Responsible Wealth, has conscripted 1,500 people who would be subject to the estate tax, but who do not want it abolished. They are doubly heroic for understanding that government has vast responsibilities, and that they are most able to pitch in.
Collins cites studies that show charitable donations would decline by $6 billion a year if the tax were abolished. Here in Greater Hartford, philanthropist and industrialist Harry Gray - an opponent of the tax - said Thursday he would not give away less if the tax did not exist. I believe him, and the broad point is debatable.
Gray and other opponents, including Rep. Rob Simmons, R-2nd District, who voted to abolish the tax, but not reform it, say it amounts to an unfair double taxation. Among people such as Gray who are affected by the tax, that's an understandable argument, although I disagree.
For Simmons and his constituents in the less affluent eastern half of Connecticut, the fairness argument is hard to fathom. The only conclusion is that they have a misguided hatred of government, a hatred they are using to hurt their own economic cause.
Copyright © 2003 by The Hartford Courant