9/29/00 12:20 p.m.
Back from the Dead
The return of the estate tax.

By Stephen Moore, NR contributing editor

t's quite possible that death-tax repeal is the most popular public-policy issue in America today — even out-polling prescription-drug benefits for seniors as a priority issue for Congress. A September 19 McLaughlin poll finds that 83 percent of voters believe the death tax is unfair and only 10 percent think it is: "fair." Republicans have a radioactive issue here, but they may be blowing it.

Clinton vetoed death tax repeal a few weeks ago and he's now desperate for a deal with the congressional Republicans. So are the so-called "blue dog" Democrats who represent swing districts and are facing angry voters over the White House veto. Congressman John Tanner, the Tennessee Democrat, has proposed a decent compromise. There are indications that Clinton White House aide John Podesta strongly supports the plan and that the President would sign it into law. Tanner would cut the top death-tax rate from the confiscatory 55 percent by 20 percent to a top rate of 44 percent. He would also increase the deduction so fewer businesses and families would be affected by it.

The Tanner compromise is not ideal, but it's worth taking. The rate's still too high and Republican leaders could negotiate a still lower rate — perhaps 39.6 percent, matching the top income-tax rate. One virtue of the Tanner bill is that it would actually cut the tax rate faster than the Republican bill that Clinton vetoed. That bill would have phased out the death tax over 10 years. There's a high likelihood that at some point the death-tax phase-out would have been cancelled anyway.

When Congress needed the revenue the Republicans don't want to deal on this issue and would rather club Democrats with the veto through the campaign season. But they may be committing a big political and policy blunder. Strategically, it makes sense to take the deepest possible tax cut now, then come back for more next year. That's the strategy the Democrats have used to grow the government for years and years.

The McLaughlin poll indicates that voters would be grateful to Republicans if they passed death tax relief this year. The poll asked:

"Given that President Clinton will not support full repeal of the estate tax, should Congress and the Clinton administration agree to compromise for some reduction in estates tax rates before Congress adjourns this year?"

Sixty-nine percent of voters say yes. Only 16 percent say no.

Economist Arthur Laffer has noted that the death tax is the highest priority tax cut from the supply-side perspective because, it's the last tax in America with a rate over 50 percent. Our death tax is the 2nd highest in the world with only Japan a bigger grave robber. Chopping the rate to 44 percent would be a good start toward ending taxation without respiration.