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Estate Tax Repeal Losing Political Bite

One of the GOP’s chief talking points over the past decade — a call to repeal the estate tax — appears to be losing its ability to strike fear into Democratic politicians.

A House vote on a Republican motion last week to repeal the estate tax failed, with just 10 Democrats supporting Republicans, down from 42 who backed repeal two years ago.

And while the Democratic budget blueprint for this year assumes additional cuts in the estate tax because of an amendment by Senate Finance Chairman Max Baucus (D-Mont.), Democrats have made clear their priorities are dealing with what they consider more pressing issues, from expanding children’s health insurance to providing relief from the growing maw of the alternative minimum tax.

Speaker Nancy Pelosi (D-Calif.) recently said Democrats have their own plan to shrink the estate tax but said their priority is the middle class. Pelosi also said any plan will be paid for, a contrast to Republican proposals that would pay for estate tax relief with borrowed money.

To be sure, the issue still has some legs, at least in Republican primaries. GOP presidential hopeful Mitt Romney has been running television ads in New Hampshire pledging to eliminate the estate tax, labeled the “death tax” by Republicans.

But Democratic presidential candidates are defending the estate tax on the stump. Sen. Hillary Rodham Clinton (D-N.Y.) defended keeping the tax for estates larger than $7 million per couple — affecting fewer than 1 percent of estates — as consistent with the country’s history as a meritocracy.

“Part of the reason why America has always remained a meritocracy where you have to work for what you get, where you have to get out there, make your case to people, come up with a good idea, is that we never had a class of people sitting on generation after generation after generation of huge inherited wealth,” she said at a town hall meeting in New Hampshire last week, NBC reported.

Top House Democrats say that they can parry Republican attacks on the “death tax” by pointing to plans for broad-based middle-class tax relief and measures like the bill cutting student loan rates in half. Democrats note that while polls show general support for eliminating the estate tax, it isn’t on most voters’ radar screens as a priority relative to the Iraq War, concerns over the broader economy or health care.

“We have ideas about a middle-class tax cut,” House Democratic Caucus Chairman Rahm Emanuel (Ill.) said. Emanuel said Americans are more worried about the ability to buy a home or retirement security than the estate tax. “It doesn’t touch people the way saving for retirement or health care security does,” Emanuel said.

Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Subcommittee on Select Revenue Measures, said he thought the estate tax was a dead issue. “My sense is it’s not going anywhere now,” he said. “It’s very difficult to argue the wealthy have had a hard time the last six years.”

Neal said Republican presidential candidates haven’t gotten any traction on the issue of tax cuts and Americans are more focused on the enormous costs of the Iraq War.

“I think the steam has gone out of the Republican tax cut agenda,” Neal said.

Rep. Jim Cooper (D-Tenn.), a leading Blue Dog fiscal conservative, backs a modest rollback of the estate tax but not full repeal, which he said the nation cannot afford. “I think we’re gradually coming aware of the deficit problem — the real deficit.” And Cooper said Republican attempts to repeatedly highlight the estate tax in 2006, including tying it to a minimum-wage hike, didn’t succeed at the polls.

“When you’re catering to 1 percent, the other 99 percent gets a little offended,” he said.

Other Democrats, including fellow Blue Dog Rep. Dennis Cardoza (Calif.), said they still support full repeal but objected to last week’s Republican motion on procedural and timing grounds.

Republicans, meanwhile, still feel that the issue plays to their historic advantages on taxes overall.

“Made my day,” Rep. Tom Cole (Okla.), chairman of the National Republican Congressional Committee, said of last week’s vote. “Democrats frankly are more interested in spending other people’s money than they are in the estate tax. They are going to pay a price at the polls.”

House Minority Whip Roy Blunt (R-Mo.) said the estate tax vote was part of a pattern of Democrats standing for higher taxes. “They are beginning to define their party again as a party that looks for every opportunity to raise taxes. I think that’s beginning to sink in, and I think that’ll be an important part of the 2008 elections.”

Republicans at least plan to keep looking for opportunities to highlight the issue.

“Taxing a person the day they die is just plain un-American,” said Brian Kennedy, spokesman for House Minority Leader John Boehner (R-Ohio). “We fought for and declared our independence over outrageous taxes like that.”

Grover Norquist, president of Americans for Tax Reform, contends the issue remains a potent, easy-to-understand one that would cause some of the Democrats who switched their votes or hid from the vote to lose their seats.

“Every one of those guys opens themselves up to a correct charge of hypocrisy, of voting one way when the Republicans were in charge and pretending to be good guys and following Pelosi’s bidding on the other,” he said. “They lie to their voters and they suck up to Pelosi.”

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