Raises From The Dead
Whether it's the feisty, right-wing Weekly Standard or the conservative-pandering Times O.C., everyone agrees about Chris Cox's mind. One of the more silent-but-deadly members of Speaker Newt Gingrich's House leadership, the Newport Beach congressman can't shake his haughty demeanor, but that's okay. They say Cox is one brilliant guy.
In fact, the physically diminutive corporate lawyer turned corporate politician has carefully crafted an image as one of the few rising intellectual giants on the national political landscape. And he must be given credit. With rare exceptions, the four-term Republican representative with a steady eye on higher office has played the media masterfully. Hardly any article on Cox fails to mention just how doggone "thoughtful," "intelligent" and "brainy" he is. Perhaps it is mere coincidence that those same words appear prominently in the congressman's own press-kit bio. Or maybe not, considering his brilliance.
These feelings of intellectual superiority give Cox (even GOP colleagues call him "arrogant") the courage (his bio also lists him as a "hero") to take on the harder-to-sell, non-populist legislative missions plotted by the mega-rich who sponsor the Republican Party.
During the current heated national debate over the distribution of federal tax breaks and liabilities, the man who so conscientiously portrays himself as a principled guardian of hard-working, overtaxed Middle America has revealed his real objective: camouflaged class warfare.
The estate tax does not apply to surviving spouses, and it provides a 100 percent exemption on the first $600,000 of an individual's estate or $1.2 million for a couple's. It basically touches only the dead rich. (In 1995, only the fattest 1 percent of inheritances were even subject to the tax, according to the IRS.) Nor is it a financial burden to inheritors. For example, under the present system, an estate worth $610,000 pays about 2.9 percent--$1,800--in tax. That leaves a grieving inheritor $608,200 for additional BMWs, a second yacht and--to complete the circle--sizable annual contributions to the GOP.
In fairness, on paper, the rates do rise to 47 percent on inheritances of, say, $4 million. But as the conservative National Center for Policy Analysis concedes, current massive IRS loopholes for the rich mean the estate tax "is essentially a voluntary tax." According to Columbia University professor George Cooper, "The fact that any substantial amount of tax is now being collected can be attributed only to taxpayer indifference . . . or a lack of . . . exploiting the loopholes that exist."
To all of us who are sincerely frustrated by the federal tax system, eliminating any tax may seem worthwhile--in a vacuum. Nevertheless, at a time when both major political parties say the government must cut spending dramatically to balance the budget, someone is going to have to pay Cox's $100 billion tab.
Unfortunately, it will be you and me. If you are not one of the idle rich, that is.
Robert J. Shapiro, an economist with the Progressive Policy Institute in Washington, D.C., told a U.S. Senate panel last month that the elimination of the estate tax would probably require corresponding hits on labor in the form of higher payroll taxes. If successful, Cox's Family Heritage Preservation Act shifts "part of [the ultrawealthy's] tax burden to average working people," said Shapiro. Despite all the whining about tax rates by those who live comfortably in Cox's home base of Newport Beach, Shapiro's research shows that the average working person is taxed at about 24 percent, while the rate on inheritors of a $1 million estate is now effectively less than 3 percent.
"From any vantage but a board room or Washington," he said, killing the estate tax ultimately hits lower-, middle- and even upper-middle-income families in their pocketbooks. Hitting the working poor is nothing new to Cox; he's been an outspoken advocate of reducing the minimum wage to zero.
Regardless of such a negative impact on the majority of Americans, conservative columnist George Will--never concerned about appearing aristocratic--wrote that any estate tax hinders "the loving transmission of advantages."
So far, Cox hasn't been so gauche. The brunt of his public argument against the tax has not been that its elimination will make the rich richer--that may go over big at a GOP fund-raiser but not with the public at large. Instead, he says he's looking out for "hard-working American men and women" and hopes "to ensure economic fairness for all American families and businesses, as well as economic growth and prosperity for the nation as a whole."
In a September 1996 speech, the former Reagan-administration lawyer dusted off the old voodoo/trickle-down economic notebook. Giving the rich the tax break would--poof--create 228,000 new jobs. Unsatisfied that the number wasn't sexy enough, five months later, Cox pegged the number at--poof--"more than 1 million new jobs." Even Business Week derided the claims as "myth."
The Republican Party's philosophy on the issue is as fuzzy as Cox's numbers. According to Cox, the estate tax is "a drag on economic growth and contrary to both human nature and America's free-enterprise system." Letting the wealthy pay no estate tax, he added, would serve as "a powerful engine of wealth creation." Apparently, letting average working Americans keep more of their paychecks would not.
With public opinion critical in such debates, Cox and his fellow Republicans fiddle with the terminology. They religiously avoid talking about the "estate tax"--its official name since 1916--because it makes them sound like they are aiding the elite.
Instead, the clever Cox Crew speaks of the "grave-robbers tax" or the "death tax," ominous terms that have caught on with right-wing talk-radio hosts. According to GOP policy wonks, it's not really the rich they are helping but farmers and small-business owners.
But Cox's most disingenuous argument is that the current estate tax gives future dead people a disincentive to work. Never mind reality; the theory goes that if people know part of their estates will be taxed after their deaths, they won't work hard while they are living. Nowhere does Cox mention that large inheritances create a whole class of people whose days are occupied by the production and consumption of mint juleps and novels.
Nevertheless, our brilliant congressman has an idea to sell us. The estate tax, he maintains, "punishes lifelong habits of hard work and thrift."
At least George Will was honest.
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