McCain suddenly realizes he doesn’t like the estate tax after all

Remember the good ol’ days? When John McCain used to occasionally say sensible things and break with his party when they embraced ridiculous policy proposals? Good times, good times.

For example, Republicans have been railing against the existence of the estate tax for years. It’s a foolish gambit for the GOP — they want to cut inheritance taxes for the very wealthy, costing the government billions of dollars in revenue, and they characterize this as a key populist goal.

McCain used to see through this nonsense.

“In his 1906 State of the Union Address, President Theodore Roosevelt proposed the creation of a federal inheritance tax . Roosevelt explained: ‘The man of great wealth owes a peculiar obligation to the State because he derives special advantages from the mere existence of government.’ Additionally, in a 1907 speech he said: ‘Most great civilized countries have an income tax and an inheritance tax. In my judgment both should be part of our system of federal taxation.’ He noted, however, that such taxation should ‘be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits.’

“I agree with President Roosevelt, and I remain opposed to full repeal of the estate tax.”

That is, until he became the Republican presidential nominee. As of this morning, McCain finds the estate tax offensive.

“Another of my disagreements with Senator Obama concerns the estate tax, which he proposes to increase to a top rate of 55 percent. The estate tax is one of the most unfair tax laws on the books, and the first step to reform is to keep it predictable and keep it low. After a lifetime building up a business, and paying taxes on every dollar that business earns, that asset should not be subjected to a confiscatory tax.”

Why, it’s almost as if McCain were some kind of flip-flopper or something. Heaven forbid.

Now, to be fair, unlike some of his more shameless reversals, McCain’s estate-tax change of heart does not constitute a complete 180-degree turn. Even when he was trying to be reasonable, McCain was willing to cut the estate tax, but not eliminate it altogether.

That said, any fair analysis points to a rather dramatic turnaround on the issue. McCain now believes the estate tax, which he’d partially embraced before, is “one of the most unfair tax laws on the books,” despite never having criticized the law before. Seth Colter Walls explained:

While it’s impossible to know whether McCain’s avoidance of that cliched demagoguery masks a conflicted heart, the Congressional Record does offer a few tidbits that reveal a more nuanced view of the issue than he expressed today.

In fact, a quick review of the dozens upon dozens of Senate debates about a tax that affects the fewer than an estimated two percent of estates shows no evidence that the Arizona Republican ever viewed the tax as fundamentally unfair before today. As he himself stated in a June 8, 2006 speech from the Senate floor, McCain has “consistently voted against repealing this tax because of the impact it would have on the deficit, as well as the possible chilling affect it could have on charitable giving in this country.”

For that matter, McCain heard conservative arguments about the estate tax hurting small business owners and farmers, but rejected the points as unpersuasive and unsupported.

Yet, here we are, and Mr. Straight Talk no longer believes what he used to believe.

Back in February, the far-right Washington Times reported that McCain “refuses to pander” and won’t “pander for conservative support.” It was foolish at the time, but it looks increasingly silly as the campaign unfolds.

Hey, the man’s desperate for money. Those snappy one liners and cribbing other people’s campaign slogans cost money. He needs to suck up to the Waltons (biggest opponents to the tax) to get it.

  • The estate tax is one of the most progressive taxes we have – if not THE most progressive. How horrible that rich people don’t get to ensure that their children are also rich without ever earning it. The HORRORS!

    John McCain: Your retirement is too secure as it is, don’t you think?
    John McCain: Can’t poor sick children just get a job already?
    John McCain supporting our troops by keeping them uneducated.
    John McCain: Here’s to you, OH, PA, MI!

  • The more I hear about McCain’s positions, the more obvious it seems that he personally doesn’t have any. Everything that comes out of his mouth is a kneejerk version of the GOP’s greatest hits. And unfortunately for McCain, he ticks them off like a list of Golden Oldies, with no life or relevance to them anymore.

    It’s Bob Dole’s campaign circa 1996, without the charm and wit.

  • John McAint is the CHANGE CANDIDATE…

    He will change his position on any issue that his pollsters and focus group handlers tell him to…

  • He needs to suck up to the Waltons (biggest opponents to the tax) to get it.

    The Mars family will be thrilled, too.

    And the Blethens — Portland Press Herald, Kennebec Journal, Seattle Times Yakima Herald — will love this. Expect endorsements in both states.

  • Doug, enough already with the same post in every thread, please. Don’t you have something to contribute on your own?

    I think doug is just using that as a signature. As far as I can tell, he has contributed unique comments in every instance.

  • Let’s remember that the ultra-rich, whose estates consist largely of unrealized capital gains, and hence have never been taxed, would escape tax altogether if the estate tax is eliminated. Why do so many Americans fail to understand that the rich get away without paying their fair share of taxes? Even on realized capital gains they pay only 15%.

    Perhaps Obama will become the first modern Democrat who isn’t terrified of the “class warfare” accusation, and will meet it head on with the facts. The first fact is that the rich declared war on the rest of the people from the dawn of civilization. FDR had the guts to fight back. Now let’s hope Obama does too.

  • I voted for McIdiot in the 2000 primary when the alternative was the Shrub-prick.
    Now I would sooner tangle with a rabid wolverine than vote for McIdiot.
    Guess that makes me a flip-flopper.
    Elect adults to govern us again.
    GO OBAMA!

  • McCain is the ULTIMATE maverick – he wants to break from the GOP so bad that he is willing to look like a flip-flopping fool and hand the election to Obama…

  • Do you all recognize Fidelity Investments?

    It is owned by the Johnson family and worth billions of dollars.

    Somehow the father was able to pass most of the company to his duaghter without any kind of tax bill.

    I don’t understand how they managed to avoid BILLIONS of DOLLARS in taxes.

    My point is there is something wrong with the current estate tax where someone like the Johnson’s of Fidelity can avoid (“EVADE?”) billions in taxes.

    My view of the world is that I hope I get hit with an estate tax. It would be great if my parents, or if I, were rich enough to have to worry about paying an estate tax.

    I just want Obama and the Democrats to FIX the estate tax so that things like Fidelity never happen again.

  • The Straight Talk Express is fast becoming a parody of itself. Pretty soon “straight talk” will be universally read as “all talk” or “cheap talk”, and whenever some McCain sycophant uses the expression the rest of us will laugh our heads off. Does Gramps even remember his previous positions? If not, then as far as he knows he’s never pandered to anyone, and his talk has been as straight as an arrow.

  • Prup, I understand where you’re coming from with regards to Doug. That said, there are new people all the time and the one thing I found is that not everyone reads everything. I have posted things that even regulars have missed (based upon comments in newer threads).

    I find it a bit distracting, myself, but I say go for it. Repetition is the only way to get things across. Look how well it works for lies. Maybe we can do it with the truth.

    BTW, how many sites have mentioned Kucinich’s five hours of reading his enormously detailed Impeachment Articles against Bush? *crickets* Kucinich read this on CSPAN for five hour live. Five hours! And who reported it?

    Read all 35 of the Articles of Impeachment, along with excrutiatingly detailed supporting information. 65 pages of a PDF.

    Nothing on any corporate media sites in the US. LIBERAL MEDIA MY ASS!

    http://chun.afterdowningstreet.org/amomentoftruth.pdf

  • If nobody paid the estate tax, as some suggest, the Mars family, the Walton family, and other such billionaires, wouldn’t care about it. But people do pay, and it provides billions of receipts now, and will provide even more when these families’ ability to delay payment (the first spouse doesn’t pay, but the second will have to, etc.) ends. Bill Gates’s dad explains it all for you. http://www.open-spaces.com/article-v6n2-gates.pdf

  • Hey neil, post a link to that story if you have one. Not finding much on the Google about it.

    BTW, specific examples like that one are gold. People can relate to it.

  • Please indulge me while I go off on the so-called death tax argument from the right.

    Of course, it’s not a death tax since dead people cannot spend money, nor can they complete tax forms.

    In fact, an estate tax is an inheritance tax, i.e. the person taxed is the person who inherits money, not the person who died.

    Let’s be more specific. An inheritance tax is an income tax. If I earn $50,000 and my neighbor inherits $50,000, why should I pay higher taxes on my income than my neighbor pays on his? We benefit from the same public roads, public water supply, public safety structures (police and fire), national defense, …

    Oh wait…double taxation, you say. Somebody already paid income taxes on that money. Forgive me, but somebody already paid income taxes on the money I earned. That money came from customers who purchased the goods and services I offer (or my employer offers). Those customers, purportedly, paid taxes on that money too (double-taxation). Unless, of course, they inherited it.

    With some logistical exceptions (e.g. real property is realized as income upon it’s sale), inheritance income should be taxed at precisely the same rates as earned income. On the other hand, if we insist on having a tax policy that plays favorites, then it should favor workers over heir.

    The death tax nonsense is, in fact, class warfare. It’s the upper class declaring war on the rest of us.

  • Honestly, I dont think the Republican party has any values or standards.

    Wait, they have one standard.

    Be against everything Democrats are for, and be for anything Democrats are against.

  • I always liked Warren Buffett’s comment (not directly related to the estate tax, but about inheritance in general): ‘A very rich person would leave his kids enough to do anything, but not enough to do nothing.’

  • A couple of things. The estate tax is hard to avoid altogether. Sophisticated plans are able to reduce the taxable amount and in some cases eliminate any tax at death, but there is always a real cost to doing it. Google Charitable Lead Trusts and Onassis for a famous example of zeroing out a huge estate.

    The step up in basis linked to above is a real benefit to the rest of us who don’t have taxable estates. If the estate tax is eliminated, there will have to be a tax on the UNTAXED appreciation on inherited property (mom’s house, Fidelity stock, farm property, etc.). It’s a dream come true for accountants, but not so good for the people who inherit property and have to figure out what grandma paid for the grandfather clock, the house,her jewelry and silver place settings for 10.

    The silly argument is that the inheritance tax hurts the poor “farmer” and “small business” man, when the the bulk of it really is paid by the SUPER rich. I don’t have the numbers handy, but something like 90% of the estate tax in any year is paid by the top 10% of those who pay estate tax. In other words, you can eliminate the tax on 90% of those currently subject to the tax under current rules and STILL collect 90% of the revenue, by hitting guys like Bill Gates, Johnson, and the Fortune 500 CEOs. – those in the very tip top of the upper wealth brackets.

  • MsJoanne wrote:

    ” … BTW, how many sites have mentioned Kucinich’s five hours of reading his enormously detailed Impeachment Articles against Bush? *crickets* Kucinich read this on CSPAN for five hour live. Five hours! And who reported it?”

    Well, Alex Koppelman, the sniveling twit who replaced Tim Grieve at the War Room (salon.com), kind of mentioned it today.

    Some liberals in the blogosphere are complaining about the dearth of coverage of Kucinich’s resolution. I have to disagree — as I’ve pointed out before, when discussing complaints of liberal bias from the right, the media is in the business of covering news. This barely qualifies; if it deserves mention in the mainstream media at all, it certainly doesn’t deserve to be accorded the status of something big and breaking. I’m sorry, but the action of a lone congressman who’s widely considered something of a laughingstock, especially when it’s clear that action will never come to anything, just isn’t especially newsworthy. (I cover it here mostly just because I know Salon readers care, and partially because I wanted to make that point.)

    I’m happy to report that Koppelman’s getting the virtual snot kicked out of him for what one reader termed his “pissy attitude”. Several of the commenters have suggested that people fed up with salon’s eroding standards and integrity head on over here to the carpetbagger report. (I think a lot of people were really disappointed that Steve Benen’s stint in the War Room was only temporary … I know I was.)

  • I never said anything about a state tax. That’s up to the states.

    Well, one of the unnoticed benefits of the Bush Tax Cuts was to completely gut many states’ inheritance tax. States used to impose what was called a “pick up” tax which was equal to the federal credit. By just changing a federal credit to a deduction, many states were left with nothing at all. Their constitutions’ prohibited a tax but allowed what was essentially a way for the Feds to share the estate tax with the states.

    Anyway, now those states must amend their constitutions to impose any kind of inheritance tax.

    It was a nice little under the radar giveaway to the big donors whose beneficiaries save a few percentage points off Father’s estate tax bill.

  • 3reddogs, thanks for the comment. I added my discontent at Salon.

    How very Fox of them.

    That article was right out of the WH slamming McClellen personally but not denying a thing he said.

    Journalism is dead. America is half way over the same cliff.

    Shit.

  • What are we waiting for–the few months after each parties’ convention?!?!? It seems to me I was watching Republicians waving flip-flop shoes in the air at John Kerry all summer long in 2004?!?! And the MSM showed each and every rally where it happened like it was different, breaking news! WTF are we wating for ?!?!?

  • I only facetiously suggested previously that literally no rich people pay estate taxes. In fact, it is truly hard to completely zero out a huge estate. The rich & super rich care about the estate tax precisely because they pay a huge share of it because it is so hard to avoid it all & they have so much money to start with. It is classic rent-seeking behavior though: So its cheaper to pay to try and change the law to your benefit. Class warfare indeed!

    As Jasper points out (last paragraph in #26) when you’ve got an enormous estate, even if only a small portion if subject to tax, its still a huge amount (see Jasper’s last paragraph in #26). Nevertheless, the stepped-up-basis is a loophole you can drive a truck through and it what helps the rich avoid those taxes on that 90+% of their estates.

    It amazing that the estate tax is sold as a populist measure. It has an enormous exemption amount. Studies that indicate an embarrassingly small number of family farms pay it. It does hit the super-rich (not as much as it should). It is my feeling that it is the high marginal rates (45+%) that generate so much populist sentiment, despite all logic. To most people, these rates trip the “inherent unfairness” buttons, regardless. This is the same way the Reagan tax cuts were sold. In an ideal world, I’d rather see the base widened (less loopholes, like the stepped-up basis, lower exemptions, like say “only” $1M) and the rates lowered (maybe to capital gains rates?), just to kill this sentiment.

  • MsJoanne said:

    3reddogs, thanks for the comment. I added my discontent at Salon.

    How very Fox of them.

    That article was right out of the WH slamming McClellen personally but not denying a thing he said.

    Journalism is dead. America is half way over the same cliff.

    Shit.

    ====================================

    Funny you should mention — Josh Silver blogged over at HuffPo today about that very topic. This was my response:

    When I was in my 20’s I sometimes squirmed at the tone and content of questions hurled at Richard Nixon by the White House press corps. Now questions aren’t hurled, they’re lobbed and the tone is respectful when outrage is required. Our founding fathers always imagined that the press would play an adversarial role when it came to government … they aren’t just turning in their graves, they’re positively spinning.

  • Not to stay OT, but Steve (CB), I am a bit disappointed that you didn’t have an entry about this. Granted, it isn’t going to go anywhere, but still, this should have garnered a post of its own (I am assuming it will be mentioned in today’s Mini-Report).

  • Nevertheless, the stepped-up-basis is a loophole you can drive a truck through and it what helps the rich avoid those taxes on that 90+% of their estates.

    Wait. Is that really true? It’s correct that you don’t pay the 15% capital gains tax on anything but gain after the date of death; the gains accrued for the decades before death disappear as far as that tax goes. But the whole final stepped-up basis, which includes all intermediate gains, is part of the gross estate and is subject to a much higher rate (what is it now? 45%, I think). So the gain is actually taxed at a higher rate than capital gains are, isn’t it? Now there are exemptions and so on (as there ought to be), but the really rich folks can’t avoid the estate tax without giving enormous amounts away to charity and stuff that is almost as bad as paying tax on it. So it seems to me that your “loophole” doesn’t really exist. Am I missing something?

  • For anyone wondering about why I put all these links in my posts, see the link below for a full explanation:

    Why do I put these links in all of my comments? Click Here.

  • Could we kindly tell people that businesses that are built up are unaffected unless they are sole proprietorships that exceed one million dollars PER HEIR?

    It really should be renamed from “Estate Tax” to “Death Tax” to “Hoarding Tax”
    Every one of your kids become a millionaire tax free and you’re STILL griping? Oh, right. $200,000 a year is chump change to McSame.

    Rich just ain’t what it used to be. (and never will.)

  • The “death tax” as some on the right are wont to call it, are still under the impression that they can take it with them. With the ability to hide the money in various and sundry loopholes (foundations, trusts, Cayman accounts) what they hell are they bitching about? It’s a Nerf football nothing more.
    T.R. is one of our homegrown American heroes here in NY-say what you will he would put McCain on the ropes in a heartbeat. TR was a true “maverick” in his day and would shriek at the amount of monopolistic aggression going on in the “United States of AmeriCorp” today. He’s probably kick the first lobbyist in the teeth that he saw.

  • On June 10th, 2008 at 3:09 pm, Angry Liberal said:

    “With some logistical exceptions (e.g. real property is realized as income upon it’s sale), inheritance income should be taxed at precisely the same rates as earned income. On the other hand, if we insist on having a tax policy that plays favorites, then it should favor workers over heir.

    The death tax nonsense is, in fact, class warfare. It’s the upper class declaring war on the rest of us.”

    Great!…so let’s put the income tax rate @ 45% for those who earn 50k and those who inherit 50k.

  • “I remain opposed to full repeal of the estate tax”, so instead of raising it he wants to “keep it predictable and keep it low”

    And somehow you think that because he calls it an unfair tax that he is now in contradiction with his earlier beliefs. I notice how you are missing any earlier quotes about how he felt about the tax as a way to bolster your interpretation of his feelings now. I remind you that I person is allowed to disagree with a policy. After all Obama disagreed with many things in the FISA bill and yet he still voted for it.

    So keep grasping for those straws guys. It seems like a fun game.

  • Great Post….except…..you link — in the items that I checked — mostly to other secondary material rather than specific McCain quotes. I hope someone does the work to really annotate the positions. This would make the post much more useful.

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