Estate Tax

One aspect of the mystery remains, however. Not every member of the super-rich elite supported repeal. There were some who hated the idea, including William Gates Sr (father of Bill), Steven Rockefeller, George Soros and Warren Buffet. What is more, the Democratic Party was squarely against the proposal, and wanted to prevent it. Given that the alliance that had been formed to push repeal through was so obviously flaky, and vulnerable to the skilful exploitation of the differences between its members, why didn’t the opposition do more to break it up? The answer is a mix of complacency, incompetence and ideological slippage.

For the most part, the Democratic Party didn’t believe that estate tax repeal was ever going to happen, because it was such an obviously minority interest. Once they woke up to the fact that the plan had wide popular support, they thought that it could easily be countered by pointing out that the tax applied only to the richest 2 per cent of Americans. This was a catastrophic error. It played into the hands of the champions of repeal, by making them sound principled, and their opponents whiny and self-interested (this is what Norquist was playing on in his Holocaust rant). Similarly, it didn’t help trying to explain that ‘double taxation’ was nothing to get excited about, since it was so commonplace (the same individuals can be taxed on income, consumption, capital gains and so on). This made repeal of the estate tax sound exactly what its supporters wanted it to sound like: the first step in a war against the widespread duplicity of the tax system. By the time a few opponents of repeal started to make the case on more principled grounds, arguing that the estate tax was a crucial part of the American conception of giving everyone a fair chance in life, it was already too late. Graetz and Shapiro draw a blunt lesson from all this, designed to send a chill through the hearts of progressive politicians everywhere: ‘In politics, when you’re explaining, you’re losing.’ …

This, though, simply points to the deeper difficulty that Graetz and Shapiro identify. The Republicans made headway on the estate tax issue in the 1990s by the simple expedient of holding their ground, while the Democratic Party, under Bill Clinton, moved the goalposts their way. This book contains, at the end, a withering critique of Clinton’s strategy of ‘triangulation’, which left his legacy (including those large budget surpluses) vulnerable to the cruder, but also far shrewder, tactics of anti-tax die-hards like Grover Norquist, who simply bided their time. As Graetz and Shapiro explain,

there is a world of difference between triangulation and Norquist’s calculating pragmatism. Norquist never considers compromises that threaten his strategic goals. Triangulation may be an effective tactic in isolation, but it becomes a disastrous long-term strategy whenever it is manifestly opportunistic – devoid of any clear moral purpose. Indeed, pursued for its own sake, triangulation undermines your strategic objectives if it does not displace them entirely.