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Subject: [Norton AntiSpam] New FactCheck Article: A Half-true Attack on
McCain
A Half-true Attack on McCain
The anti-tax Club for Growth runs an ad in New Hampshire claiming McCain
would "keep the death tax." Actually, McCain favors a big reduction.
August 31, 2005
Summary
The conservative anti-tax group Club for Growth targeted 2008 presidential
hopeful Sen. John McCain with a TV ad in New Hampshire. It contains a
half-true claim that McCain would "keep the death tax." In fact, McCain has
long advocated reducing the number subject to the tax, so that it falls only
on the estates of multi-millionaires.
The ad also misleads viewers by saying, "when you die, the IRS can tax you
again. Taking as much as 55 percent of everything you've saved for your
children." In fact, only estates exceeding $1.5 million currently pay any
tax on that wealth. It fell on fewer than 1 percent of all Americans who
died in 2004.
Analysis
Club for Growth (CFG) announced Aug. 29 that it was running a new round of
ads supporting total repeal of the estate tax, including one aimed at Sen.
John McCain, Republican of Arizona. The ad is airing in New Hampshire, where
McCain could be running in the first presidential primary election of 2008.
Club for Growth Ad "McCain"
Announcer: You're born. You go to school. You work hard. You raise a family.
You pay your taxes.
And when you die, the IRS can tax you again. Taking as much as 55 percent of
everything you've saved for your children. It's called the death tax and
it's wrong.
Senator John McCain wants to keep the death tax. Isn't a lifetime of taxes
enough?
McCain: Target of Conservatives
The ad says, "Senator John McCain wants to keep the death tax," but that's
misleading. In fact, McCain does not favor keeping the estate tax in its
present form. He has long sought to narrow the tax to apply only to the
estates of the wealthiest multi-millionaires. During his primary race
against George W. Bush in 2000, McCain proposed excluding all estates under
$5 million.
The Club for Growth made clear it hopes to damage McCain's presidential
prospects. In its press release, the group's president Pat Toomey said, "we
hope that politicians have finally learned the lesson that the Death Tax is
both bad for the economy and bad for their careers."
It is true that McCain opposes permanent repeal of the estate tax, which
under terms of the tax cuts enacted in Bush's first term expires for one
year in 2010 and then returns the following year. Many conservatives are
pushing to make repeal permanent, but a McCain spokeswoman confirmed that
the senator stands in "opposition to full repeal of the estate tax" due to
its "long-term fiscal implications." Immediate repeal of the estate tax in
2006 would cost the government almost $290 billion in tax revenue through
2015, according to the Joint Committee on Taxation.
But McCain's spokeswoman said he is currently backing efforts of bipartisan
Senate negotiators to reach a compromise that would retain the estate tax in
a much-reduced form. Sen. Jon Kyl, McCain's fellow Arizona Republican, plans
to introduce an alternative proposal that would put the exemption level
anywhere from $7 million to upwards of $10 million. Kyl has held talks with
ranking Finance Committee Democrat Max Baucus, but no agreement has been
reached on the exemption level or the tax rate. The Capitol Hill publication
CongressDaily reported Aug. 16 that Kyl is "likely" to reduce the estate tax
rate to 20 percent to match the capital-gains rate in 2010. The current top
rate is 47 percent.
McCain's spokeswoman said he "remains confident" that Kyl and Baucus will
strike a deal he can support. Regardless, McCain clearly supports repealing
the tax for most Americans and would "keep" it only for the wealthiest
multi-millionaires - a position distorted by the Club for Growth's ad.
A Wider Effort - Also Misleading
The misleading attack on McCain is part of a wider effort by the Club for
Growth aimed at repealing the tax. The Senate is expected to take up the
issue upon return from the August recess. Other Club for Growth ads targeted
moderate Democratic senators viewed as swing votes. Repeal advocates need 60
votes to block a filibuster.
Club for Growth Ad, "Cantwell" Version
Announcer: You're born. You go to school. You work hard. You raise a family.
You pay your taxes.
And when you die, the IRS can tax you again. Taking as much as 55 percent of
everything you've saved for your children. It's called the death tax and
it's wrong.
With her vote, Sen. Maria Cantwell can eliminate the death tax. Isn't a
lifetime of taxes enough?
The latest targets include Baucus, the leading Democrat on the Finance
Committee, as well as Sens. Maria Cantwell of Washington, Kent Conrad of
North Dakota, and Ron Wyden of Oregon.
The ad creates the misleading impression that all those who see the ad will
face a 55 percent tax their estates. As we've said before, "you" only pay if
you have an estate worth over $1.5 million, under current law. So the ad is
untrue for 99 percent of those viewing the ad - their estates would pay zero
tax at the levels that apply this year. And as we've already noted, even the
top rate is no longer 55 percent - it has come down to 47 percent this year
and is scheduled to go to 45 percent in 2007. Under the Bush tax cut the top
rate would come back to 55 percent in 2011 - after the one-year "repeal" in
2010.
Many affluent families escape the estate tax by making systematic gifts to
their heirs before they die, and by using legal but expensive
estate-planning maneuvers. But the fact is that those who actually pay are
relatively few and wealthy. In 2003 2.4 million adults died, and just 28,600
left estates that were liable for any tax, according to the Tax Policy
Center. So the tax fell on only the richest 1.2 percent that year. That was
when the tax fell on estates of $1 million or more. For 2004 the threshold
was increased to $1.5 million, so the tax currently falls on something below
1 percent of all estates, and would fall on even fewer under the $5-million
threshold McCain proposed five years ago.
-- By Brooks Jackson and Jennifer L. Ernst
Sources
Joint Committee on Taxation, "Estimated Revenue effects of H.R. 8, 'The
Death Tax Repeal Permanency Act 2005'" 13 April 2005.
Leonard Burman, William Gale, and Jeffrey Rohaly, "Options to Reform the
Estate Tax," Urban-Brookings Tax Policy Center, Tax Policy Issues and
Options No. 10, March 2005.
Martin Vaughan, "Kyl Mapping An Alternative Strategy For Estate Tax
Measure," CongressDaily, 16 August 2005.
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