In late-December, and again in late-June, I noted that if Paul Ryan’s worst nightmare comes true, and Democrats regain control of the House and Senate on November 8 thanks to Donald Trump’s hot mess of a presidential campaign, there will be a full-court press by progressives and climate activists to take care of the biggest piece of unfinished business from the Obama years–the failure to pass economy-wide carbon pricing legislation.
Both pieces noted the activism of the Partnership for Responsible Growth, which is aggressively pushing for legislation that would pair a federal fee on carbon emissions with a dramatic reduction in the federal corporate income tax rate, arguing that such legislation would “…foster economic growth, create jobs, [and] end the long-standing deadlock over tax reform…”
Unfortunately, one can envision a scenario in which such legislation would not get enough votes to pass even a Democratically-controlled House and Senate unless members of the Republican minority had a greater incentive to vote for such legislation. (Recall that forty-four House Democrats voted against the Waxman-Markey cap-and-trade bill in June 2009; eight Republicans voted in favor.) Once such incentive may involve the right’s favorite fetish object: the elimination of the federal estate tax.
As Paul Krugman notes, the death of what the right calls the “death tax” has long been an obsession of Conservatism Inc.:
It’s sort of being put into the background by little stuff like death threats against Hillary Clinton, but I’m still kind of fascinated by how “populist” Donald Trump came out for elimination of the estate tax, which hits only a tiny number of yuuge estates. Of course, he probably doesn’t know that. Still, it was clearly a sop to the GOP establishment, which considers tax-free inheritance the “linchpin of the conservative movement.”
That tells you a lot about said movement. The thing about the estate tax is that it’s really, really hard to make the case that it’s all about incentives and trickle-down benefits. And conservatives basically don’t even try. Instead, they’ve made estate tax repeal an issue of “fairness” — people, they say, shouldn’t have to pay tax all over again when they die, and think of all the family farms and businesses broken put to pay the tax.
Now, this argument is in fact deeply misleading and almost always dishonest. For one thing, lots of people get taxed twice — once when you earn income, again when you pay sales tax, etc.. And much of the wealth passed on to heirs represents income — unrealized capital gains — that has never been taxed before. Oh, and the very wealthy, the people who now pay the bulk of the estate tax, often pay lower overall tax rates than people further down the scale; see Romney, Mitt.
There’s no question that eliminating the federal estate tax would worsen the wealth-concentration crisis in the United States. However, there’s also no question that legislation to address an even bigger crisis–the climate crisis imperiling our overheating planet–simply won’t make it through the House and Senate without some sort of sop/handout/goodie/benefit/giveaway to the one percent, even if the House and Senate is in Democratic hands.
An economy-wide pricing of carbon is generally recognized as the most effective way to ramp down emissions, but that general recognition could be obscured by a blizzard of BS from carbon-pricing foes in the fossil-fuel industry about the alleged economic catastrophe that would result from this policy (despite its clear success, from an economic and ecological perspective, in British Columbia). Perhaps the only way to prevent this anti-carbon-pricing strategy from succeeding is to essentially force certain House and Senate Republicans to choose between appeasing those who want lower corporate taxes and the elimination of the estate tax, and appeasing those who want carbon pollution to continue in perpetuity.
We cannot dismiss lightly the economic (and moral) problems inherent in eliminating the federal estate tax. However, we also cannot dismiss lightly the urgent need to implement an economy-wide solution to the problem of carbon pollution–and cannot deny the reality that some profoundly unpleasant compromises will have to be made in order to ensure that carbon-pricing legislation makes it through both houses of the 115th Congress. It is not impossible to get Republicans to vote positively on climate-connected legislation; faced with a bill that would implement a federal carbon price in exchange for a reduction in corporate taxes, personal income taxes and the repeal of the federal estate tax, how many Republicans would turn down such an offer? Phasing out the estate tax and phasing in a carbon tax would be seriously controversial…but considering the existential threat of climate change, does it warrant serious consideration?