Krugman’s blog, 8/10/16

There was one post yesterday, “Hair Meets Heirs:”

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 more: we’re supposed to feel bad about those broken-up family farms — but back in 2001, when the American Farm Bureau Foundation was asked to provide examples, it couldn’t find even one. Small business tales are also very hard if not impossible to find, and that was back when the minimum threshold was a lot lower than it is now. Basically, we’re supposed to feel sorry for unicorns.

But in that case, how does this story still exert power? Money in politics, for sure; decades of lavishly funded propaganda, too. But what Graetz and Shapiro, linked above, emphasize is that some of the blame rests on centrists and mild liberals, too: they never made the moral case for estate taxation. Even now, it’s hard to think of many politicians willing to be anywhere near as forthright as Teddy Roosevelt was about the dangers to democracy posed by vast inherited wealth.

The question is whether the Trump phenomenon will reopen that door. I understand and sympathize with the Clinton campaign’s decision to emphasize how uniquely bad Trump is; their task is, first and foremost, to keep his short fingers off the button. But a big win would, perhaps, create room for a more robust enunciation of progressive values, on this and many other subjects.

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