Feinstein Is on the Money With Tax Cut Votes

U.S. Sen. Dianne Feinstein showed again last week why she seems to have a lock on reelection. Her Democratic colleagues, meanwhile, demonstrated how they periodically lose touch with voters--and why they can’t quite shuck off that old label of tax and spend.

The surprise is that President Clinton--the “new Democrat” who revived his party with centrist politics--doesn’t get it on this one.

Feinstein walked away from her party and the president and sided with the people--married people--by voting for a Republican tax cut plan to eliminate the onerous marriage penalty.

“If Congress only passes into law one piece of tax reform legislation this year,” the California senator said, “it should be marriage penalty relief. . . . [It’s] a matter of common sense, fairness and decency.”

The week before, Feinstein also broke ranks with Clinton and Democratic leaders by voting for a GOP bill to phase out the inheritance tax--what Republicans call “the death tax.”

“It amounts to double taxation,” Feinstein asserted. “If you have earned money and already paid taxes on it, you ought to be able to pass these assets on to your children. . . . [It’s] not fair, not right and not what the American dream is all about.”

California’s other senator, Barbara Boxer, joined most Democrats in voting in lock-step against the Republican bills.

Feinstein’s reelection opponent, Rep. Tom Campbell (R-San Jose), supports both proposals. But he’s so far behind in the race that he felt it necessary to remain in California campaigning rather than show up for work to vote.

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Eyes glaze over--at least mine do--when Beltway pols blather about “targeted tax cuts,” “out years,” “non-Social Security surpluses” and “risky schemes.” Especially in summer when baseball trades, fish bites and beach conditions are the real concerns.

But when pols talk about dumping the marriage penalty, that’s an attention grabber.

An estimated 25 million American couples--3 million in California--pay higher taxes just because they’re married. Another 21 million couples--mainly one-earner families--enjoy a marriage bonus. Truth is, tax rates should not be affected by a marriage certificate one way or the other.

It’s screwy to provide tax incentives--credits, exemptions--for couples to have children, but to penalize them for getting married. The Feds offer a $500 tax credit and $2,750 income exemption for each dependent child. But the marriage penalty averages about $1,400. What’s the policy logic? To encourage child-rearing out of wedlock?

“A lot of young people I run into--kind of upwardly mobile professionals--tell me, ‘I should have stayed single. If we just lived that way, it’d be cheaper,’ ” Feinstein says.

“If we’re in a situation--and we are--where there are balanced budgets and projected surpluses, the time has come to ease some taxes for people. The things that always come up--particularly among Californians--are the marriage penalty and the estate tax. They’re basically unfair.”

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It’s not like the government is hurting.

The latest budget projection is for a $2.2-trillion surplus over the next decade. Ending the marriage penalty would cost the treasury $293 billion in that period. Phasing out the estate tax would drain another $105 billion and, when completely eliminated in 2010, cost $750 billion per decade.

Cost the government--and benefit the taxpayers.

Cynics might guffaw that Feinstein, of course, worries about the estate tax because she’s wealthy. But she says, “It isn’t a big deal when you’re very well to do because there are ways. . . .” The devastating hits are taken by farms and small businesses, she says.

The estate tax applies to assets worth more than $675,000. That will rise to $1 million by 2006. It’s currently $1.3 million for a family-owned business--some farms qualify--and this is not scheduled to rise. Soaring real estate prices are rapidly pushing many Californians into death tax brackets.

Democrats have fallen back on their old standby: These tax cuts would benefit the rich. Clinton has vowed to veto both bills, while saying he’d sign less costly proposals benefiting fewer taxpayers.

Is Feinstein in trouble with the White House? “No,” she says. “Look, I’m a big girl. I don’t have to march to the sound of anyone’s drummer other than the people of California.”

The people--likely voters--prefer Feinstein over Campbell by 26 points, 58% to 32%, in the latest Field poll.

The people of California also had the good sense long ago to abolish both the state inheritance tax and marriage penalty.