Is the Tax Issue Back?

By Michael Barone
Monday, October 15, 2007

British politics sometimes moves in tandem with American politics.

Ronald Reagan's administration was informed by the success of Margaret Thatcher's governance, and vice versa.

Tony Blair's New Labor drew inspiration from Bill Clinton's successful run as a "new Democrat." This month has seen a sharp turn in British politics. It raises the question of whether something similar could happen here in the next 13 months.

The sharp turn was this: Gordon Brown, who succeeded Blair as prime minister in June, decided, after much hinting to the contrary, not to call a general election this fall.

Brown was expected to call a general election because he seemed highly popular: He handled crises over terrorism and animal disease reassuringly and with the same competence he showed during his 10 years as chancellor of the exchequer. In 27 polls from July 11 to Sept. 27, his Labor Party led the Conservatives by a 40 percent to 33 percent margin -- enough to boost his party's already solid parliamentary majority and keep it in office through 2012.

Then came the annual Labor and Conservative party conferences -- usually matters of interest only to political insiders. Brown turned in a workmanlike performance at his conference. But Conservative Party leader David Cameron outshined him with a call for tax cuts -- specifically, abolition of the estate tax for estates under 1 million pounds and an end to the stamp duty on homebuyers. In two years as leader, Cameron avoided calling for tax cuts and made headway into the third-party Liberal Democrats' vote by stressing environmental issues.

Now, his call for tax cuts seems to have boosted the Conservative total. Four polls taken since the party conferences showed Labor with a statistically insignificant 39 percent to 38 percent lead. Even worse news for Labor: A News of the World poll of 83 marginal seats showed the Conservatives ahead by 44 percent to 38 percent. That suggested Labor might win less than an absolute majority, which would force it to govern with the support of the Lib. Dems.

It's unusual to see such a sudden shift of opinion in British politics. (You seldom see it in America, either, except sometimes during the parties' national conventions.) And it's possible that the post-party conference poll numbers won't hold up.

Nevertheless, they were enough to make Brown, a shrewd politician, drop his plans for a general election. And they suggest a more general point, perhaps applicable here, that an issue that seemed dormant and unimportant -- taxes, in this case -- can suddenly move votes when it's raised anew.

Labor won three general elections because it captured high-income seats in London and southeast Britain that used to be solidly Conservative. But voters evidently don't want their high housing values taxed away at death.

Can we expect to see the tax issue revived in the United States? Possibly. The Bush tax cuts are scheduled to expire in 2010, and the estate tax is scheduled to come back in full force in 2011, unless the Congress and president elected in 2008 take action. Democratic presidential candidates are calling for letting the tax cuts on high earners expire, and House Democrats last week beat back a proposal for a permanent repeal of the estate tax. So the issue may be squarely raised: If Democrats win, taxes on some voters (they will say a few, Republicans will say many) will go up.

Democrats starting with Bill Clinton have been carrying high-income suburban counties because of their stands on cultural issues. But with those issues less prominent -- you haven't heard presidential candidates of either party talk much about them this year -- taxes could go back into the spotlight.

A test case may come in the Massachusetts 5th District special election to be held next week. It's a high-income district last carried by Republicans in 1972 (when John Kerry was the Democratic nominee). Republican candidate Jim Ogonowoski, brother of one of the pilots killed on 9-11, has been campaigning against Congress, emphasizing taxes and immigration. Democrat Niki Tsongas, widow of the late senator, has been campaigning on a platform similar to those of most Democrats in 2006.

Both sides are now campaigning hard, as if they expect a close race. An upset win for the Republican or near-upset could be a sign that 2008 won't be a carbon copy of 2006.