Showdown Over Bush Cuts Revives Estate Tax Fight
Excerpt of original report by Yuki Noguchi, National Public Radio - September 11, 2010
The estate tax typically hits a tiny fraction of the wealthiest Americans, but it often generates debate among a much larger segment of the population. And this year could be no exception, though it's the first and probably only year there are no federal estate taxes on the books.
That means a potentially huge windfall for the heirs to the George Steinbrenner estate, reportedly worth more than $1 billion. If Congress does not try to collect a retroactive estate tax this year, it means his heirs won't have to pay the 45 percent tax on everything over $3.5 million that would have applied last year.
This quirk in the tax code is the result of the Bush tax cuts, which started phasing out estate taxes a decade ago. Next year, if Congress does nothing, the taxes will go back up to their pre-2001 levels.
The Estate Tax
Under President George W. Bush, Congress gradually increased the amount exempted from the estate tax and reduced the top estate tax rate. The estate tax was repealed for 2010 but is scheduled to reset at pre-2001 levels.
And that has reignited debate over whether — or how big — estate taxes should be.
Estate taxes affect a small segment of the wealthiest Americans. Last year, only a quarter of a percent of those who died paid any.
Abigail Disney benefited greatly from a big inheritance but believes the estate tax should come back, at least to their levels last year.
"I take this position because I love my country," says Disney, the granddaughter of Roy Disney, who helped build the Walt Disney Co. empire. "And the fact is, my grandfather could never have built his business anywhere else."
Disney, a filmmaker and philanthropist, spent a lot of time shooting a film in Liberia. She says there, unlike the United States, there are no safe roads or schools and therefore no safe investments. And she says those who make money in a secure society like the U.S. also owe the society a debt.
She joined a group of wealthy individuals called United for a Fair Economy in part, she says, because she felt wealth is fundamentally unfair.
"It's absolutely an accident of my birth. And that's sort of the point — that there shouldn't be dynasties built around the simple good luck of being born related to somebody very wealthy," she says.
Warren Buffett and Robert Rubin are also members of the group and share the same philosophy. But not even Disney's family agrees with her. And she and her sympathizers face a mountain of money lobbying on the other side, including from the Chamber of Commerce and the National Federation of Independent Businesses.
Without any estate tax, Williams says, charitable giving could fall by up to a third...