"Key Democrats predicted the federal estate tax will expire after Dec. 31 because an impasse among lawmakers will prevent an agreement on extending the current levy before Congress takes its holiday break.
The lawmakers said Congress would likely seek to restore it retroactively next year. [...] A temporary expiration would hand a victory to congressional Republicans who enacted legislation in 2001 to phase out what they call the “death tax.” It also would subject tens of thousands of heirs who otherwise wouldn’t owe taxes to capital gains rates if they liquidate inheritances. [...]
Unless Congress acts, the estate tax would be replaced next year by a capital-gains tax on all but the first $1.3 million in inherited assets, including homes, stock certificates, stamp collections and livestock.
Heirs who sell those assets would pay from 15 percent to 28 percent in taxes on any appreciation in value since the assets were acquired. Current law imposes capital-gains taxes only on any increase in value after the assets are bequeathed.
[Rep. Earl] Pomeroy [D-ND] said some 61,000 Americans would face taxes under the capital gains regime, versus about 6,000 estates that would face a tax under an extension of the current law. [...]
A prominent proponent of taxing large estates, Bill Gates Sr., father of Microsoft Corp. founder Bill Gates and co- chairman of the Bill and Melinda Gates Foundation, urged Congress to retain the tax.
“Society has a just claim on these fortunes,” Gates told reporters yesterday on a conference call organized by United for a Fair Economy, a Boston-based advocacy group in favor of keeping the estate tax."
Read the full article by Ryan J. Donmoyer on Bloomberg.com
"For most of the past decade, the House voted to repeal the estate tax. So, it’s worth a smile and a nod to see that the House finally recognizes the need for an estate tax. The not-so-good-news is that continuing 2009 law would increase the federal deficit by $234 billion over 10 years—that’s quite the generous tax giveaway to the massively wealthy. But don’t we have more pressing needs for that revenue? How about healthcare, clean energy, education, infrastructure, jobs, and deficit-reduction?"
Read the full op-ed by Lee Farris in The Oneida Daily Dispatch.
On January 26th, Oregon voters will be asked to affirm the state's revenue package, and fair taxation activists in the state are pushing hard for voter turnout to vote YES on Measures 66 and 67. If the measures are voted down, it would mean drastic cuts for state services and jobs.
If you are a resident of Oregon be sure to read up on these important measures and, most importantly, be sure to vote!
"Several wealthy people today added their voices to a campaign to get Congress to extend and strengthen the estate tax, calling it a key incentive for people to leave money to charity. [...]
The [press teleconference] was organized by United for a Fair Economy [...] The group is pushing Congress to act before its holiday recess to renew and increase the tax that applies to large estates when people die — which is set to expire at the end of the year.
The wealthy participants said the tax is a small price to pay to support government services like education and research that allow people to become prosperous in the United States. It also encourages philanthropy, they said, because people with large fortunes can make gifts to charity without paying taxes on them. [...]
[United for a Fair Economy] favors a proposal by Rep. Jim McDermott, Democrat of Washington, which would apply a 45-percent tax, with a $2-million exemption per spouse, and index the exemption to inflation. It would also tax assets above $5-million at 50 percent, and above $10-million at 55 percent.
Lee Farris, the group’s estate-tax policy coordinator, says extending the current law, rather than returning to the higher rates that are now set for 2011, would amount to a '$391-billion tax break to the wealthiest 1 percent of Americans over 10 years, at a time when economic inequality has skyrocketed.'
United for a Fair Economy proposes that Congress extend the current rate for one year, but strengthen the tax after that."
Read the full article in the Chronicle of Philanthropy.
"The U.S. Congress is moving toward a stopgap measure to prevent the federal estate tax from expiring Dec. 31, postponing a broader fight over levying the fortunes of multimillionaires when they die.
Senate Finance Committee Chairman Max Baucus said he would seek to attach the temporary fix to year-end legislation, possibly a defense spending bill. It would draw from a permanent solution adopted by the House on Dec. 3 that freezes the current tax imposing a top rate of 45 percent on estates valued at more than $7 million per couple.
'There’ll be an extension, one-year, two-year, we don’t know,' said Baucus, a Montana Democrat. [...]
The current defense spending bill expires Dec. 18. Baucus said he is considering that measure or another as a way of getting the temporary estate-tax measure adopted.
A prominent proponent of taxing large estates, Bill Gates Sr., father of Microsoft Corp. founder Bill Gates and co-chair of the Bill and Melinda Gates Foundation, urged Congress not to let the tax expire.
'Society has a just claim on these fortunes,' Gates told reporters today on a conference call organized by United for a Fair Economy, a Boston-based advocacy group in favor of keeping the estate tax. “The facts are clear: The estate tax raises substantial revenue from those with the capacity to pay it.” [...]
John Bogle, founder of The Vanguard Group Inc., the largest U.S. manager of stock and bond mutual funds, said he has had plenty of time to plan a substantial estate, providing for his wife, children, and grandchildren. Still, Bogle, 80, said he is 'proud and pleased to pay' taxes on his fortune when he dies."
Read the full article by Ryan J. Donmoyer on Bloomberg.com
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BRETT NEELY: The House has already voted to extend the estate tax through next year and beyond. It will apply to estates larger than $3.5 million. Now it's the turn of the Senate, which is occupied with health care.
A group of some of America's wealthiest people are campaigning for the federal estate tax, which affects estates larger than $3.5 million, to extend beyond 2011. [...]
Members of the Gates and Rockefeller families say the tax is essential to preventing an aristocracy, says Lee Farris. She's an organizer with the group United for a Fair Economy that's working with the families.
LEE FARRIS: Our country is founded on being a meritocracy, where you have to get ahead on your own merit.
BRETT NEELY: In the big picture, the estate tax is pretty small. Fewer than 1 in 400 families ever pay it, according to the Tax Policy Center. And it will raise about $14 billion this year, compared to over $800 billion from the income tax. [...]
See the full transcript of this news report on American Public Media's Marketplace.
"The best solution [to funding healthcare] is for Congress to adopt the House proposal to slightly raise income taxes on couples with incomes above $1 million and individuals with incomes over $500,000 [...] Another progressive alternative is the Senate proposal to raise the Medicare payroll tax on income over $250,000 for married couples ($200,000 for individuals).
To make health care work and address the most vital needs of our nation, we need a fair tax plan. The funding fight over health care will set the stage for other battles in Congress, including over attempts by right-wing forces to cut back on the estate tax — the only tax mechanism in federal law to reverse the concentration of wealth in fewer and fewer hands.
Let’s hope increased taxes on the rich stay in the final health care bill and we get back to the principle in America that taxes should fall most heavily on those who can best afford to pay them."
Read the full article by Karen Scharff and Bob Cohen on Syracuse.com.
"For the first time in decades, Washington is daring to tackle financial
reform. It took the collapse of the whole sector and the resulting
public outrage to get them started, and it will take pressure to keep
them going. It’s not certain that Congress and the Obama administration
will have the courage to prioritize the long-term health of our economy
and the legitimate interests of the public over the self-serving
demands of their friends on Wall Street.
Three steps are essential: regulating executive compensation, separating financial “casino” activities from regular banking, and creating a consumer financial protection agency."
Read the full article in The Register Citizen.
"President Obama's Afghanistan troop surge decision caused considerable rancor among liberal House Democrats Tuesday at the same time they are being asked to vote this week on a measure cutting taxes for millionaires. [...]
The House bill would set the estate tax at 45 percent with an exemption for up to $3.5 million in inherited assets per individual, at a $234 billion cost. That figure would not require offsets under a deal House leaders struck with members of the Blue Dog Coalition, provided the Senate passes statutory pay/go language.
But that is an abstract concept to liberals weighing the cost of war and a tax cut for a small group of wealthy families. The House bill would head off the estate tax's scheduled 2011 increase to 55 percent, with the threshold lowered to $1 million. It would protect all but about 5,500 families, or the richest 0.2 percent from the tax, according to the Tax Policy Center.
That's not good enough for those who argue multimillionaires are still getting a free ride. 'I feel that it's a contradiction to vote on a tax break for people worth $3.5 million and above while we're sending troops overseas without any idea how we're going to pay for it,' said Rep. Raul Grijalva, D-Ariz., co-chairman of the Congressional Progressive Caucus.
Rules Chairwoman Louise Slaughter called the $234 billion cost a 'pretty astonishing figure' and suggested some of those revenues should be set aside to help pay for the war. 'The money is going to be needed here if indeed they get enough votes to pay for this adventure here in Afghanistan,' Slaughter said. [...]
Advocacy groups such as United for a Fair Economy have been plugging a higher estate tax rate and lower exemption as critical particularly given the state of the economy and need to create jobs. They support a bill from Rep. Jim McDermott, D-Wash., that would set the exemption at $2 million per spouse, adjusted for inflation, with a progressively rising estate tax rate based on the value of an estate. For estates worth up to $5 million, the tax would be 45 percent, rising to 50 percent for up to $10 million and 55 percent for those above $10 million. That would cost about $203 billion, according to the Joint Committee on Taxation.
In an alert to UFE members Tuesday, senior organizer for estate tax policy Lee Farris wrote the McDermott bill was the best policy 'because our country needs funds for long-overdue investments in health care, education, clean energy, and other public services -- not more tax breaks for the heirs of the richest 1 percent.'"
Read the full article on RiehlWorldViews.com
"Congress needs to act on an estate bill to prevent the rate from going to zero next year. Advocacy groups such as United for a Fair Economy have pushed for a higher estate tax rate and lower exemption as critical particularly given the state of the economy and need to create jobs. They support a bill from Congressman Jim McDermott (D-Washington) that would set the exemption at $2 million per spouse, adjusted for inflation, with a progressively rising estate tax rate based on the value of an estate. For estates worth up to $5 million, the tax would be 45 percent, rising to 50 percent for up to $10 million and 55 percent for those above $10 million."
Read the full posting on Rotor.com.