Estate Tax Hearings Begin Crucial Estate Tax Battles in 2008

Estate Tax Hearings Begin Crucial Estate Tax Battles in 2008

By Lee Farris, Senior Organizer for Estate Tax Policy at UFE.
November 14, 2007

Senator Baucus (D-MT) held the first of two estate tax hearings on Wednesday, November 14, 2007, fulfilling a promise made to Senator Kyl (R-AZ) that hearings would be held in the fall of 2007.

Warren Buffett, one of America's richest citizens, testified in support of the estate tax. "I see nothing wrong with those who have been blessed by this society to give a larger portion of their income to the society than somebody who's working very, very hard to make ends meet," said Buffett.

A Senate vote on a new Kyl proposal to reduce the estate tax that would cost 76% as much as complete repeal will be held in the spring of 2008.

Specifics on the Kyl proposal

On Oct. 4, Senator Kyl (R-AZ) proposed an amendment to the farm tax bill to sharply cut the estate tax. Kyl withdrew the proposal in return for a promise by Baucus that the Senate Finance Committee will hold hearings this fall on Kyl's proposal, and will vote on it in the spring of 2008.

Kyl's amendment would exempt all estates under $5 million ($10 million per couple), tax those between $5 million and $25 million at the 2011 capital gains rate of 20%, and tax those over $25 million at 30%.

The amendment would cost $301 billion from 2013-2017, or 76% as much as complete estate tax repeal would cost, compared with existing/projected estate tax law which has a $1 million exemption and a 55% tax rate.

"Once again, it's a question of priorities," said Lee Farris, Senior Organizer for Estate Tax Policy at UFE. "Do we want to preserve a historic source of revenue which could fund education and health care, or give this money, hundreds of billions of dollars of it, to multi-millionaires and billionaires?"

Historic Estate Tax Reversal in House of Representatives

On Oct. 10, 2007, by a vote of 212-196, the House rejected an amendment to HR 3056, which aimed to permanently end the estate tax and prevent the Internal Revenue Service from hiring private contractors to collect back taxes. See how your representative voted

Last year, the House passed a similar bill called H.R. 8 by a vote of 272-162, with 42 votes from Democrats; it got only 10 Democrats' votes this time around. The House had voted to repeal the estate tax five times since President Bush was elected.

Eight bills to end or sharply reduce the estate tax have been introduced in Congress. Three were sponsored by Republicans, and four by Democrats. Some of these bills exempt farms from the estate tax, despite the fact that there are several estate tax provisions that already protect farms.

New Tax Loophole In the Making

If passed by Congress, this proposal would have drained vital revenue from public services that are already suffering due to the cost of the war in Iraq and to other tax cuts.

In fact, slashing estate taxes, even if it's confined to farmers, may actually hurt family farms in the long run. Exempting all farms from the estate tax, no matter how large, creates a whole new set of loopholes, as wealthy individuals could convert large amounts of wealth into farmland, driving up the costs of farmland and driving out the family farmers these bills purportedly try to protect.

Join the Battle

Defeating costly estate tax proposals in 2008 is important to UFE's mission of fighting economic inequality. We will continue working to educate the public and senators on the need to keep the estate tax, in order to reduce growing economic inequality and to provide needed revenue for programs that help people get ahead.

We hope you will join us in the battle to keep a fair estate tax by calling your senators and writing letters to the editor.

If you would like to submit written testimony to the Senate Finance Committee, please contact lfarris@faireconomy.org">Lee Farris.
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