Wealthy Families Oppose Estate Tax Repeal

Press Release
For Immediate Release - August 30, 2000
Contact:Betsy Leondar-Wright
(617) 423-2148 x13

Wealthy Families Oppose Estate Tax Repeal

Responsible Wealth members affected by the estate tax say that repeal would be the wrong legacy for their children and country.

In the words of software entrepreneur Martin Rothenberg and his daughter, management professor Sandra Rothenberg: "Tax policy should stress incentives to work, invest, give and save. In our case, the estate tax has encouraged us to set up a family foundation. Without the estate tax, a child could inherit millions, even billions of dollars–much of it accumulated tax-free in appreciated stocks, bonds and real estate–without paying a penny in taxes. Without revenue from the estate tax, there would be an even greater burden on taxpayers who never inherit a dime."

"Presidents Abraham Lincoln, Theodore Roosevelt, Woodrow Wilson and Franklin Roosevelt supported inheritance taxes because without them, this country would move further from democracy, and closer to aristocracy," says Mike Lapham, co-director of Responsible Wealth, and stockholder in an upstate New York paper mill that has been in his family for five generations. "The top 1 percent of American families already have 38 percent of the wealth–up from 20 percent in the mid-1970s. Without the estate tax, we can expect their share to skyrocket–leaving everyone else further behind."

Philadelphia restaurant owner Judy Wicks says, "Sure I care about my children's future, but I also care about the well-being of all America's children and the future of our society. Repealing the estate tax would mean less money for programs that reduce child poverty, clean up the environment and improve public education–programs that create a healthier, more secure future for everyone."

"If this tax is repealed, we will not likely see it again in our lifetime," say Jenny Ladd and her mother Helen Ladd, both Massachusetts philanthropists. "That would be a terrible legacy for our family and America’s future."

Members of Responsible Wealth who oppose repeal of the estate tax are available for interviews. (See profiles, below.)

Responsible Wealth arguments against estate tax repeal include the following:

  • It’s a tax only on the wealthiest Americans: the estates of 98 of every 100 people who die face no estate tax whatsoever. Current law contains protections for family farms and businesses. The exemption for individual estates, now $675,000, is set to rise to $1 million by 2006. The exemption for couples, now $1.35 million, is set to rise to $2 million. Spouses can inherit estates of any size without any tax liability.
  • The wealthiest multimillionaire families would get a giant tax break. Charles Davenport, a tax expert at Rutgers University, says that repealing the tax would mean an average $7 million tax cut for the top one-tenth of one percent of families (New York Times, July 16, 2000).
  • The estate tax is not double taxation. A majority of the value of the largest estates have never been subject to taxation. In fact, when a person dies, the gains on assets such as stocks, bonds, houses and other real estate that have never been sold (unrealized capital gains) are not subject to capital gains taxation. Heirs inherit the assets at their full, appreciated value. Without the estate tax, those gains would remain untaxed forever.
  • In 2000, the federal estate tax is expected to raise $27 billion in 2000. That's more than double the total amount of federal income taxes paid by the bottom half of all taxpayers. According to the Center on Budget and Policy Priorities, repealing the estate tax would be very costly–$105 billion over the first 10 years, as it phases in slowly, and nearly $50 billion a year once it was fully in effect. The cost of repeal in the second 10 years–from 2011 to 2020–would be at least $620 billion, over half a trillion dollars! What would be cut to make up this lost revenue? Education, Food Stamps, Medicare, Social Security? Or would taxes be raised on low- and middle-income Americans?
  • No estate tax is due on funds bequeathed to charities. In 1997, more than 15,500 estates took advantage of this provision, making donations worth more than $14 billion. Experts say charities would lose substantially after a repeal.
  • The average effective estate tax rate (after all exemptions and deductions) is not 55 percent (the top marginal rate), but a modest 17 percent of the gross value of the estates. That’s less than the income tax rate paid by many middle Americans.

"Estate tax repeal would accelerate America’s drift towards economic apartheid. Why eliminate a tax that targets only America’s wealthiest families, encourages charitable giving, expands green space through bequests to conservation land trusts, and promotes America's core economic and democratic values?

–Chuck Collins, co-director of United for a Fair Economy and
co-author of Economic Apartheid in America (New Press, 2000).

Responsible Wealth Members Affected by the Estate Tax
Available for Interviews

Martin Rothenberg

  • Founder and former CEO of Syracuse Language Systems, an educational software company.
  • Founder and President of Glottal Enterprises, a manufacturer of computer-based systems for the remediation of speech communication disorders.

Sandra Rothenberg

  • Assistant professor, Rochester Institute of Technology, College of Business.
  • Daughter of Martin Rothenberg.
  • Runs a family foundation with her father and siblings.

Judy Wicks

  • Owner of the White Dog Cafe, one of Philadelphia’s premier restaurants.

Mike Lapham

  • Co-Director of Responsible Wealth.
  • Stockholder in paper mill in upstate New York that has been in his family for five generations.

Jenny Ladd

  • Heir to the Standard Oil fortune.
  • Philanthropic advisor and donor organizer as director of Class Action.

George Pillsbury

  • Great-grandson of the founder of The Pillsbury Company.
  • Director of the Massachusetts Money and Politics Project, a project of the Commonwealth Coalition, based in Boston.
  • Cofounder of Haymarket People’s Fund (1974), a Boston-based community foundation, and the Funding Exchange (1979), a national umbrella organization of 15 community funds.

Interviews with these and other Responsible Wealth members and staff can be arranged through Betsy Leondar-Wright at United for a Fair Economy, 617-423-2148 x13.

Responsible Wealth is a national network of businesspeople, investors and affluent Americans who are concerned about deepening economic inequality and are working for widespread prosperity.