Volcker, Gates, Sr.: Accelerating Estate Tax Repeal Fiscally Irresponsible

Press Release from United for a Fair Economy
For immediate release - March 8, 2004
Contact: Christina Kasica, (617) 423-2148 x119

Volcker and Gates, Sr.: Accelerating Estate Tax Repeal is Fiscally Irresponsible

“At this time of record deficits, repealing the estate tax is not only poor tax and social policy but fiscally irresponsible,”

– Paul A. Volcker, former Federal Reserve chairman

WASHINGTON--Former Federal Reserve Chairman Paul A. Volcker and Bill Gates, Sr. will comment on Wednesday, March 10, on new estate tax repeal and reform proposals emerging from the House and Senate. They will speak at a press conference in the National Press Club’s Holeman Lounge at noon.

On March 4, the Senate Budget Committee proposed accelerating repeal of the estate tax by one year to 2009, as part of the budget resolution. Meanwhile, Representative Christopher Shays (R-Conn.), vice chairman of the House Budget Committee, said, “I no longer have interest in eliminating the estate tax.”

“We want responsible reform that raises the wealth exemption, but doesn’t greatly diminish the revenue the estate tax generates,” said Gates. “If we settle for accelerated repeal or irresponsible reform, we’re going to leave another kind of inheritance to the next generation: deep and distressing debt.”

Volcker and Gates will deliver their remarks as part of a two-day Estate Tax Lobby event sponsored by Responsible Wealth.

“We should reform the estate tax, not repeal it,” commented Chuck Collins, co-founder of Responsible Wealth. “Under most reasonable reform proposals, ninety-eight or ninety-nine per cent of Americans would be exempt from this tax. But Sen. Nickles is now proposing to temporarily suspend the estate tax for an additional year in 2009 without counting that cost in his current budget proposal. This is irresponsible.”

BACKGROUND ON THE FEDERAL ESTATE TAX

Permanent repeal of the estate tax is estimated to cost almost $1 trillion over the next 20 years, according to the Center on Budget and Policy Priorities.

Under tax legislation passed in May of 2001, the amount of wealth exempted by the estate tax gradually rises until 2009 to $3.5 million for individuals and $7.0 million for couples. In 2004, exemptions are $1.5 million for individuals and $3.0 million for couples.

Current legislation provides that in 2010, the estate tax is suspended for one year. In 2011 the law “sunsets” and reverts to its 2001 status. The Senate is now debating a proposal to accelerate the temporary repeal of the estate tax for an additional year, beginning in 2009. Opponents of the estate tax in Congress are pressing for permanent repeal. Others advocate reforming the estate tax by raising wealth exemptions, but retaining the tax on large fortunes over $2 - 4 million. Such reform would greatly reduce the loss in federal revenue that would be caused by permanent repeal.

Despite the largest federal deficit in history, President Bush continues to include permanent repeal of the federal estate tax among his key initiatives in both the latest State of the Union address and in his 2005 budget. The U.S. House voted in June 2003 to permanently repeal the estate tax.

PAUL A. VOLCKER, former chairman of the Federal Reserve Board from 1979 until 1987, later served as chairman of the Board of Trustees of the International Accounting Standards Committee, overseeing efforts to develop consistent, high-quality accounting standards acceptable in all countries.

BILL GATES, SR., co-chairman of the Bill and Melinda Gates Foundation, is co-author of "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes," and is the lead signer of Responsible Wealth’s “Call to Preserve the Estate Tax,” now signed by over 1,600 millionaires.

RESPONSIBLE WEALTH, a project of Boston-based United for a Fair Economy, is a national network of business people, investors and affluent Americans who are concerned about deepening economic inequality and who advocate widespread prosperity. For more information, see www.responsiblewealth.org.
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