Estate Tax Repeal Called Fiscally Reckless During Debt and War

Press Release from United for a Fair Economy
April 13, 2005
Contact: Christina Kasica (617) 423-2148 x119
Chuck Collins (617) 308-4433

Estate Tax Repeal Called Fiscally Reckless and Unseemly During Time of Debt and War

Supporters of Reformed Estate Tax Available for Comment/Interviews

BOSTON--Supporters of estate tax reform condemned today's upcoming vote in the U.S. House of Representatives on H.R. 8, legislation to permanently abolish the estate tax, saying the estate tax needs reform, not repeal. The Senate, where a vote is expected this summer, is deemed less likely to pass permanent repeal legislation.

"The estate tax is an appropriate and fair tax," said Bill Gates Sr., co-director of the Bill and Melinda Gates Foundation and a leader of the effort to reform the estate tax which is being organized by Responsible Wealth. "It is a fair payback to society for the opportunity to do business in our marvelous economy and society." Gates points to public investment in research, orderly markets and property protections as many of the examples of how wealthy individuals disproportionately benefit from societal investments.

"Estate tax opponents are fighting to preserve every last dime of Paris Hilton's inheritance," observed Chuck Collins, Senior Fellow at Responsible Wealth. "When we have families holding bake sales to buy body armor for their kids in Iraq, it's wrong that the tax cut zealots in Congress are working overtime to give tax breaks to multi-millionaires and billionaires."

"For eighty-five years, the estate tax has generated substantial revenue from those most able to pay," said Gates. "If we abolish it, who is going to pick up the tab?"

Responsible Wealth points out that under current law, the tax affects 1.5 percent of the people who die each year, yet will generate more than a trillion dollars over the next two decades. They advocate raising the exemptions and creating additional exclusions for closely held family businesses -but oppose abolishing the tax on great fortunes.

"While our nation already has a tremendous budget deficit, full repeal of the estate tax would make the deficit worse, costing hundreds of billions of dollars in order to cut taxes for the wealthy" said Tom Buis, Nation Farmers Union's vice president of legislative affairs. "Farmers and ranchers could be protected by far less costly measures, such as raising exemptions. The NFU supports a reformed estate tax."

"Small businesses like mine would not benefit from estate tax repeal - it's America's richest families, like the Waltons, that would benefit," said Dick Baldwin, owner of a real estate agency in Seattle, Washington. "If my business succeeds so much that I need to pay the estate tax, I will be happy to pay it, so that my community and country can create opportunity for the next generation."

Members of United for a Fair Economy, Responsible Wealth, the National Farmers Union, and Americans for a Fair Estate Tax are available to be interviewed about estate tax repeal and reform.

Background on the Federal Estate Tax

The federal estate tax was instituted in 1916 as a way to discharge war debts and to prevent the build-up of an American "aristocratic" class.

  • Under tax legislation passed in May 2001, the amount of wealth exempted by the estate tax gradually rises until the year 2010, when the tax will disappear entirely. Then, in 2011, it will be re-instituted with a $1 million exemption and 55% top rate.

  • Estate tax opponents in Congress are pressing for permanent repeal, while supporters of the estate tax advocate reforming the tax by raising wealth exemptions and retaining the estate tax on fortunes over $2-4 million.

  • In 2005, estates worth up to $1.5 million ($3 million for a couple) are exempt from paying any estate tax at all. This exemption will rise to $3.5 million ($7 million for a couple) in 2009.

  • In 2005, the top marginal estate tax rate is 47%. But because estates are taxed only on amounts exceeding the exemption level, the average effective tax rate is about 17%.

  • The wealthiest 1.5% of Americans are the only ones who pay estate taxes in 2005.

United for a Fair Economy (UFE), a national nonpartisan non-profit organization, raises awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart.

UFE's Responsible Wealth project has organized over 2,300 wealthy people to sign the Call to Preserve the Estate Tax, which helped prevent permanent estate tax repeal. See http://www.faireconomy.org/estatetax for more information.

UFE is a member of Americans for a Fair Estate Tax, a broad-based coalition of more than 60 arts, environmental, human needs, education and religious organizations.

The National Farmers Union has a membership of 250,000 farm and ranch families throughout the United States.

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