Americans For a Fair Estate Tax Coalition Letter to Congress - December 2010

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December 8, 2010

Dear Senators and Representatives:

The undersigned organizations urge you to establish a robust estate tax during the current lame duck session of Congress.  Within the next few weeks, the House will likely consider an extension of the Bush tax cuts; any package must include the permanent extension of a strong estate tax.

Americans for a Fair Estate Tax (AFET), a coalition of dozens of national and state organizations, has long advocated for a robust estate tax that can provide our nation with the desperately needed revenue to invest in priorities such as education, health and nutrition, and infrastructure.

We are told repeatedly, however, that increased investments in the American people are not affordable because the federal budget deficit is too great.  Yet, Congress has sharply decreased an important revenue source that can help fund these priorities and reduce the budget deficit.

The Bush tax cuts enacted in 2001 set in place the gradual reduction and then temporary one-year elimination of the federal estate tax for 2010.  Unfortunately, we have already seen the revenue loss resulting from the one-year repeal.  In March, an oil and gas businessman in Texas became the first billionaire in United States history to pass along his entire estate – worth some $9 billion – without paying any federal estate tax.

President Obama recently endorsed a Bush tax cut extension compromise with Republicans that includes a weak estate tax.  With a $5 million exemption for individuals and a $10 million exemption for couples, and a tax rate of 35 percent, this proposal would severely undermine this fair and important revenue source.

The president originally proposed permanently extending the 2009 estate tax in his budget proposal this year.  With a $3.5 million exemption for individuals and a $7 million exemption for couples, and a tax rate of 45 percent, this proposal would be more than generous to the wealthiest among us and would not harm small businesses or family farms.

Restoring the estate tax to 2009 levels or stronger would affect only the wealthiest one quarter of one percent of estates and would bring in roughly $250 billion in revenue over 10 years.  The Brookings/Urban Institute Tax Policy Center estimates that in 2009, only 100 small businesses and small farm estates nationwide owed any estate tax, and those paid an average tax of only 14 percent.

Any proposal that grants a higher exemption level or a lower tax rate than existed in 2009 will virtually eliminate the estate tax and cost our nation much more revenue down the road.  Moreover, no proposal should provide a prepayment option or include an unlimited farm exemption, both of which would provide an unacceptable loophole and deprive the Treasury of much-needed federal revenue.

We support re-establishing a permanent robust estate tax because it serves these crucial purposes:

  • The estate tax raises revenue that our nation needs to invest in the American people.  Continued repeal will deepen the budget deficit by roughly $800 billion between 2012 and 2021.
  • Polls show a clear majority of voters want there to be an estate tax, believing that an exemption of between $2 million and $3.5 million is fair.  Voters continually place the estate tax at the bottom of the list of taxes the government should cut.
  • Because the government does not tax assets bequeathed to a charity, the estate tax encourages charitable contributions.  This is especially important in light of the current economic downturn in which charities are struggling to continue providing vital community services.
  • The estate tax functions as a backstop for the income tax, taxing capital gains that previously have not been taxed.  Over half the value of inherited estates is capital gains income that has never been taxed.  Most large estates include assets such as real estate, stocks or bonds.  Any increase in the value of these assets is capital gain income that would only be subject to the income tax if the assets were sold during the owner’s lifetime.

A robust estate tax must fairly tax wealth that might otherwise escape taxation entirely, preserve a system that ensures that the very wealthy pay their fair share, and maintain a structure that encourages charitable giving.



9to5, National Association of Working Women


American Association of University Women (AAUW)

American Federation of State, County and Municipal Employees (AFSCME)

American Federation of Teachers

American Heart Association

Americans for Democratic Action

Americans for Responsible Taxes

Arizona Advocacy Network

Bread for the World

Campaign for America's Future

Citizen Action / Illinois

Citizen Action of New York

Citizen Action of Wisconsin

Citizens for Tax Justice

Coalition on Human Needs

Colorado Progressive Coalition

Communications Workers of America

Community Action Partnership

Community Organizations in Action

Connecticut Citizen Action Group

Economic Opportunity Institute

Every Child Matters Education Fund

Florida Consumer Action Network

Friends Committee on National Legislation

Friends of the Earth

Georgia Rural Urban Summit

Growth & Justice

Independent Sector

Institute for Policy Studies' Program on
Inequality and the Common Good

Iowa Citizen Action Network

Jobs with Justice

Main Street Alliance

Maine People's Alliance

Michigan Citizen Action

Missouri Progressive Vote Coalition

National Committee for Responsive Philanthropy

National Community Tax Coalition

Missouri Progressive Vote Coalition

National Committee for Responsive Philanthropy

National Community Tax Coalition

National Education Association

National Women's Law Center

NETWORK: A National Catholic Social Justice Lobby

New Hampshire Citizens Alliance

New Jersey Citizen Action

Ocean State Action

OMB Watch

Oregon Action


Progress Ohio

Progressive Maryland

Progressive States Network

Responsible Wealth


Service Employees International Union (SEIU)

Sugar Law Center for Economic and Social Justice

Tax Fairness Oregon

Tax Justice Network USA

Tennessee Citizen Action


United Action for Idaho

United Church of Christ, Justice and Witness Ministries

United for a Fair Economy


Virginia Organizing

Voices for Progress

Washington CAN!

Wealth for the Common Good

West Virginia Citizen Action Group

Wider Opportunities for Women


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