"Times are tough for workers in the U.S. where a recession has a stranglehold on much of the economy, but life is perfectly rosy for those at the top.

The riches of the wealthiest North Americans grew by double digits in 2009, primarily from interest their money earned when it was invested in the stock market and elsewhere, according to a report by the Boston Consulting Group.

Millionaires in the U.S. and Canada saw their wealth increase 15 percent in 2009, to a total of 4.6 trillion dollars, the report found.

Worldwide, 11 million - or less than 1 percent of all households - were millionaires in 2009. They owned about 38 percent of the world's wealth or 111 trillion dollars, up from about 36 percent in 2008, according to Boston Consulting Group.

About 4.7 million millionaires live in the U.S., four percent of the population and more than anywhere else in the world. Japan, China, Britain and Germany followed the U.S. in the number of millionaires.

Their fortune is a stark contrast to the lives of more than 15 million people in the U.S. who are unemployed and searching for work, and the eight million more who are just getting by with a part-time job...More than two million more people were working prior to the recession but have now dropped out of the labour force. [...]

The recession isn't hitting those at the top as it has workers. In fact, many wealthy people benefited from the stock market's ups and downs, said Mike Lapham, director of the Responsible Wealth Project at United for a Fair Economy, an NGO in Boston.

'Folks at the top have a cushion, a disposable income to fall back on. Maybe their portfolios took a hit but they didn't lose their jobs and their homes. If they had losses, they can deduct them from their taxes,' Lapham told IPS. [...]"

Read the full column by Adrianne Appel on AlterNet.org (via Inter Press Service)

Ranchers demand a fix for the estate tax

With less than 30 legislative days left on the congressional calendar, the National Cattlemen’s Beef Association on Tuesday warned lawmakers that time is running out to fix the estate tax.

The tax is repealed, but barring congressional action will return next year to the pre-2001 levels that hit estates worth more than $1 million with a 55 percent tax.

Steve Foglesong, the cattle association’s president, warned that the reinstatement of the tax would force some ranchers and farmers to close their operations.

“They’re in essence handing down a death sentence to family-owned farming and ranching operations,” he said in prepared remarks. “Taxing family farmers and ranchers out of business will have serious impacts on all Americans, not just in our rural communities.”  

Read the full blog post by Jay Hefflin on TheHill.com

"Former Treasury Secretary Robert Rubin will join several others in calling on Congress to reinstate the estate tax before the August recess. 

The July 21 event will be hosted by United for a Fair Economy, which has been fighting to preserve the estate tax since 1999.

Rubin is expected to discuss his reasons for supporting a permanent estate tax fix. [...]"

Read the full blog post by Jay Hefflin on TheHill.com

Urge Your Senators to Co-Sponsor The Responsible Estate Tax Act, S.3533

Dear Friend of United for a Fair Economy,

Senators Sanders (I-VT), Harkin (D-IA), and Whitehouse (D-RI) have just proposed a strong, fair, and fiscally responsible estate tax bill. The Responsible Estate Tax Act (outlined below) would make the wealthy pay their fair share, while ensuring that the estate tax will not affect the middle class, small businesses, or family farmers. Call your Senators now and urge them to co-sponsor the Sanders/Harkin/Whitehouse Responsible Estate Tax Act S.3533 so that we can begin the path towards a fairer and more responsible tax system.

1. Call toll-free 800-830-5738 or 202-224-3121 (Capitol switchboard) and ask to be connected to your two US Senators, or call their direct lines. Then, ask for the staff person who handles taxes, or tell the person who answers the phone:

• My name is _____________. I am a constituent.
• I am calling to urge the Senator to co-sponsor S.3533 the Sanders/Harkin/Whitehouse Responsible Estate Tax Act .
• If we are going to get out of this recession, we need to end the Bush tax cuts for the wealthy. It’s time to restore the progressive tax system that made our country strong, beginning with a robust estate tax. The Sanders/Harkin/Whitehouse The Responsible Estate Tax Act is an important step on the road to an economic recovery that benefits all Americans.
• This bill is a common sense solution. It balances the desire to protect small businesses and farms with the assurance that the super-wealthy give back and support the country that made their prosperity possible.

Email me (don't reply to this email), Lee Farris, at [email protected] to let me know what you heard and how it went. If you get a reply email or a letter from your legislator, please send me a copy.

2. Write a letter to the editor. Find the editor's email from the Contact the Media box. Use the talking points above and connect your letter to any story about taxes or deficits. Please send me a copy of the letter you submit.

3. Share this alert with everyone you know. Please forward this email, post it on blogs, Facebook, Twitter, MySpace, and everywhere else you communicate.

Thanks for taking action,

Lee Farris
Senior Organizer on Estate Tax Policy
United for a Fair Economy
617-423-2148 x133
[email protected]

THE SANDERS/HARKIN/WHITEHOUSE RESPONSIBLE ESTATE TAX ACT, S.3533

• Exempts the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009. Doing this would mean that 99.75 percent of all estates would be exempted from the federal estate tax in 2011 alone.
• Includes a progressive rate structure so that the super-wealthy pay more. The rate for the value of the estate above $3.5 million and below $10 million would be 45 percent, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50 percent, and the rate on the value of estates above $50 million would be 55 percent.
• Includes a billionaire's surtax of 10 percent. The bill also imposes a 10 percent surtax on the value of an estate above $500 million ($1 billion for couples). According to Forbes Magazine, there are only 403 billionaires in the United States with a collective net worth of $1.3 trillion. Clearly, the heirs to these multi-billion fortunes should be paying a higher estate tax rate than others.
• Closes all of the estate and gift tax loopholes requested in President Obama's Fiscal Year 2011 budget. These loophole closers include requiring consistent valuation for transfer and income tax purposes; a modification of rules on valuation discounts; and a required 10-year minimum term for Grantor Retained Annuity Trusts (GRATS). OMB has estimated that closing these loopholes that benefit the super-wealthy, would raise at least $23.7 billion in revenue over 10 years.
• Protects family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes. Under current law, the value of farmland can be reduced up to $1 million for estate tax purposes under 2032(a) of the Internal Revenue Code (Special Use Valuation). The bill increases this level to $3 million and indexes it to inflation.
• Benefits farmers and other landowners by providing estate tax relief for conservation easements. The bill provides tax relief to farmers and other landowners by amending estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60 percent.

This legislation would exempt over 99.7% of Americans from paying any estate tax whatsoever, while ensuring that the wealthiest Americans in our country pay their fair share.

BACKGROUND

The future of the federal estate tax is still up in the air. Due to the Bush Tax Cuts, there is no estate tax in 2010. However, it will return in 2011 with a $1 million exemption and a 55% rate. It is likely that the Senate will act on the estate tax by the end of the year. This is creating a pressure cooker of debate over what the estate tax should look like in 2011.

President Obama proposed keeping the 2009 estate tax, with a $3.5 million exemption per spouse and 45% rate. That loses about half as much revenue as full repeal.

As a stronger alternative to the Obama proposal, UFE has supported H.R. 2023, The Sensible Estate Tax Act, sponsored by Rep. McDermott, (D-WA)., which would set the exemption level at $2 million per spouse, and establish progressive tax rates of 45% to 55%. Because the McDermott bill has not been introduced in the Senate, UFE also supports the Sanders/Harkin/Whitehouse Responsible Estate Tax Act.

Senators Lincoln (D-AR) and Kyl (R-AZ) proposed a dangerously weak estate tax that includes a $5 million dollar exemption per individual and a 35% tax rate. This proposal would cost our cash strapped nation additional tens of billions of dollars in the coming years and would do so to the exclusive benefit of multi-millionaires.

America quite literally can’t afford the kind of estate tax that Lincoln and Kyl propose. Senators Sanders, Harkin, and Whitehouse have proposed a viable solution. Call your Senators as soon as possible and urge them to co-sponsor S.3533 the Sanders/Harkin/Whitehouse Responsible Estate Tax Act and help bring fair taxation back to America!

P.S. Remember to call toll-free 800-830-5738 or 202-224-3121 (Capitol switchboard) to support a strong estate tax, and ask to be connected to both your US Senators, or call their direct lines.

The government needs to generate a certain amount of revenue in taxes to fund important public services. The estate tax goes a long way toward generating this revenue. And, explains UFE's Estate Tax Organizer Lee Farris, "If the estate tax goes away altogether, the responsibility for those taxes will be shifted onto middle class people." This hardly seems fair when, according to Farris, "A family could leave $7 million tax-free to their kids, which is more than a median income worker could earn in two lifetimes."

To listen to Lee's full interview with Jeff Santos on Revolution Boston, click here (MP3).

Point: Why America Needs a Strong Estate Tax

By Lee Farris

"America is a tremendous nation that faces huge challenges over the coming years. Millions have lost their jobs and homes during this economic crisis, and our nation’s long-term budget is on an unsustainable path.

Despite these facts, there are still some who want to end the estate tax, which would amount
to yet another irresponsible tax break for the wealthy. Sadly, for some of our elected leaders, like Senators Kyl and Lincoln, passing new tax cuts for wealthy trust fund heirs is a higher priority than revitalizing our economy or balancing our budget.

Why do we need an estate tax? Our government plays a vital role in promoting individual opportunity and national prosperity. Simply put, taxes are the price we pay to live in a stable, secure and thriving society with a decent quality of life. The estate tax generates billions in revenue from those most able to pay. The wealthiest Americans have benefitted the most from the investments that our country has made in an educated workforce, reliable transportation, technology and a legal system that makes commerce possible.

Middle class Americans are finding fewer opportunities for success because education and other paths to advancement are increasingly out of reach. The estate tax helps to even the playing field by slowing the concentration of power in the hands of those born into great wealth. [...]"

Read the full op-ed by Lee Farris (PDF 1.1 MB) - see p. 8

Read the Counterpoint by William Beach (PDF 260 KB) - see p. 9

To listen to Lee's full interview on the Rick Smith Show, click here (MP3).

Highlights from the interview:

Farris: "[The estate tax could be called] the dynasty tax. It's the tax so that we don't have dynasties. It's the meritocracy tax, it's the tax that enforces having a meritocracy where you get ahead on your own merits rather than on your parents'.

Under [Presidents] Eisenhower and Kennedy, the very wealthy were paying more than half of their income in taxes. That's not true now. We did it before, there's nothing about now that's different than then.  It's just the whole political outlook about what taxes should be like. That's the difference."

Work vs. Wealth

How Unfair Tax Breaks Benefit the Richest Americans

By Brian Miller
Originally published in the Fayetteville Daily News, June 1, 2010

"I am a wealthy American who supports higher taxes on wealthy people. I realize that agitating to pay more taxes is unusual. When I appeared on Fox News recently, the host, Neil Cavuto, opposed my position but also called me an altruist with a good heart, because I favored a policy against my own self-interest. I thank Neil for his kind words, but I disagree with him. I believe higher taxes on myself are in my own self-interest.

Although repealing the Bush tax cuts for the wealthy will cost me a lot, I think doing so is necessary to address a looming national debt crisis that could severely harm me and my family. In the face of this threat, I consider it perfectly self-interested to worry more about the state of the overall national economic pie than about my own particular slice. [...]"

Read the full op-ed by Responsible Wealth member Eric Schoenberg

This year, members of Americans for a Fair Estate Tax (AFET), a coalition of progressive labor, faith-based, and social justice groups that has been fighting efforts to repeal or cut the estate tax for years, formally adopted a set of principles on the estate tax. Once you've reviewed the principles, please join our campaign by signing your organization's endorsement onto the document.

Statement of Principles on Estate Tax Legislation

Our nation desperately needs revenue to invest in education, health, nutrition, and other priorities to promote a competitive workforce and ensure opportunity for every American. Only one-third of working adults have a college degree. One out of three Americans lacked health insurance at least once over the last couple years. Poverty, joblessness, and home foreclosures are harsh realities for millions of Americans.  
 
We are told over and over again that increased investments in the American people are not affordable because the federal budget deficit is too great. And yet, Congress has gradually eliminated an important revenue source that can help fund these priorities and reduce the budget deficit.  
 
Through a period of war, natural disaster, and now the worst economic downturn since the Great Depression, the Bush Administration and Congress set in place the gradual elimination of the federal estate tax. Since 2001, the tax was cut to exempt more and more estates so that in 2009, only one-quarter of one percent of all estates in the U.S. were expected to pay the tax. In 2009, only individuals with estates worth more than $3.5 million ($7 million for married couples) were subject to the tax. In January 2010, the estate tax was completely eliminated for one year.   
 
The federal estate tax has been repealed for 2010 and under current law will reappear in 2011. Congress must permanently reinstate the estate tax for 2010 and subsequent years because it serves these crucial purposes:  

• The estate tax raises revenue that we need to invest in the American people. When Congress enacted the gradual repeal of the estate tax in 2001, it did not want to own up to the enormous cost of full repeal, which would exceed $800 billion over ten years. Therefore, after a year of outright repeal in 2010, the legislation calls for the estate tax to return to its old levels starting in 2011. Supporters of the Bush estate tax repeal assumed in 2001 that Congress would not allow the tax to be reinstated. Now that repeal has taken effect, Congress must take a hard look at the damage it is inflicting. Continuing the repeal will deepen the budget deficit by about $800 billion between 2012 and 2021. Keeping the estate tax at its 2009 level will cost about $400 billion over ten years.   
• The estate tax ensures that families who have benefited the most from public goods pay their fair share to maintain them. Families that have accumulated massive fortunes in America could not have done so without the infrastructure, educated workforce, stability and other public benefits that taxes make possible. Society only works when everyone contributes to the common good.
• The federal estate tax provides a check on the concentration of power in the hands of those born into great wealth. Such a concentration of power is contrary to American values and democratic principles. This is a growing problem today, as hard-working Americans are finding fewer opportunities for success because education and other paths to advancement are increasingly out of reach. The United States now has the greatest concentration of wealth in the hands of the rich in nearly a century. As billionaire Warren Buffett reminds us, “Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit.”
• The estate tax corrects a feature of our tax system that would otherwise allow certain income to escape taxation entirely. 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 be subject to the income tax if they were sold during the owner’s lifetime. However, this income is not subject to the income tax if the owner dies and leaves it to an heir.
• The estate tax encourages charitable giving. The estate tax is not imposed on assets bequeathed to charity. Many wealthy individuals take advantage of this unlimited deduction for charitable giving. In 2004, the Congressional Budget Office estimated that if the estate tax had not existed in 2000, charitable donations would have been $13-$25 billion lower that year.    

 
Despite claims to the contrary, the estate tax does NOT affect the vast majority of small businesses and family farms. The Brookings/Urban Institute Tax Policy Center estimates that in 2009, only eighty small business and small farm estates nationwide owed any estate tax, and these estates paid an average tax of only 14 percent. This has not stopped estate tax opponents from spending millions in lobbying and advertising claiming that the estate tax hurts small businesses and family farms.  This is simply a ruse to convince average Americans to support another massive tax cut for the wealthy that they would otherwise reject.  
 
We call on Congress and the President to take the following steps when addressing
the estate tax:   

1. Exempt no more than the first $2 million ($4 million for married couples) of assets in an estate.
   
   A $2 million per-spouse exemption for the estate tax was in effect from 2006 through 2008. This shielded over 99 percent of the estates of people who died during those years from taxation. A $2 million per-spouse exemption is also twice as large as the exemption that takes effect in 2011 under current law.


2. Set a tax rate of no less than 45 percent for the taxable portion of estates, with an additional 10 percent tax on the taxable portion exceeding $10 million.  
    
   The taxable portion of an estate includes assets in excess of the exemption, and it excludes any assets bequeathed to a spouse or charity. Therefore, even if the taxable portion of an estate is taxed at a statutory rate of 45 percent, the effective tax rate on the entire estate, i.e. how much is actually paid, is much lower.  
    
   A fundamental tenet of a fair tax system is that those who have the greatest ability to pay should pay a larger share. Great wealth is the best indicator of ability to pay. The estate tax should continue to target the very wealthy, and the largest estates should be taxed at a higher rate.  
3. Restore a credit for state estate and inheritance taxes.  
    
   The credit for state estate and inheritance taxes was gradually repealed under the tax cut legislation enacted in 2001, but will reappear in 2011. This credit allows states to share in estate tax revenues without having to administer a separate state tax.  
    
   Before the 2001 estate tax cuts were enacted, all 50 states had a tax on estates or inheritances. Many of these taxes have since disappeared because they were tied to the credit in the federal estate tax. Currently, only 20 states have such taxes. This is particularly problematic now, as this loss of tax revenue contributes to the severe budget shortfalls that many states are facing.


4. Simplify the estate tax.  
    
   The estate tax should be simplified in two ways. First, the gift tax, estate tax, and generation-skipping transfer taxes should be “reunified,” so that transfers made during the lifetime or at death are subject to the same rules, exemptions, and tax rates. This will ensure tax fairness and reduce the need, and incentive, for complicated tax planning.
    
   Second, the estate tax should allow for the “portability” of any unused estate tax exemption from one spouse to another. If one spouse dies without using his or her entire $2 million exemption, the unused portion should automatically transfer to the surviving spouse. This would greatly simplify estate tax planning for many Americans and avoid the need to split up and re-title assets or set up complicated trusts. It also would eliminate situations in which some families have to pay the estate tax just because they failed to plan for it.

Click here to sign your organization on to the AFET Principles or you can send an email to Gary Therkildsen at [email protected]