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The Latest News on the Estate Tax

January 19, 2005
Republicans Consider Keeping Estate Tax Alive for the Very Rich

This Wall Street Journal report identifies UFE's Responsible Wealth project as a key opponent of estate tax repeal.

From the Portsmouth (NH) Herald:

To the Editor:

This week, as Congress leaves Washington for its annual summer recess and the media is focused on Boston, it is extremely important that our Maine congressional delegation holds firm against middle-of-the-night tax votes. There is a chance that Congress will try to permanently repeal the estate tax when no one is watching by attaching it to another piece of unrelated legislation.

Senators Snowe and Collins, and Congressmen Allen and Michaud, must continue to hold firm against an estate tax repeal that would cost our nation a trillion dollars and further endanger the services our citizens depend on. One of the greatest tragedies of American democracy is the ongoing effort by a privileged few to widen the divide between the rich and poor.

Our founding fathers were adamant at the birth of our nation that political power should not be hereditarily transferred - and that spirit lives on. In the early 20th century, as those few with wealth became overly extravagant and the majority of less fortunate Americans shrank further into poverty, our country stood up for a fair democracy.

As one solution, it implemented the estate tax in 1916. President Bush is now pushing us into the red by over $5 trillion with his economic policies.

Despite the downward revenue spiral, some conservatives in Congress, motivated by wealthy lobbyists, want to permanently repeal the estate tax. This would cost our federal budget over $1 trillion in the next 20 years. Maine alone could stand to lose over $150 million a year and another $54 million annually in contributions to charities.

The estate tax is the only major federal tax on excessive amounts of unearned wealth. Only the richest 2 percent of U.S. citizens pay it.

Spouses and charities that have estates transferred to them do not have to pay this tax. The net value of an estate has to be over $1.5 million for an individual or $3 million for a couple to pay estate tax at the federal level.

Maine has kept the exemption at $750,000 per individual; otherwise, our state would lose over $38 million in the next two years. In 2009, the federal threshold will be lifted to $3.5 million per person and $7 million per couple, making 88 percent of estates exempt.

And 2010 will see the tax completely repealed, while in 2011, the tax will be reinstated as a federal exemption level of $1 million per person. The reason for this flip-flopping is that Congress didn't have the votes to permanently push through such a disastrous tax cut, so it settled for a temporary fix that passes the buck of settling the matter to the future lawmakers. We need to stand up against concentrated wealth and privilege, and a fair estate tax will help us do that.

Seniors are especially vulnerable to the never-ending cuts in services that are a result of federal deficits and destructive federal policies. Seniors still can't afford their prescription drugs, but many states are facing large cuts by the federal government in the Medicaid program. Maine is one of them.

Maine Care (Medicaid) is struggling to keep all its programs funded, such drugs for the elderly and care for the disabled. Maine cannot afford to lose more senior services due to reckless tax cuts.

Preserving the estate tax is important not only for its significant contribution to revenues, but as a symbol of equality in our nation. Life is about more than materialism, although sometimes we forget that.

I hope Congress avoids the temptation to sneak an estate tax repeal past the voters this week, and has the courage to preserve the estate tax in the future. If Congress fails to preserve it, we will lose much more than the services we depend on to be a healthy and prosperous nation, we will lose the spirit of equality in our proud history as a democracy.

John Carr
President
Maine Council of Senior Citizens - Alliance for Retired Americans
York, Maine

Neena Quirion
Director
Maine Council of Senior Citizens - Alliance for Retired Americans
Augusta, Maine

Here's the letter:

Bush's tax policy helps the rich

The June 19 editorial, "Erase the disgrace," portrays the Bush administration's tax policy as a millionaire money machine -- a polluted policy that delivers more wealth for the wealthy and does little for others. As one who voted for President George W. Bush, I do not support his tax policies. Tax cuts likely will hurt most Americans by reducing necessary services and creating record deficits.

Bush's opposition to the estate tax (affecting those leaving more than $3 million) will hurt most Americans. It is estimated that eliminating the estate tax could increase the deficit by $1 trillion over the next two decades.

Eliminating the estate tax is unjust, helps only the richest Americans and, in the long run, hurts the poorest.

After all, millionaires don't make it all on their own. Public programs and services have provided even the well-known wealthy with a leg up on the money ladder, as Bill Gates Sr. and his fellow Responsible Wealth members have noted.

Fair taxation, Gates explains, requires those with the biggest piece of the pie to pay the biggest portion. This seems humane and reasonable since so many hard-working people do not earn enough to live decent, safe lives. Bush's strategies eventually will create an excessive tax burden for middle- and bottom-wage earners. That will be a disgrace.

Mark Manning
Ballwin

Efforts to repeal the Virginia Estate Tax fell apart when pro-repeal forces refused to raise income taxes on the richest Virginians to compensate for the revenue that would be lost to repeal. Kind of gives the lie to the argument that, "We oppose the estate tax because because death is the wrong time to impose a tax." Turns out they oppose the estate tax because they don't want to tax rich people.

"[The Estate Tax] is something we've had in this country for decades because it evens the playing field for those of us who pay taxes day in, day out during our lives with those who get so much wealth that they don't have to pay taxes on."

— Delegate Vivian Watts, D-Fairfax County

From OMB Watch: The Tax Policy Center has recently posted tables displaying the impact of the estate tax. The analysis shows just how few people would benefit from a repeal of the estate tax.

• In 2004, an estimated 18,800 estates will pay an estimated total $17.6 billion in estate taxes. That's just 1 out of every 15,587 people in the US who will pay an estate tax this year.

• In 2004, only an estimated 440 estates with significant farm or business assets will pay even a dime in estate taxes. That's about 2 percent of those who pay the estate tax, and just 1 out of every 665,989 people in the U.S..

• From 2002 to 2003, changes in the estate tax law have cost the federal government $13 billion.

• Over the next 10 years, the estate tax will raise $271 billion from only the wealthiest decedents.

He goes on to say: "I believe a special interest group is pushing this with Farm Bureau. Seems to be the very large farmers and other multimillion dollar and larger private businesses. Farm Bureau members offer support only as a general antitax issue. If you think is best to concentrate wealth in fewer and fewer hands, elimination of estate tax is one of the tools to use. This will not benefit the majority of farmers."

More here. Scroll down to the third comment in the dialogue.

People from over 20 states, including regular citizens, business leaders, farmers, and representatives of nonprofit organizations, unions, the Children's Defense Fund, and civil rights groups brought their own passion, spirit and motivation to our two-day education and lobbying effort.

We had lots of people for whom this was their first time ever meeting with their elected representatives in Washington. We heard from powerful plenary speakers ­ including New York Times reporter David Cay Johnston on tax scams and Wade Henderson from the Leadership Conference on Civil Rights talking about the tax cut ­ civil rights connection.

Our timing could not have been better. Several legislators we met with had never heard from anyone defending the estate tax. Several legislators who had been pro-repeal indicated that they are ready to switch. Thanks to the involvement of signers of the Call to Preserve the Estate Tax, it's clear that the climate in the U.S. Senate is changing for the better.

Florence Clark, a retired software programmer who attended college with financial support from a private scholarship foundation, a federal grant and a federally sponsored student loan, forcefully explains why repealing the estate tax will threaten all three of those funding sources in the future.

Read the op-ed

This report addresses some facts about state estate taxes that helps put their impact in perspective. It finds that the decision by states to retain their own estate tax will not affect the vast majority of Americans.

UFE, Responsible Wealth and allied organizations National Priorities Project, OMB Watch, and Americans for a Fair Estate Tax are releasing state-by-state reports that show how estate tax repeal would devastate charities and cut funds available for public services. Press briefings are being held in the following states: Arkansas, Indiana, Louisiana, Maine, Minnesota, Ohio, Oregon, and Washington.

With the support of 26 of Oregon's 30 Senators, and 53 of Oregon's 60 Representatives, the Oregon Legislature enacted a bill to preserve the state's estate tax. The strong bi-partisan support for the bill should send a loud message to Oregon's congressional delegation that they should all be supporting reform, not repeal, of the estate tax. Many people worked hard all session to make this happen.

The bill did pass (as we expected), with a similar margin to the 2002 vote. The bill is not yet scheduled for a vote in the Senate, where it has failed repeatedly.

We and our allies sent out thousands of emails and generated hundreds of calls to targeted Representatives who have voted for repeal in the past, such as Russ Holt (NJ), Rick Larsen (WA), Darlene Hooley (OR) and 33 other target districts.

The good news is that we believe we can hold off permanent repeal in the US Senate and keep building support for reform. One lobbyist told the Washington Post today that support for estate tax repeal has “plateaued” because of swollen budget deficits, and some backers of the repeal effort are now realizing they need to work for reform.

On Capitol Hill, Bill Gates, Sr. joined a national farmers group, a business owner, and two Congressional Representatives in urging the House of Representatives not to pass H.R. 8. This bill would permanently extend the currently temporary repeal of the federal estate tax in 2010.

• William H. Gates, Sr., chairman of the Bill and Melinda Gates Foundation, board member of the United Way of America, author of "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes"

• Tom Buis, Vice President of Government Relations, National Farmers Union

• Seth Goldman, co-founder of Honest Tea
  Mr. Goldman is a successful business owner, interested in leaving his business to his children, and who believes his estate should be taxed.

• Rep. Earl Pomeroy of North Dakota

• Rep. Jim Marshall of Georgia

Julie Hirschfeld Davis reports in The Baltimore Sun that House Republicans intend to exploit the expansion of the child tax credit to attach permanent repeal of the estate tax: “Conservative Republicans in the Senate and House, who are loath to give a tax credit to people who earn too little to owe income taxes, are pushing to pair [an extension of child tax credits to low-income taxpayers] with other long-sought tax cuts, such as a repeal of the estate tax.”

As US forces prepared to invade Iraq, Sen. Jon Kyl (R-AZ), the Senate leader of the estate tax repeal cause, put forward an amendment to accelerate the repeal of the estate tax by one year.

Thanks to RW activists, we generated hundreds of calls to Senators with the basic message: “Vote NO on estate tax repeal” and “Why are you even considering a tax cut for the wealthy during a time of war?”

The Senate voted, during the first day of war, to pass the amendment 51-48. This incremental change doesn’t make estate tax repeal “permanent” – that would require 60 votes.

So the good news is we switched a number of votes. Repeal forces started the day with 57 votes for repeal. Five Senators who have historically voted FOR repeal changed their vote and voted against the amendment. This is very significant.

The five Senators who did the right thing and switched their votes (Please THANK THEM by email or by phone):

• Mary Landrieu (D-LA) (202) 224-5824 email form

• Evan Bayh (D-IN) (202) 224-5623 email form

• Susan Collins (R-ME) (202) 224-2523 senator@collins.senate.gov

• Olympia Snowe (R-ME) (202) 224-5344 olympia@snowe.senate.gov

• Max Baucus (D-MT) (202) 224-2651 email form

Republicans Lincoln Chaffee (R-RI) and John McCain (R-AZ) continued their opposition to repeal.

Two of our Republican targets who continued to vote FOR REPEAL:
George Voinovich (R-OH)
Sen. Arlen Specter (R-PA)

Democrats who still voted FOR REPEAL during a mobilization for war:
Blanche Lincoln (D-AR)
Ben Nelson (D-NE)
Bill Nelson (D-FL)
Ron Wyden (D-OR)

Zell Miller (D-GA) did not vote.

Complete roll call vote

March 2, 2003
Bill Gates, Sr. Joins the National Farmers Union to Demand Reform of the Estate Tax, Not Repeal

Anaheim, CA - Two weeks after Republican Congressional leaders announced that permanent repeal of the estate tax was one of their top 10 legislative priorities, Bill Gates, Sr. called for the reform of the estate tax, not repeal, as the keynote speaker at the 101st Anniversary Convention of the National Farmers Union (NFU). The NFU represents nearly 300,000 farming and ranching families across the United States. | Press Release

More information on how the estate tax affects farmers

Hundreds of people concerned about growing economic inequality packed community meetings in Seattle, Pasadena, San Francisco, Oakland, and Portland for events featuring Bill Gates, Sr. and UFE Program Director Chuck Collins. The events are part of a nationwide grassroots campaign to preserve the estate tax. Gates and Collins are the authors of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

	Crowd at estate tax event in Boston, Jan. 16, 2003. Photo: Bill Morse

Hundreds of people concerned about growing economic inequality packed community meetings in Washington, New York, Boston, and Portland for events featuring Bill Gates, Sr., Rev. Jim Wallis of Call to Renewal (in D.C.), and New York Times columnist Paul Krugman (in N.Y.). The events are part of a nationwide grassroots campaign to preserve the estate tax. Gates is the co-author of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

Nation's wealth disparity widens, but report shows 52% of families own stocks USA Today

Kent Conrad of North Dakota, ranking Democrat on the Senate Budget Committee, called today for scaling back reductions in the estate tax that are scheduled to go into effect later this decade. Conrad spoke at a press conference [organized by United for a Fair Economy and Responsible Wealth] attended by Bill Gates Sr., the father of the founder of Microsoft Corp., and George Soros, chairman of Soros Fund Management.

Gates and Soros argue that lowering or repealing the estate tax will exacerbate the gap between rich and poor and will reduce revenue needed to support government services. Soros said the estate tax was the "least damaging" form of taxation because it does not affect the motivation of talented people to take risks and work hard.

At a news conference on the federal budget situation, Republican Senator George Voinovich of Ohio said that while he supported making Bush's 2001 tax cuts permanent, he has "some concern" about the estate tax. "I think that there may be another approach on that issue," he said.

This is welcome news. In the past, Voinovich has repeatedly voted to repeal the estate tax. His statement indicates that there may be an emerging move among moderate Republicans to reform, rather than repeal, the tax.

Dear Friends,

We have our work cut out for us.

Preserving the federal estate tax will be harder in the coming year, given the shift in control of the U.S. Senate.

Can you imagine what kind of country we will become if President Bush and his patrons succeed in eliminating the estate tax? Precisely at the moment when we are experiencing the greatest levels of wealth and income inequality in eight decades, our elected leaders are going to throw fuel on the fire.

Our country’s founders fought a revolution to throw off an aristocracy. In 1916, we instituted an estate tax in response to the excessive inequality of the Gilded Age. At that time, populist farmers, urban reformers, Andrew Carnegie and President Theodore Roosevelt all understood that the American experiment was threatened by the extreme concentrations of wealth and power at the turn of century. The estate tax helped level the playing field and strengthen equality of opportunity.

In 2001, some of you joined Responsible Wealth and United for a Fair Economy’s “Call to Preserve the Estate Tax.” (If you haven’t, please sign here at our web site). Hundreds of people signed on in the Spring of 2001 and over 1,000 Americans likely to owe estate taxes signed our petition urging reform, but not abolition of the federal estate tax.

Together, we had an impact. We shifted the debate about the estate tax and about what claim our society has on great fortunes. Congress passed the 2001 Bush tax cut, but the estate tax repeal that takes place for one year, in 2010, is not permanent. In June 2002, we fended off a serious threat to make repeal permanent. With both houses of Congress in GOP control, pro-repeal forces are primed to finish the job.

First, the good news: Senate budget rules require 60 votes to make the repeal of the estate tax permanent. Our preliminary post-election count indicates that they are still short the votes needed for repeal.

Now, the bad news: These rules expire in April! At that point, the Senate could make repeal of the estate tax and other tax cuts permanent with a simple majority vote.

We’ve been preparing for this moment. We have a plan!

• In the coming months, we will launch, with allied organizations and Congressional leaders, an organizing campaign to promote legislation to reform the estate tax.

• In January, Beacon Press will publish a new book, Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes by William H. Gates, Sr. and myself. Former Federal Reserve chairman Paul Volcker wrote a stunning forward. The purpose of the book is to generate a great deal of publicity for this vital effort.

• We are planning a book promotion and organizing tour that will kick off in January in Washington, DC. Bill Gates and I will travel to 15 cities and enlist hundreds of other wealthy Americans to publicize this effort.

• We’ve hired Lee Farris, a veteran organizer, to coordinate our field campaign and rapid response network, enlisting grassroots organizations and local activists around the country to lobby to preserve the estate tax. We’ve forged new alliances to speak out against repeal, including farmers, small business owners, land conservancies and charity groups.

Please explore this web site to find out how you can be involved. Please feel free to contact Lee Farris to plug in. She can be reached at lfarris@faireconomy.org or at (617) 423-2148 x33.

Thanks,

Chuck Collins
Program Director
ccollins@faireconomy.org

Request for Financial Support
We need your financial support to succeed. I’m asking you to write two checks. One to our tax exempt 501(c)3 organization, United for a Fair Economy. The second to the Fair Economy Action Fund, a 501(c)4 organization set up to facilitate more direct lobbying and advertising on this issue. You can give securely online, or mail your contributions to:

Responsible Wealth
29 Winter Street, 2nd Floor
Boston, MA 02108

Let me know if you would like to see a more detailed proposal.

--Chuck Collins (ccollins@faireconomy.org)

Responsible Wealth, 29 Winter Street, 2nd Floor, Boston, MA 02108.
Voice: 617/423-2148 Fax: 617/423-0191.
© 2004 Responsible Wealth. All rights reserved.