Paul Volcker Blasts Idea of Permanently Repealing Estate Tax

Wall Street Journal • January 2, 2003

By Tom Herman and Michelle Higgins

The former Federal Reserve Chairman urges Washington to overhaul the tax, instead of eliminating it completely. Mr. Volcker makes his appeal in the foreword to a new book by William H. Gates Sr. (father of the Microsoft executive and co-head of the Bill & Melinda Gates Foundation) and Chuck Collins (co-founder of Responsible Wealth, a Boston-based group). Their book is called: "Wealth and Our Commonwealth." The subtitle: "Why America Should Tax Accumulated Fortunes."

"I didn't get it last year. I still don't get it," Mr. Volcker writes. Why, right now, in the aftermath of the greatest burst of paper wealth creation in all of American history (in all of history for all I know), in the midst of growing concern (even alarm) about the growing disparity of wealth and income in the United States, right in the face of increasing pressures on the federal budget, has their been so much effort to abolish the estate tax?"

Mr. Volcker agrees with Messrs. Gates and Collins that the $1 million basic exclusion from the tax is too low. "Similarly, the annual allowances for individual tax-free gifts, now $11,000, could be raised significantly," he writes.

"But by all means, let's keep the tax on truly huge fortunes," Mr. Volcker concludes.

Copyright 2002, Dow Jones & Co.