| WASHINGTON - May 29 - American taxpayers may be
stuck paying $850 billion in taxes normally paid by the
super-wealthy if a measure currently before the U.S. Senate becomes
law, according to a warning issued by Americans for a Fair Estate
Tax (AFET), a non-partisan coalition of nonprofit organizations
concerned about repeal of the estate tax. The threat comes from a
tax plan by Sens. Phil Gramm (R-Texas) and Jon Kyl (R-Ariz.) to
permanently mandate that multi-million-dollar estates would never
have to pay any taxes. The Senate is expected to vote on the issue
in June.
"The Senate should reject the Gramm-Kyl tax plan to permanently
repeal the estate tax," said Gary D. Bass of OMB Watch and chair of
AFET. "We cannot afford to sacrifice Medicare, Social Security,
education, homeland security and other key national priorities just
to permanently mandate a special gift to a few multi-million-dollar
estates at the expense of 98 percent of American taxpayers."
AFET last week issued a letter to several thousand of its member
organizations' constituents, advising them of the danger of the
Gramm-Kyl estate tax plan.
"Instead of this large handout to a small handful of
multi-millionaires at the expense of most Americans, we favor
common-sense estate tax reform that would protect family farms,
small businesses and average taxpayers -- without a costly repeal
that would leave most Americans holding the bag," said Chuck
Collins, co-founder of AFET member organization Responsible Wealth,
the group of small business owners and affluent individuals who
organized last year's pro-reform statement, signed by Bill Gates
Sr., Warren Buffett and 1,100 other people personally affected by
the estate tax. "Repeal of the estate tax is simply unfair and not
the best way to advance America's priorities."
Permanent repeal of the estate tax means less revenue for the
country -- $100 billion in the next 10 years and $750 billion in
the following decade. It would force the government to either raise
taxes on middle-income taxpayers or cut vital services, such as
Social Security or prescription drugs for the elderly, just to pay
for a special windfall for the wealthiest few.
The estate tax is applied when individuals leave behind estates
worth at least $1 million ($2 million for couples) at the time of
their death. There is no tax on the first $1 million per
individual, and amounts in excess of $1 million are taxed at
various rates, starting at 37 percent. As a result of last summer's
tax legislation, the amount that is exempted from taxation rises to
$3.5 million ($7 million for couples) and the highest taxable rate
drops from 55 percent to 45 percent by 2009. In 2010 the estate tax
is repealed, but is again instituted in 2011. The Gramm-Kyl plan
would permanently repeal the estate tax.
Repeal of the tax also would have a major harmful impact on
America's foundations and charities. Estates are allowed to
transfer unlimited amounts of money to charitable groups, thereby
helping to reduce the size of the estate that is taxed. In 1999,
this tax incentive for charitable giving resulted in $14.8 billion
in contributions to foundations, universities, museums, churches
and many other charities.
"Even beyond the heavy burden it would place on most taxpayers,
the Gramm-Kyl tax plan would drain billions of dollars from
foundations and hard-hit charities that are already struggling to
serve the most vulnerable Americans," said Rick Cohen of the
National Committee for Responsive Philanthropy and AFET. "The
Gramm-Kyl tax plan is as unfair as it is unwise. It would hurt
America's charities even as the president and Congress are looking
to promote charity."
The estate tax was already scaled back last summer as part of
President Bush's sweeping tax package. The Gramm-Kyl tax proposal
would be far more costly for most American taxpayers as it would
permanently repeal the tax rather than simply reforming it. Senate
Majority Leader Tom Daschle has agreed to a vote in the Senate on
the Gramm-Kyl proposal by June 28. The House will vote on permanent
repeal of the estate tax for a second time on either June 5 or 6 to
send a message to the Senate.
As part of AFET's effort to reform rather than repeal the estate
tax, Responsible Wealth sponsored an ad in the May 20 edition of
Roll Call and the May 22 edition of The New York Times. Entitled
"Much Ado About a Very Few," the ad highlights just how few estates
would benefit from the costly Gramm-Kyl tax plan -- 24 in Maine,
for example. Overall, 5,854 multi-millionaires would get a break
while the remaining taxpayers would have to pick up the tab if the
measure passes. The ad is available at
http://www.responsiblewealth.org.
The AFET letter was signed by representatives of a wide range of
public interest organizations, including AFSCME, American Arts
Alliance, American Association of University Women, Americans for
Democratic Action, Campaign for America's Future, Children's
Defense Fund, Coalition on Human Needs, Evangelical Lutheran Church
in America -- Lutheran Office for Governmental Affairs, Independent
Sector, Minnesota Council of Nonprofits, National Committee for
Responsive Philanthropy, National Council of Nonprofit
Associations, National Women's Law Center, NETWORK (National
Catholic Social Justice Lobby), OMB Watch, Responsible Wealth,
United for a Fair Economy, and United Church of Christ Justice and
Witness Ministries.
Americans for a Fair Estate Tax (AFET) is a broad-based
non-partisan coalition of nonprofit groups, including civic, labor,
social justice, faith-based, and environmental organizations, as
well as organizations providing human services. AFET advocates that
instead of repealing the tax on multi-million-dollar estates,
Congress should reform the estate tax to ensure that family farms
and small businesses are not unfairly taxed while keeping 98
percent of taxpayers exempt and safeguarding Medicare, Social
Security, education, charities and other key national priorities
that would be threatened by a complete repeal. More information
on this issue can be found online at
http://www.ombwatch.org/estatetax, which will soon be at
http://www.fairestatetax.org.
###
|
