For Immediate Release
Statement: Chuck Marr, Director of Federal Tax Policy, on the Senate Debate on the Federal Estate Tax
WASHINGTON - Today’s Senate debate over whether to extend the federal estate tax or let it expire for next year is a study in irony.
current law, the estate tax, which has been reduced very significantly
since 2001 and now only affects the biggest 1 of every 500 estates in
America, will expire next year and then return to pre-2001 law. The
Senate leadership has been trying to extend the tax’s 2009 parameters
beyond this year, preventing the scheduled rollercoaster of the tax
over the next two years. Unfortunately, some senators have blocked that
action, paving the way for the tax’s expiration on December 31. They
have refused to let the Senate extend the tax for a year — or even for
just a couple of months. That’s ironic for two reasons.
some of the same senators who say they will not vote to increase the
federal debt limit on the grounds of “fiscal responsibility” have
prevented the Senate from extending the estate tax. If it stands, their
action will cost the government billions of dollars, all of which will
go to the estates of the richest people.
Second, while many of these same senators claim they are protecting family farms and small businesses, many more farm and business estates of people who die in 2010 will face tax increases than tax cuts
if Congress allows the estate tax to expire. That’s because very few
small businesses and family farms face the estate tax, but many small
businesses and family farms have assets that have risen in value, such
as their land or business. Under current law, many of these people pay
no estate tax, and their capital gains taxes on that appreciated value
are forgiven at death. But if the tax expires, their heirs could face
capital gains taxes on the increase in the value of assets they may
have acquired years or even decades ago.
Congress should extend
the estate tax under its 2009 parameters rather than allow it to expire
altogether next year. If Congress cannot work out a permanent solution
on this matter now, it should, at a minimum, extend the current estate
tax rules temporarily while it addresses the issue for the long term.
That would keep the tax at already-low levels, prevent the government
from accumulating more debt, and ensure that many farms and small
businesses do not face new tax increases. But failure to act at all
would be deeply irresponsible.
FRIENDS: Help Us Fight
Independent journalism has become the last firewall against government and corporate lies. Yet, with frightening regularity, independent media sources are losing funding, closing down or being blacked out by Google and Facebook. Never before has independent media been more endangered. If you believe in Common Dreams, if you believe in people-powered independent media, please support us now and help us fight—with truths—against the lies that would smother our democracy. Please help keep Common Dreams alive and growing. Thank you. -- Craig Brown, Co-founder
The Center on Budget and Policy Priorities is one of the nation’s premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.