For Immediate Release
Waging Class Warfare - The Rich Win Again
BOSTON - On New Year's Day, the estate tax, which has been part of the US tax system for nearly 100 years, will disappear due to the failure of the Senate to pass an extension in December. Now, Congressional leaders are pledging to act in early 2010 to reinstate the federal estate tax, making it retroactive to January 1, 2010, an action supported by United for a Fair Economy (UFE).
"The Senate's failure to extend the estate tax is the epitome of fiscal irresponsibility, coming at a time when our country is struggling to recover from a deep recession," states Brian Miller, UFE's executive director. "Permanent repeal of the estate tax would increase the federal deficit by $1.3 trillion dollars over 10 years. Those taxes would likely be shifted from multi-millionaire inheritors to the middle class, at a time when middle-class families are already losing their jobs and homes. That's outrageous."
The estate tax has been cut five times since 2001. As of 2009, it is paid only on the portion of an individual's estate over $3.5 million, or $7 million for a couple. As a result, over 99% of all estates are unaffected by the estate tax. Very few farms or small businesses are impacted at the 2009 level either, collectively making up less than 1% of all estate tax collections. Those estates that are affected only pay taxes on the portion of the estate above the exemption, not the full value of the estate. "The 2009 law is already generous enough. We oppose any effort to further weaken it," states Miller.
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"Providing for one's children and grandchildren is a good thing. No one is questioning that," adds Miller, "But how much is enough? Since there is zero tax on the first $7 million left by a wealthy couple under 2009 law, an heir can conceivably inherit more, tax free, than the average American earns in four whole lifetimes. Isn't that enough? And unlike the lucky heir, the working American will be paying taxes on what they earn."
Because the Senate failed to act, the estate tax will disappear in 2010, then return in 2011 to the pre-Bush levels with an exemption of $2 million for a couple and $1 million for an individual. However, it is unlikely that Congress will allow the estate tax to revert fully. In response, UFE and other estate tax advocates are supporting Rep. Jim McDermott's Sensible Estate Tax Act, HR 2023, as a middle ground between 2009 and pre-2001 law. It includes an exemption of $4 million for a married couple, with a 45% rate on amounts over that, and a 55% rate on estates worth over $10 million.
"The estate tax helps pay for essential services ranging from education to transportation that are the cornerstone of our nation's prosperity," states Miller. "Instead of giving tax breaks to the super-rich, many of the same people who wrecked our economy, we need a tax system that works for middle-class families. That's why it is so important that we preserve the estate tax, allowing each generation to get a fair shot at achieving the American Dream though their own merit. We urge Congress to reinstate this critical source of revenue for our nation and its people."
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United for a Fair Economy is a non-partisan organization that helps people of all races, ethnicities and classes work to reduce economic inequality.