Estate Tax in Danger of Repeal

When the U.S. Senate returns on September 6, it will be tackling the permanent repeal of the estate tax., Often referred to by its opponents as the “death tax,” the estate tax currently taxes estates valued over $1 million when they are bequeathed to an heir. As part of President Bush’s 2001 tax-cut plan, the estate tax is set to phase out in 2010. In 2006 the tax will apply only to estates valued over $2 million, in 2009 the level rises to $3.5 million, and in 2010 there will be no estate tax at all. This past April the House passed a bill repealing the tax permanently after 2009. According to the Joint Committee on Taxation, the federal government would lose $750 billion in revenue from a repeal of the estate tax over the next ten years.

Opponents of the estate tax cite small farmers as the main reason that the tax should be repealed. They say that often the tax creates such a large burden for the heirs of family farms that the recipients have to sell off their land to pay the tax, effectively ending the tradition of family farms in the United States.

The facts tell a different story. The Congressional Budget Office recently conducted a study of tax returns from 1999 and 2000 and found that with today’s $2 million exemption from the estate tax, only 123 farmers would have had to pay the tax. Of those, 15 farmers would not have been able to afford the tax with their liquid assets.

Furthermore, the estate tax offers an incentive for the wealthy to make charitable contributions at the time of their death since those contributions are tax-deductible and reduce the estate taxes they owe. Without the estate tax, the Congressional Budget Office estimates that charities and nonprofit organizations would lose between $13 billion and $25 billion per year.

United for a Fair Economy has put out a call to preserve the estate tax. To add your name to those supporting this tax on the richest 2 percent of Americans, go to https://faireconomy.org/join/et-call-rw.html. For more information, contact Yuri Gottesman at 312.368.1033.