My grandparents and great-grandparents paid the estate tax when they passed along the family business. Some decade soon, my own parents will.
With hundreds of thousands, perhaps millions, of dollars to gain, I should be cheering for the proposal coming before the Senate in May to do away with the estate tax, which applies only to multimillion dollar inheritances.
Instead, Iím organizing wealthy members of Responsible Wealth to oppose repeal of the estate tax. As multi-millionaires, we have benefited handsomely from all that our country provides: public education, roads, clean water, legal protection, research funding and public safety, just for starters.
One Responsible Wealth member, Martin Rothenberg, grew up using the public library, went to school on the GI Bill, received a government fellowship, and built a $30 million software company using publicly-funded research and publicly-educated employees. ďI hope the taxes on my estate will help fund the kind of programs that benefited me and others from humble backgrounds,Ē he says.
Given the choice to be taxed or not, we all tend to choose not. Thatís just human nature. But we have to look at the wider implications of what we ask our elected officials to do for us.
In 2001, when Congress voted to phase out and repeal the estate tax, the federal treasury was expecting a $5 trillion surplus. Times have changed, however. Now thereís over $8 trillion in federal debt.
There are a trillion good reasons to retain the estate tax in the years to come. Permanently abolishing the estate tax would cost almost $1 trillion in the first ten years.
I believe our country has higher priorities for $1 trillion than giving families like mine a huge tax break.
Besides our existing $8 trillion debt, consider some of the additional expenditures coming down the pike.
The Iraq War will continue to be costly in both human lives and money. Nobel Prize-winning economist Joseph Stiglitz and his coauthor Linda Bilmes estimate a total budgetary cost of between $750 billion and $1.27 trillion.
In late 2003, Congress passed an expansion of the Medicare prescription drug benefit. The Center for Medicare and Medical Services projects a ten-year cost of $797 billion.
Congressional leaders have pledged to abolish the Alternative Minimum Tax (AMT) for individuals, especially as an estimated 30 million taxpayers will pay the AMT by 2010. Eliminating the AMT will reduce federal revenues by $611 to $790 billion over ten years.
The Republican leadership in Congress would like to extend the tax cuts they passed in 2001 and 2003. The cost of this extension would be $1 trillion in lost revenue over ten years.
Estate tax repeal, combined with these other expenditures, would balloon our national debt in the coming decade. With lighter and lighter taxation of wealthy asset-owners like my family each year, more tax dollars would come out of the pockets of working Americans. In this context, considering estate tax repeal is fiscally and morally irresponsible.
A new poll shows that most Americans agree. Voters chose keeping the estate tax as one of the two best ways to reduce the budget deficit. Almost three-quarters support reforming the tax or leaving it intact rather than repealing it.
In a society where the economic rules are strongly tilted in favor of the haves at the expense of the have-nots, where tax laws give generous loopholes to the wealthiest among us, the occasion of passing on wealth to the next generation is an appropriate time to tax our accumulated fortunes. Most of the appreciated value of these assets has never been taxed.
The choice is whether to remove a tax on estates of more than $3.5 million, affecting only the 6,000 wealthiest individuals who die each year. Responsible Wealth members believe that a fair tax system, fiscal responsibility, and priorities like healthcare and education are better choices than lining the pockets of our progeny.
I could be sitting back hoping my parentsí estate wonít be subject to the estate tax. Instead, Iím hoping the majority of U.S. Senators understand what many of them donít: that we in the richest one percent can and should pay this very fair tax, as an appropriate way for us to give back and create opportunities for others.