The Death Tax Repeal Permanency Act permanently repeals the incremental federal tax on inherited assets valued at over $1.5 million (or $3 million for married couples). Under current law, the estate tax is being gradually phased out and will disappear entirely by 2010, but will go back into effect in 2011 unless permanently repealed.
The Middle-Class Position:
The Middle Class Opposes: The estate tax falls only on the small number of individuals lucky enough to inherit a windfall – less than one percent of Americans ever pay it at all. Nearly half of all estate taxes collected by the government are paid by the most affluent 0.1 percent of Americans. By further increasing the amount of money heirs can acquire without paying a dime, this bill would shift more of the cost of the public services that benefit all Americans onto middle-class families, allowing accumulated wealth to be passed on for generations while obliging those who work for their money to pick up a bigger share of the tax bill, or suffer cuts in services essential to middle-class families and communities.
From the Experts:
“We had fought a revolution to reject hereditary political and economic power—and the dizzying inequalities of the Gilded Age violated a fundamental American ideal of equality of opportunity. We are now in a second Gilded Age...We’re heading backward to the wealth inequalities of a century ago. We need to preserve the estate tax in states and at the federal level for exactly the reason it is under assault. In a democracy, we should be offended when the power of concentrated wealth brazenly attempts to shape the terms of policy debate and dictate the rules of our society.” —William H. Gates, Sr. and Chuck Collins, authors, Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes
“Politicians claim the estate tax is crushing poor farmers, but… according to IRS data almost no working farmers every pay the estate tax… One prominent Iowa economist actually searched for families who had lost their farms to estate taxes but failed to find a single one… But the facts no longer seem to matter: the lies about the ‘death tax’ hurting average Americans have become so omnipresent… Though many ordinary Americans have been lead to think this repeal will help them, in truth most of them will get nothing. The repeal of the estate tax was a total and complete victory for the superrich champions of hereditary wealth.” –David Sirota, author, Hostile Takeover: How Big Money& Corruption Conquered Our Government – and How We Take It Back (2006)
“[The estate] tax that applies only to the children who receive the money, rather than the parent who built up the estate. [Estate tax reduction is] the Paris Hilton Benefit Act.” —Michael Graetz, Professor of Law, Yale University (March 24, 2005)
Beyond this Bill:
As the permanent repeal of the estate tax awaits a vote in the Senate, legislators should not only oppose this legislation but reclaim the debate about the so-called “death tax” from wealthy interests bent on its elimination. While in reality 99 percent of Americans will never pay any estate tax, polls suggest about half of Americans nevertheless believe that “most families have to pay the federal estate tax someone dies.” As an issue of sound fiscal policy, legislators concerned with the economic stability of the middle class should vote down any proposed repeal or reduction of the estate tax, as well as educate the public about its role in our economy.
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Injustice Index Facts
Year the federal estate tax was introduced: 1916
Maximum percentage of Americans who died in 2004 that paid any estate taxes: 1 percent
Percentage of revenue from the estate tax that came from estates valued at $10 million or more: half
Estimated amount raised by the estate tax in 2004: $23.4 billion
Estimated cost of completely repealing the estate tax from 2012 to 2021: $1 trillion
Estimated amount by which charitable donations would have been reduced had the estate tax not been in effect in 2000, according to the Congressional Budget Office: $25 billion
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