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Wealthy group that includes Warren Buffett, Jimmy Carter calls for heftier estate tax
A group of wealthy people that includes Warren Buffett, George Soros and former President Jimmy Carter is pressing Congress to roll back estate tax parameters, saying the current set-up leaves “too much revenue on the table.”
The group of roughly three dozen people released a statement on Tuesday calling for both the current estate tax exemption to fall, from roughly $5 million a person to $2 million, and for the rate to rise from a top level of 35 percent to a minimum of 45 percent.
Robert Rubin, the former Clinton-era Treasury secretary and a signer of the statement, told reporters on a conference call that expanding the reach of the estate tax would help protect key programs like Medicare and Social Security.
But more broadly, Rubin, now at the Council on Foreign Relations, also said that a heftier estate tax could help break up concentrations of wealth in the U.S., and others on the conference call to discuss the proposal said expanding the tax could battle income inequality.
A strong estate tax, Rubin said, “can contribute substantively and constructively to our economic well-being and our society. And I think a weak estate tax would be counterproductive.”
The White House, as part of its offer to avoid the looming spending cuts and tax increases in the "fiscal cliff," has called for returning the estate tax to its 2009 parameters of a $3.5 million exemption and a 45 percent top rate.
This summer, Democratic leaders in the Senate were forced to drop the administration’s estate tax proposal from a plan to extend Bush-era tax rates for family income up to $250,000 a year.
Both Baucus and Pryor are up for reelection in 2014 in states that voted for GOP nominee Mitt Romney in this year’s presidential election.
Without congressional action, the estate tax will revert back to the 2001 parameters of a $1 million exemption and 55 percent top rate.
Republicans have long said that the estate tax drags down small businesses and family farms, with a large number of GOP officials calling for getting rid of the estate tax altogether. GOP lawmakers have said the estate tax is not an efficient collector of revenue, and can stifle economic growth.
Rubin and other participants on Tuesday’s call said those arguments didn’t hold water, even as they acknowledged that opponents of the estate tax — who have dubbed it the “death tax” — have done a good job with messaging.
Under current law, some businesses and farms can have up to 15 years to pay off their estate tax liabilities, leading Mike Lapham of United for a Fair Economy to call the GOP argument a “canard.”
“As individuals and families that have benefited most significantly from public investments and a strong society, we are proud to have the opportunity to contribute back to the country that helped to make our success possible,” the group said in its statement for a “responsible estate tax proposal.”
The group is also calling for its proposed 45 percent rate to rise for even wealthier estates, but has not yet spelled out its preferred way for doing so.
According to the Tax Policy Center, the administration’s proposal for a $3.5 million exemption would hit somewhere around 7,000 or 7,500 estates in 2013, while extending the current $5 million policy would reach around 4,000 estates.
Snapping back to the $1 million exemption, on the other hand, would hit more than 50,000 returns, the tax center said.
That exemption, plus a 55 percent rate, would raise roughly $40 billion next year, while the administration’s proposal would raise about half that and the current policy about a third.
Bill Gates Sr., the father of the Microsoft founder; the television produce Norman Lear and members of the Disney and Rockefeller families also signed Tuesday’s statement.
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