The Gates Family Foundation – arguably the biggest charity in the world with assets over $35 billion according to 2008 records – is in the crosshairs of Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.), who see it as a money pot to help pay for a legislative fix for the estate tax. Well-placed sources say the senators might create a “toll charge” on charitable foundations that would sock Democratic heavyweights like Bill Gates and Warren Buffet.
Both Gates and Buffet use family foundations, which allows them to avoid paying the estate tax. In the past, both men have opposed repealing the estate tax.
The possibility of paying for an estate tax fix by gouging rich people who are some of the Democrats’ biggest donors poses an obvious dilemma for the party.
Neither of the senators’ offices would confirm that they are considering a change to family foundations’ tax status, but sources said such a charge could raise enough revenue to reinstate the estate tax to a rate lower than 2009 levels, when estates worth more than $3.5 million were taxed at a top rate of 45 percent.
There is no estate tax at the moment, as it lapsed on Dec. 31. But barring congressional action it returns next year to pre-2001 levels and will hit estates worth more than $1 million with a tax that tops out at 55 percent. Republicans and more than a few Democrats oppose this level.
During last year’s budget debate, Kyl and Lincoln put forward an amendment that created a 35 percent tax on estates worth more than $10 million per couple. The provision was considered popular, but failed by a 51-48 vote.
Sources say the Joint Committee on Taxation has been asked to score the toll charge. The committee would not confirm this.
According by Rasmussein polling, Lincoln trails Republican challenger John Boozman 56 percent to 33 percent. Nearly two-thirds of her state, 62 percent, disapprove of her actions on Capitol Hill. It is unclear how advocating to lower taxes for richer taxpayers will benefit her in a state not known for its wealth.