Reform - NOT Repeal - the Estate Tax

From the Moving Ideas Network

Update: The House passed a permanent repeal of the estate tax, a boon for this nation's millionaires and a loss of much-needed revenue for the federal budget and cash-strapped states. They rejected an amendment reforming the tax instead of repealing it. The bill (S. 420/H.R. 8) moves to the Senate next.

The federal estate tax is a tax on the transfer of assets, called a person's estate, at death. Currently, estates over $1.5 million, or $3 million for couples, are subject to the tax. These large estates represent the wealthiest 2% of Americans. The tax is scheduled to phase out to zero by 2010, at which time the current law will expire and the task will revert back to affecting estates over $1 million. Republican leaders have made permanent repeal of the tax a top priority.

The estate tax brings in $20 billion for the federal budget annually, and a portion goes to state budgets. The Center on Budget and Policy Priorities estimates that Bush tax cuts for the wealthy, including the estate tax, will cost $2.1 trillion through 2015 at a time when the budget deficit and federal debt are ballooning out of control. The estate tax also encourages charitable giving, and its repeal would hurt charities' fundraising efforts.

Instead of an outright repeal, tax fairness groups are calling for reforms to ensure that the average working family is exempt while not letting millionaires off the hook. They propose that exemptions for family farms and businesses be simplified and improved and that the estate value subject to the tax be raised to $3.5 million, or $7 million for couples. These reforms would provide relief for 88% of current applicable estates leaving only the largest 0.25% of estates subject to the tax.

A permanent repeal of the estate tax is problematic for families and the U.S. economy. Take action today to preserve the estate tax.