Keep the Estate Tax
Our country's needs are pressing. We all know we need to reform our health care system, improve our schools, and strengthen our infrastructure, which means everything from maintaining our roads and bridges to expanding access to the Internet.
These things cost money. As Americans, we are rightly concerned about how we will pay for the critical investments we need to make for ourselves and the generations to follow. One way we can pay for our priorities is to stop bailing out the wealthiest Americans. We can start with the estate tax.
The estate tax has been reduced significantly over the last decade and is set to expire next year, only to reappear in 2011. The President is proposing to extend the estate tax at its current (2009) levels. In 2009, estates up to $7 million per couple or $3.5 million per individual are completely exempt from any tax. Only the value of an estate above those levels is taxed. While the tax rate is 45 percent, the amount paid by most estates is much closer to 20 percent once other credits and deductions are taken into account.
Some in Congress want to cut the estate tax even more. They would exempt estates valued at $10 million per couple or $5 million per individual and lower the tax rate to 35 percent. This would cost at least $150 billion more than the President's proposal, which already costs nearly $400 billion, over 10 years.
Some argue we need to do this to help small businesses and farms. But small business owners and farmers would not be the key beneficiaries. Only 110 small business and farm estates in the entire country are expected to owe any tax at all in 2011 if the President's proposal is adopted. Only 0.2 percent of the tax cut under this proposal would go to small business and farm estates.
We believe that further raising the exemption level and lowering the rate at which estates are taxed undermines our nation's ability to make needed investments and would make the federal deficit even worse.
Between 2001 and 2008, the federal deficit grew to $1.3 trillion. We often hear that Congressional spending was to blame. But in fact tax cuts were responsible for nearly half of the increase in the deficit caused by Congressional actions. Weakening the estate tax would mean an additional loss of revenue even as Congress and the President must find ways to bring the federal budget back into balance. Investing in health care, education, infrastructure and reducing the federal deficit are important for improving our long-term economic outlook. Cutting the estate tax should not take precedence over these other much higher priorities.
It's reasonable to ask the top quarter of one percent of the population - who have benefited significantly from tax cuts -- to pay their fair share. ICAN's goal is to protect the estate tax and oppose efforts to cut it below the 2009 levels.