Coalition to Preserve the Estate Tax

Letter Opposing Repeal of the Estate Tax

To sign on this letter, e-mail Cate Paskoff at paskoffc@ombwatch.org

March 21, 2001

Dear Representative:

We urge Congress not to repeal the estate tax. The estate tax is an integral part of our overall tax system. It is an important source of federal and state revenue. It is an incentive for charitable giving. As our most progressive tax, it inhibits the growth of large concentrations of wealth.

Repeal of the estate tax will cut federal revenue by an estimated $294 billion over the next ten years. Once fully repealed the loss of revenue would be more than $60 billion a year, far in excess of most discretionary programs serving low-income and vulnerable individuals. Further, repeal of the estate tax will cut resources to states, most of which have estate taxes that are piggybacked on the federal tax. The cost to states alone could be as much as $9 billion a year after full repeal.

Since property or money left to a charitable organization is entirely exempt from the estate tax, it acts as a powerful incentive for charitable giving. Repeal is likely to dramatically decrease charitable contributions. According to the Treasury Department, repeal will reduce charitable bequests by $5 to $6 billion a year. Other estimates range from a decline of 12% to almost 80%. This would have a large impact not only on charitable bequests to individual charities but also to private foundations, which in turn provide grants to charities.

The estate tax is a tax on the wealthiest Americans-less than 2% of all estates pay any estate tax, and in 1997 over one-half of the total tax collected came from the largest five percent of taxable estates. At a time when only a little less than 40% of total wealth in the United States is held by the top one percent of households, the issue of wealth concentration within the same family over generations is a cause for concern. One purpose of the estate tax when it was made permanent in 1916 was to discourage great concentrations of wealth and the creation of an aristocracy.

Contrary to the assertions made against it, the estate tax is not, for the most part, a double tax. One-half to three-fourths of most taxable estates consists of unrealized capital gains that have never been taxed. Proponents of repeal also argue that family farms and small businesses are being hurt by the tax. Yet very few pay the tax and such payments make up a tiny percentage of estate tax revenue. Nonetheless, if there are problems with the estate tax, the solution is to make appropriate modification to the law, not repeal it.

Supported by,

ACORN
AFSCME
Alliance for Justice
Alliance for Retired Americans
American Arts Alliance
American Association for International Aging (AAIA)
American Autoimmune Related Diseases Association
American Federation of Teachers
American Network of Community Options and Resources (ANCOR)
Americans for Democratic Action
The Blake Foundation (AZ)
Building Opportunities for Self-Sufficiency (BOSS)
Business Leaders for Sensible Priorities Action Fund
Campaign for America's Future
Capital Area Food Bank (DC)
Center for Civil Justice (MI)
Center for Community Change
Center for New Directions
Central Conference of American Rabbis
Children's Defense Fund
Cleveland Neighborhood Development Corporation
Coalition on Human Needs
Consumers for Affordable Health Care Foundation
Families USA
FOR THE CHILDREN (OH)
Friends Committee on National Legislation (Quakers)
Georgetown Public Policy Institute
Georgia Center for Nonprofits
HomeBase The Center for Common Concerns
Jewish Family and Children's Services of San Francisco, the Peninsula, Marin and SonomaCounties
Lutheran Office for Governmental Affairs, ELCA
McAuley Institute
Maine Center for Economic Policy
Maine Coalition for Food Security
Maine Initiatives
Massachusetts Association of Community Development Corporations
Michigan League for Human Services
Minnesota Council of Nonprofits
Minnesota Diversified Industries
National Association of Service and Conservation Corps
National Council of Nonprofit Associations
National Committee for Responsive Philanthropy
National Housing Trust
National Low Income Housing Coalition
National Priorities Project
NETWORK, A National Catholic Social Justice Lobby
OMB Watch
Oregon Action
Oregon Center for Public Policy
Presbyterian Church (USA), Washington Office
Texas Alliance for Human Needs
Union of American Hebrew Congregations
Unitarian Universalist Association of Congregations
United Church of Christ Justice and Witness Ministries
United Neighborhood Crime and Improvement Watch
Utah Issues
Vermont Alliance of Nonprofit Organizations (VANPO)
Vermont Arts Council
Washington Ethical Action Office, American Ethical Union
Welfare Law Center
Wisconsin Citizen Action Women Work