PRESS RELEASE --For immediate Release-- CONTACT: Anna Oman 202/234-8494 OR Meredith Dodson 202/783-7100 x116 With Vote Nearing in the Senate, Experts Speak Out Against Estate Tax Repeal WASHINGTON, April 21--Key experts and stakeholders came together Wednesday to call on the U.S. Senate to reject full repeal or "backdoor repeal" of the estate tax next month. Numerous organizations including unions, anti-poverty, public interest, and faith groups are hoping to prevent estate tax repeal, which will cost $1 trillion over the next decade. Participants added a diverse range of perspectives to the argument that repeal of the tax is impractical, unnecessary, and too costly. During a conference call for reporters, Robert Carlson, president of the North Dakota Farmers Union and board member of the National Farmers Union, representing 250,000 family farmers, voiced his group's opposition to repeal. Family farmers, according to Carlson, have been held up as the "poster child" for estate tax repeal by opponents of the tax who claim the tax is destroying family farms. He cited Department of Agriculture figures that show that the present estate tax affects less than one percent of family farms. Besides gaining no real benefit from repeal of the estate tax, Carlson explained, family farmers face a very real tax increase with an end to the estate tax. Repeal would mean that farmers (and many others) would lose the standard step-up in basis within the estate tax and have to pay capital gains taxes on some farm estates. This would, according to Carlson and tax and budget policy experts participating in the teleconference, "affect many more people" and would mean "a net loss" for farmers. Carlson told reporters, "There would be many more losers than gainers among the farm community and family farms and ranchers if the estate tax were to be eliminated." Carlson argued that farmers believe in progressive taxes and that many early American farmers, including his own grandfather, "came to this country to have a fresh start, and get away from a European system where land was owned by the very wealthiest estates and then passed down for many generations." Joining Carlson on Wednesday's call organized by RESULTS, a grassroots citizens lobby, was former IRS Commissioner Sheldon Cohen, whose career as a tax attorney has span over 50 years. Cohen challenged other claims made by groups pushing for estate tax repeal. "Much of the argument says, well, this is double-taxation," Cohen explained, "you get taxed on the income, and then you get taxed on it again." This isn't the case for much of the value of large estates, according to Cohen, because "it's generally appreciation that's occurred." Cohen also pointedly dismissed claims that the estate tax destroys family businesses:

The impact (of the estate tax) on small family businesses is virtually nil...so that--in my practice--I've been practicing law for a little over 50 years--I have never seen a family business that was sold because of the estate tax. They are sold, because the kids don't want to manage the business, the kids are off just being doctors or lawyers and don't want to go back into the farm, or don't want to go back into the family manufacturing business. That occurs all the time. But it isn't because of the estate tax that the business is sold.

Adam Hughes, budget policy director with OMB Watch, a progressive research and advocacy group, lent his perspective, arguing that the cost of repeal was far too great for an already strapped federal government. Hughes, relating estimates based on statistics from the nonpartisan Congressional Joint Committee on Taxation, pointed out estate tax repeal would cost $1 trillion in the first 10 years when increased interest on the debt is included. This loss would only add to the ballooning national debt and would be felt most sharply by programs serving the needs of middle- and low-income Americans, explained Hughes. "The real question that I want to address here," Hughes told reporters, "is whether this is something that our country can afford right now. And the answer is absolutely not." Hughes also warned that, if repeal fails, conservative Senators plan to push for reform that will be as costly as repeal. One such proposal detailed by Hughes is that of Senator Kyl (R-AZ) that would immediately quadruple the exemption rate to $10 million per person and $20 million per couple. More problematic from a revenue perspective, the proposal would lower the estate tax rate to the capital gains rate of 15 percent. According to Hughes, this "backdoor repeal" would rob the federal government of all by 8 percent of estate tax revenue, handing 92 percent of it back to heirs of multimillion dollar fortunes. In a statement released the day of the teleconference, Joe Logan, Ohio Farmers Union president, explained that "repealing the estate tax is not the answer." He went on to challenge reform proposals that would dramatically reduce the tax rate, calling them "meaningless to farmers while creating an enormously problematic and irresponsible increase in the federal budget deficit and this will cause valuable support for true family farmers to get squeezed out of the budget." In a separate interview this week (transcript and audio recording (mp3 file) online) William Gates, Sr., co-author with Chuck Collins of Wealth in our Commonwealth, Why American Should Tax Accumulated Fortunes.and father of Microsoft founder Bill Gates, called the estate tax "a sensible tax." Gates explained the tax in terms of giving back (even expressing gratitude) to the nation that made one's vast wealth possible:

We wouldn't have had any chance to have the comfort and to generate the wealth and the opportunity to pass along some part of that wealth to our children but for having been born in this country, a place where markets are stable, where laws are enforced, where tomorrow's business is predictable, that you can have confidence that what you own can be sold and that people will maintain their obligations and their purchase arrangements.

The message from these experts was loud and clear: repeal or drastic "reform" of the estate tax is bad fiscal policy, and there could not be worse time to consider. In closing the call, Meredith Dodson of RESULTS noted, "there's a direct link between these tax breaks--that primarily benefit the wealthy, that widen the wealth gap--and the kind of cuts to Medicaid, to student loans, to programs like Head Start and WIC--that we've already seen enacted, and are being pushed forward in this coming year's fiscal-year budget resolution." ### More resources: The RESULTS website includes the April 19 press briefing transcript and audio file (mp3). Other background materials include: - Myths and Realities factsheet and slideshow presentation, from the Center for Budget and Policy Priorities - Materials on the Americans for a Fair Estate Tax website including:

• AFET talking points
• The Adverse Impact Estate Tax Repeal Has On Nonprofits (.pdf)
• The Estate Tax and Its Impact on Farms and Small Businesses (.pdf)

- The New York Times article summarizing their new study on who benefitted from the Bush tax cuts - State-by-State Data

• Number of estates in each state that would by subject to the estate tax in 2009
• Estimated loss per state in charitable giving if the estate tax were repealed

Interview availability (members of Responsible Wealth, a national network of businesspeople, investors and affluent Americans who support tax fairness, corporate responsibility and living wages): DARIUS A. ROSS (New York), an African-American entrepreneur, is the founder and managing partner of D. Alexander Ross Real Estate Capital Interest, LLC, which is a boutique of high net worth investors involved in real estate private equity and commercial acquisitions. RICHARD ADLER (Louisiana) is a retired shipbuilding industry consultant. He has substantial stock ownership and would benefit from estate tax repeal. Adler wants to see the estate tax updated, not obliterated, so that the government has funds for rebuilding the Gulf Coast and protecting it from future disasters without cutting food programs for the hungry and so that the growing federal deficit will not leave a terrible legacy of debt for coming generations. ALICE CHENAULT, M.D., (Alabama) is a psychiatrist who is also a columnist for the Huntsville Times and a supporter of Alabama’s Arise Citizen’s Policy Project. She has been a small business owner, and lives in Huntsville with her husband and children. ALAN GRAD (New York) is CEO and President of American Business & Professional Program, Inc., a Manhasset, New York-based firm. Grad lives in Mamaroneck with his wife, Ellen, and their three children. The firm, established in 1965, serves over 35,000 clients in the areas of estate, pension, charitable and business planning, as well as advanced insurance analysis. OMB Watch is a nonprofit research and advocacy organization dedicated to promoting government accountability, citizen participation in public policy decisions, and the use of fiscal and regulatory policy to serve the public interest. RESULTS is a citizens' grassroots lobby, dedicated to ending hunger and the worst aspects of poverty in this country and around the world, with volunteer chapters in 100 communities across the United States.