PRESS RELEASE: GRAMM-KYL ESTATE TAX PLAN THREATENS TAXPAYERS WITH $850 BILLION PRICE TAG

Proposal Leaves Most Americans to Pick Up the Tab for a Few Multi-Millionaires, Americans for a Fair Estate Tax Coalition Warns FOR IMMEDIATE RELEASEWednesday, May 29, 2002 Contact: Gary Bass – (202) 234-8494 OMB Watch Betsy Leondar-Wright – (617) 423-2148, ext. 13 Responsible Wealth Rick Cohen – (202) 387-9177 (w) /(202) 329-4438(c) National Committee for Responsive Philanthropy Proposal Leaves Most Americans to Pick Up the Tab for a Few Multi-Millionaires, Coalition Warns WASHINGTON – American taxpayers may be stuck paying $850 billion in taxes normally paid by the super-wealthy if a measure currently before the U.S. Senate becomes law, according to a warning issued by Americans for a Fair Estate Tax (AFET), a non-partisan coalition of nonprofit organizations concerned about repeal of the estate tax. The threat comes from a tax plan by Sens. Phil Gramm, R-Texas, and Jon Kyl, R-Ariz., to permanently mandate that multi-million-dollar estates would never have to pay any taxes. The Senate is expected to vote on the issue in June. “The Senate should reject the Gramm-Kyl tax plan to permanently repeal the estate tax,” said Gary D. Bass of OMB Watch and chair of AFET. “We cannot afford to sacrifice Medicare, Social Security, education, homeland security and other key national priorities just to permanently mandate a special gift to a few multi-million-dollar estates at the expense of 98 percent of American taxpayers.” AFET last week issued a letter to several thousand of its member organizations’ constituents, advising them of the danger of the Gramm-Kyl estate tax plan. “Instead of this large handout to a small handful of multi-millionaires at the expense of most Americans, we favor common-sense estate tax reform that would protect family farms, small businesses and average taxpayers – without a costly repeal that would leave most Americans holding the bag,” said Chuck Collins, co-founder of AFET member organization Responsible Wealth, the group of small business owners and affluent individuals who organized last year’s pro-reform statement, signed by Bill Gates Sr., Warren Buffett and 1,100 other people personally affected by the estate tax. “Repeal of the estate tax is simply unfair and not the best way to advance America’s priorities.” Permanent repeal of the estate tax means less revenue for the country – $100 billion in the next 10 years and $750 billion in the following decade. It would force the government to either raise taxes on middle-income taxpayers or cut vital services, such as Social Security or prescription drugs for the elderly, just to pay for a special windfall for the wealthiest few. The estate tax is applied when individuals leave behind estates worth at least $1 million ($2 million for couples) at the time of their death. There is no tax on the first $1 million per individual, and amounts in excess of $1 million are taxed at various rates, starting at 37 percent. As a result of last summer’s tax legislation, the amount that is exempted from taxation rises to $3.5 million ($7 million for couples) and the highest taxable rate drops from 55 percent to 45 percent by 2009. In 2010 the estate tax is repealed, but is again instituted in 2011. The Gramm-Kyl plan would permanently repeal the estate tax. Repeal of the tax also would have a major harmful impact on America’s foundations and charities. Estates are allowed to transfer unlimited amounts of money to charitable groups, thereby helping to reduce the size of the estate that is taxed. In 1999, this tax incentive for charitable giving resulted in $14.8 billion in contributions to foundations, universities, museums, churches and many other charities. “Even beyond the heavy burden it would place on most taxpayers, the Gramm-Kyl tax plan would drain billions of dollars from foundations and hard-hit charities that are already struggling to serve the most vulnerable Americans,” said Rick Cohen of the National Committee for Responsive Philanthropy and AFET. “The Gramm-Kyl tax plan is as unfair as it is unwise. It would hurt America’s charities even as the president and Congress are looking to promote charity.” The estate tax was already scaled back last summer as part of President Bush’s sweeping tax package. The Gramm-Kyl tax proposal would be far more costly for most American taxpayers as it would permanently repeal the tax rather than simply reforming it. Senate Majority Leader Tom Daschle has agreed to a vote in the Senate on the Gramm-Kyl proposal by June 28. The House will vote on permanent repeal of the estate tax for a second time on either June 5 or 6 to send a message to the Senate. As part of AFET’s effort to reform rather than repeal the estate tax, Responsible Wealth sponsored an ad in the May 20 edition of Roll Call and the May 22 edition of The New York Times. Entitled “Much Ado About a Very Few,” the ad highlights just how few estates would benefit from the costly Gramm-Kyl tax plan – 24 in Maine, for example. Overall, 5,854 multi-millionaires would get a break while the remaining taxpayers would have to pick up the tab if the measure passes. The ad is available at http://www.responsiblewealth.org. The AFET letter was signed by representatives of a wide range of public interest organizations, including AFSCME, American Arts Alliance, American Association of University Women, Americans for Democratic Action, Campaign for America’s Future, Children’s Defense Fund, Coalition on Human Needs, Evangelical Lutheran Church in America – Lutheran Office for Governmental Affairs, Independent Sector, Minnesota Council of Nonprofits, National Committee for Responsive Philanthropy, National Council of Nonprofit Associations, National Women’s Law Center, NETWORK (National Catholic Social Justice Lobby), OMB Watch, Responsible Wealth, United for a Fair Economy, and United Church of Christ Justice and Witness Ministries. Americans for a Fair Estate Tax (AFET) is a broad-based non-partisan coalition of nonprofit groups, including civic, labor, social justice, faith-based, and environmental organizations, as well as organizations providing human services. AFET advocates that instead of repealing the tax on multi-million-dollar estates, Congress should reform the estate tax to ensure that family farms and small businesses are not unfairly taxed while keeping 98 percent of taxpayers exempt and safeguarding Medicare, Social Security, education, charities and other key national priorities that would be threatened by a complete repeal. More information on this issue can be found online at /files/estatetax, which will soon be at www.fairestatetax.org. - 30 -
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