Former Treasury Secretary Rubin calls on Congress to restore permanent estate tax
Published: July 21, 2010
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With 12 legislative days remaining before the August recess, United for a Fair Economy (UFE) is calling on Congress to prioritize reinstating the estate tax, currently the most progressive tax in the code and the only national tax on wealth. On Wednesday, July 21, four powerful voices joined UFE and its Responsible Wealth network (RW) in a teleconference urging Congress to immediately restore a robust and permanent estate tax.
Among participants on the call was Robert Rubin, the former Secretary of the Treasury during the Clinton administration. "Our country is on an unsustainable fiscal path. A progressive estate tax can provide needed revenue with no adverse supply-side economic effect, and that revenue can then fund deficit reduction, additional public investment, or added assistance to those affected by the economic crisis," said Rubin. Moreover, he added, "our nation has always held itself out as a meritocracy and a land of opportunity, and an estate tax helps avoid accumulation of inherited economic and political power that is antithetical to this historical vision of our society."
In her prepared remarks, Abigail Disney, the grandniece of the legendary Walt Disney, explained that her family amassed its fortune "not in spite of, but because of the American system of taxation." Disney continued, "After all, without reliable and safe roads there'd have been no Disneyland; without high functioning legal systems and a well regulated business environment there would have been no copyright protection for Mickey Mouse."
Mike Lapham, director of UFE's Responsible Wealth Project, which brings together high-net-worth individuals who advocate for an end to tax breaks for wealthy Americans like themselves, stated, "Members of Responsible Wealth recognize that our good fortune comes from some combination of skill, luck, and public investments, and we have a unique ability and responsibility to give something back."
Lee Farris, UFE's Estate Tax Policy Coordinator, added, "Hardworking families who live paycheck to paycheck pay their fair share of taxes, and so should the heirs of millionaires. If Congress chooses to shrink the estate tax, the middle class will face higher taxes or cuts in vital services like unemployment benefits or education. We don't need to weaken the estate tax – we need to strengthen it."
Julian Robertson, a hedge fund pioneer who made his fortune on Wall Street beginning in the 1980's, was also on the call and said: "America desperately needs to bring its budget more in line. Any move in that direction is favorable. It seems to me that the least deserving recipients of wealth are inheritors. Further, there are many indications that inheritors often have trouble adjusting to their unearned inheritance. An inheritance tax would de facto help remedy this."
"Our economy remains on the edge of a double-dip recession, and we urgently need to create millions of jobs and invest in our future, not give more tax breaks to the wealthy," said Richard Trumka, president of the AFL-CIO. "Anyone who pretends to care about cutting deficits while opposing the restoration of the estate tax is clearly residing on a different planet."
UFE is calling on Congress to move quickly on the estate tax as part of a larger tax package addressing the Bush tax cuts. All the participants in today's UFE teleconference believe that a proposal, recently reintroduced by Senators Jon Kyl and Blanche Lincoln, to further weaken the estate tax is the wrong way to go, and agree the estate tax should be re-established at its 2009 level or stronger.
While participants on the call have varying views of what form a reinstated estate tax should take, UFE supports such progressive proposals as: the bill offered by Senators Sanders, Harkin, and Whitehouse (S.3533) with a $3.5 million exemption per spouse, 45-55 percent rate, and a 65 percent rate on amounts over $1 billion; and a House bill from Rep. Jim McDermott (HR 2023) with a $2 million exemption per spouse and a 45-55 percent rate.
The federal estate tax, established in 1916, has been temporarily suspended for one year at the beginning of 2010. If Congress fails to pass new legislation, the estate tax reverts in 2011 to a $1 million exemption per spouse and rates from 41-55 percent.
