Press Releases

For Immediate Release
5/29/2002
Contact: Gary Bass / Betsy Leondar-Wright / Rick Cohen
(202) 234-8494 / (617) 423-2148, ext. 13 / (202) 387-9177 (w) /(202) 329-4438(c)
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, 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."
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