Labor & Employment Law

Trumka: Boost Fairness and Revenue with Estate Tax Reinstatement

By Mike Hall

New York Yankees owner George Steinbrenner and hundreds of other multimillionaires (and some billionaires, like Steinbrenner) who have passed away this year disproved the old adage, ?the only two things certain in life are death and taxes.?

They couldn?t dodge death, but their estates have dodged taxes?some $14.8 billion so far this year, according to Sen. Tom Harkin (D-Iowa). The federal estate tax that in the past applied to multimillion-dollar fortunes fully expired at the end of 2009, after President George W. Bush?s 2001 $1.35 trillion tax cut package for the wealthy exempted larger and larger estates from the levy each year.

Today, AFL-CIO President Richard Trumka, former Treasury Secretary Robert Rubin, philanthropist and Walt Disney heir Abigail Disney and others called for a reinstatement of the tax.

During a telephone press conference sponsored today by United for a Fair Economy (UFE), Trumka said:

Today, the Bush tax cuts for the wealthy, the suspension of the estate tax and other policies favoring the super-rich are key contributors to our nation?s budget deficits.

Our nation desperately needs revenue to invest in job growth, education, health and infrastructure.

Rubin said the revenue generated by an estate tax could be used for public investments that would create ?a rapid spend out? to boost job creation.

It?s time to restore the estate tax and restore it now. It?s a progressive tax and can supply revenue without any supply side effects.

The AFL-CIO, UFE and others on the call said the estate tax should be restored at its 2009 levels or stronger. In 2009, the estate tax exempted the first $3.5 million and applied a 45 percent rate thereafter. Trumka said the AFL-CIO has endorsed two current bills. The first, from Rep. Jim McDermott (D-Wash.), includes a $2 million exemption and rates of 45 percent to 55 percent. That would raise about $31 billion more over 10 years than the 2009 levels.

Legislation from Sen. Bernie Sanders (I-Vt.) and Harkin has a $3.5 million exemption and rates of 45 percent to 65 percent and would produce about $62 billion more over the next 10 years than the 2009 levels. Says Harkin:

Across this country, schools are firing teachers, first responders are underfunded and hard-working Americans are being denied basic services, all while our deficit reaches record highs. And yet, billion-dollar fortunes are exempt from paying their fair share of estate taxes. There is something wrong with this picture.

A proposal from Sen. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.) would boost the 2009 exemption and lower the rate at a cost, Trumka said, of $544 billion over 10 years. He asked, ?Does the estate tax really need to be further reduced??

Many Republicans have long called for complete abolishment of the estate tax, and Sen. Jim DeMint (R-S.C.) introduced an amendment to a small business bill to permanently repeal the tax.  Said Trumka:

It is ludicrous that some in Congress are proposing to end the estate tax at the same time they oppose action to create jobs.

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.

Disney, the grandniece of Walt and granddaughter of Roy E. Disney, stressed the fairness of the estate tax and scoffed at those who claim the estate tax is a heavy burden for the wealthy.  The founder of the philanthropic Daphne Foundation that funds programs to fight poverty in New York City said:

My life of great comfort was made possible despite the estate tax. We should never avoid paying to the government our fair share.

Full post as published by AFL-CIO NOW BLOG on July 21, 2010 (boomark / email).