(Bloomberg) Billionaire investors Warren Buffett and George Soros are calling on Congress to increase the estate tax as lawmakers near a decision on tax policies that expire Dec. 31.
In a joint statement on Tuesday, Buffett, Soros and more than 20 other wealthy individuals asked Congress to lower the estate tax’s per-person exemption to $2 million from $5.12 million and raise the top rate to more than 45 percent from 35 percent.
An estate tax structured this way will “raise significant revenue to reduce the deficit and fund vital services, will only be paid by the top 1 percent of estates, will raise more from the wealthiest estates” and will simplify compliance, said the statement. It also was signed by John Bogle, founder of mutual fund company Vanguard Group Inc., and former President Jimmy Carter.
The renewed push for increasing the estate tax faces significant opposition in Congress, where Senate Democrats including Max Baucus of Montana and Mark Pryor of Arkansas have joined Republicans to support the current estate tax parameters. That intra-party dispute caused Democrats to leave estate tax changes out of legislation they passed July 25 extending income tax cuts.
There’s probably enough support among Democrats to maintain the existing estate tax parameters, said Carolyn Lee, senior director of tax policy at the National Association of Manufacturers in Washington, which supports existing levels.
Various Scenarios
Changes to the estate tax are among the more than $600 billion in automatic spending cuts and tax increases scheduled to start in January.
If Congress does nothing, the amount one could exempt from the estate tax would drop to $1 million and the rate would increase to 55 percent. Obama wants to re-instate the 2009 levels, which include a $3.5 million exemption and a 45 percent top rate. Compared with continuing current policies, Obama’s plan would raise $119 billion over the next decade, according to his budget proposal.
Cutting estate taxes just means that someone else will have to pay for government, Bogle said. “I’m more than happy for my own estate to pay my fair share,” he said on a conference call with reporters.
In 2013, under the plan favored by Republicans, there would be an estimated 3,600 taxable estates in the U.S., according to the nonpartisan congressional Joint Committee on Taxation. Obama’s plan would double that number to 7,200. If Congress does nothing, 55,200 estates, or 2 percent of estimated 2013 decedents, would owe taxes.
Obama has used Buffett’s call for higher taxes on capital gains to promote the “Buffett rule,” which would require a minimum tax rate for top earners.
Other signers of the statement include Bill Gates Sr., father of the Microsoft chairman; Richard Rockefeller, chairman of Rockefeller Brothers Fund Inc.; and Leo Hindery, managing partner of InterMedia Partners LP.
The statement was organized by the Responsible Wealth project of United for a Fair Economy, a Boston-based group that opposes concentrations of wealth.
10 Comments
If Warren Buffoon wants to help out on the national debt, he can voluntarily contribute over and above his calculated taxes to the federal government. Or he can give more to charity. Most of those who have estates in the $3 to $5 million range not only earned it but have already paid taxes on whatever they have. It should be up to them what to do with their wealth-whether to leave it to their children, relatives, friends, etc. who they think might use it better than letting the government do what they wish with it.
As for George Soros, he, a foreigner, took full advantage of this country's opportunities, and has used it to further his leftist causes. I know of nothing good he has every done for this country.
I don't care how many wealthy people want to increase estate taxes, it is none of their business to tell the rest of us what to do with our hard earned estates.
Posted by: fredonia | December 18, 2012 12:15 PM
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Buffet is a hypocrite. If he was sincere he would have proposed a limitation on the charitable exemption that billionaires like himself use to avoid estate tax. Instead he wants to grind somebody that is worth $2MM. How somebody like Buffet can arrange their own affairs to avoid tax and then suggest that others should pay more tells you something about his "I am better and smarter than everybody else" personality.
Posted by: colin@colincoopercpa.com | December 16, 2012 6:26 PM
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It's amazing that the wealthiest Americans would rather take 45% of someone's estate knowing that our government will just spend it and then some since 40% of our current spending is funded by debt. I would rather see them put their money to good work through charities that will put it to good use and directly towards a cause. Increasing federal revenues will just encourage them to increase spending since they are still using baseline budgeting. There is no guarantee that increased revenues will be allocated to paying down our national debt until current spending is brought under control and we have REAL spending cuts. Every past administration has increased the debt ceiling with promises to cut future spending to offset it but this has yet to occcur.
Posted by: marcv | December 13, 2012 10:20 AM
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Increasing the tax rates will result in a decrease in total tax revenue collected because the "super rich" have too many ways to structure their investments and other assets including leaving the USA and renouncing US citizenship if they haven't already done so. The rich are leaving this country at very high rates because of our declining quality of life and lack of safety here. This highlights the real reason for the liberals wanting to increase taxes which is class warefare (as in 1917 Russia). America is becoming one very large "Banana Republic".
Posted by: efhcpa | December 13, 2012 10:00 AM
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It's interesting to note who these people are and their hypocrisy. How much of their assets have been transferred to trusts to get the assets out of their names? How many assets have been transferred offshore? How many of these people are taking big dividends in 2012 to avoid the higher dividend tax rates scheduled to take effect 01/01/13? How many of these people write checks to the federal government and their state tax departments above and beyond the regular and AMT tax liabilities? Unless and until they make complete and total disclosure of how they manage their own wealth, I do not believe anything they say re: taxation. Also, government confiscation may be called by different names, but it is what it is. It doesn't matter if the government wears an IRS uniform or an SS uniform, it's the same thing. The only difference is the color of the uniforms!
Posted by: needhamcpa | December 13, 2012 9:55 AM
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It's amazing that none of these comments in any way goes to the heart of the matter. Soros could lose 90% of his wealth and he still would have more money than somebody with a $3 million estate. The biggest impact of this is on small family farms with land that may be worth $3 million if they sell it to a large corporation, probably owned by Soros, but actually earns under $100,000 in yearly income.
These billionaires pay millions of dollars per year to attorneys and accountants to make sure that no matter what the IRS does it's not a problem for them. Somebody with a $3 million estate can't afford to do that and they're the only ones that are paying the 35, 45 or 55%.
This whole thing is a sham to get rid of small farms and small businesses that might have a total value of over $3 million but only generate a hundred thousand dollars per year to their owners.
Posted by: thegreenspan | December 12, 2012 4:59 PM
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It is overwhelming to me that Democrats, aka "Liberals"/"Progressives"/"Socialists", never call to account the governments penchant for wasteful spending. Most Americans would not object to paying taxes if the elected officials displayed a better stewardship of the revenues collected. The outrageous comments by "Tego" and "Janosik" are insulting and to those that have labored through life's work to accumulate something, AFTER TAXES ...,for their own security and well being, and, if anything is left on their death, hopefully to assist others in their families. It may also be noted that over 50% of those who "Tego" and "Janosil" would help, pay no income tax at all!
Posted by: mcameron@ddccpa.com | December 12, 2012 3:30 PM
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Actually the really 47̃pendent are the spoiled brats of the wealthy. They really need the inherited wealth for their permanent vacations, mansions, etc. Too bad the accumulators of wealth didn't use any to educate these dependents to be productive instead of protective(gated communities)members of society. Oh well, there are probably enough Congressmem that need these accumulators to pay for campain ads (TV< COLOR PRINTED MATTER, etc)--more of Romney's 47%ers
Posted by: Janosik | December 12, 2012 2:11 PM
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Why does anyone want to create more "Paris Hiltons" is beyond me.
Yes, there should be something left to the families/friends of those who accumulated wealth. However, "accidents of birth", nor "friendships", should continue "accidents of wealth."
The Walton family is an example, as other managers continue to run the business as they sit back and enjoy the benefits of the father's vision and work. Unlike others, otherwise it would seem like they would be tooting their horns, are not philanthropists and just accumulate and sit on their wealth.
At least Gates and Buffet are starting to give their wealth to various causes. And even they believe in Estate Taxes.
Least we remember, much wealth was created by Monopolies, Overcharging, Low Pay for Employees, Public Subsidies, and Other Devices which the Unprotected Public paid for. Much wealth has not been created by so called vision.
I know, I now expect "sour grapes" comments. Fire away!
Posted by: tego@verizon.net | December 12, 2012 1:38 PM
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It's easy for Obama, Buffet, Gates and Soros to propose death taxes, as they're either already billionaires or will find another way around it, with their influence and wealth.
The monies accumulated in estates have already been taxed once or twice (taxes on dividends) and it's just wrong to tax a dead person's possessions when there is a will or remaining family.
Perhaps a better option would be to cut wasteful government spending...starting with the salaries and benefits paid to members of Congress and the White House!
Posted by: jzapapas | December 12, 2012 8:25 AM
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