(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.
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.