Estate Tax: A dying idea?

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Chris Dodd, Senator for Connecticut recently posted this comment on Estate Taxes on his podcast.

Thoughts on the Estate Tax Repeal

Hi, this is Senator Chris Dodd again, and I want to welcome you to my Podcast. It’s been a while since I’ve had a chance to talk you with you and we’ve been busy here, obviously, with some issues that have been terribly important, and some that have been hardly important at all, but more the subject of Senate debate to score political points, rather than actually do anything for the country.

One of the issues that has come up recently, however, is one that, if it were to be adopted, would be very, very serious. If you’re interested at all in the accumulation of debt and the mounting deficit, the proposal that the Republicans have offered here to entirely repeal—-completely repeal—-the estate tax, which is, as all of you know, is a tax imposed on estates at the time of a person’s death. What we’ve done over the years is eliminate this tax for about 95-96% of the people. In fact, many of us are willing to virtually eliminate it for almost everybody, except less than 1% of the population, somewhere around ½ of one percent and 3/10 of one percent. That amounts to about anywhere from 7,000 to 10,000 estates, out of 300 million people in the United States. There are people who have estates in excess of $8 million, per person, so around $16 million per couple. Again, these are people in many cases who’ve worked hard, but the general feeling is that if we were to lose somewhere around $1 trillion in revenue over the next ten years, that this would be too much of a hit for the country to take at a time when we’re not paying for a war in Iraq or Afghanistan and there are mounting issues that affect a lot of working people everyday, issues like whether or not pensions are going to be there, whether or not we can have some kind of a healthcare program in the country, whether or not we can invest wisely in our educational needs—-both elementary, secondary and higher education. I’m sure you may have some other items that you could think of where those revenues would be important. This administration, amazingly, has accumulated about $8.4 — $8.6 trillion dollars in debt. That is a stunning number. I get asked a lot, “What does that amount to?” A lot of times, high school students I meet will ask me, “How big is $ 8.4 trillion ?” I told some students the other day who were visiting Washington that if they went out on the Capital steps and handed out a $100 bill every second of every day, twenty-four hours a day, seven days a week, it would take 2,635 years to retire that debt that the Bush administration has accumulated in the five years it’s been in office. That’s a stunning record. And $1 trillion of that debt, by the way, is owned by the Chinese. The South Koreans and Japanese also own large portions of our debt. In all, about a third of our debt is being held off-shore, which poses another set of difficulties.

Anyway, I don’t mean to digress, but I just wanted to give you some idea of the magnitude of the debt that this crowd is building up, not to mention, never funding the body armor, the up-armoring of the vehicles our soldiers are using a dangerous zone like Iraq and Afghanistan. Apparently, we don’t have the money for that. We’re told we can’t finance Homeland Security and we’re cutting the budgets for that. We can’t do health insurance in this country—-we can’t afford to do that. We can’t afford to contribute to elementary and secondary education. And, of course, we’re being told by a group of people that what we ought to be doing is taking a trillion dollars and just excusing the obligation of the estate tax from the tiniest percentage of the most affluent citizens of our country. Many of these most affluent people, by the way, who are most outspokenly against the elimination of the estate tax—people like John Kluge, Warren Buffett and the Gates’, who have accumulated vast fortunes through their own initiative and hard work over the years, have spoken out eloquently against the total elimination of this tax.

The last time we considered this, by the way, was a year or so ago and the Republican leadership at the time said it would have been “unseemly”—-that’s their word they used–to repeal the estate tax, because of Hurricane Katrina, which had just happened. Well, I don’t think the country is that much better off than it was right after Katrina, and certainly, that part of the country is still suffering terribly. So if it was “unseemly” a year or so ago to eliminate this tax, it is certainly “unseemly” to do it today.

So, we were able to defeat part of this last week, but I thought you should be conscious and aware of this because these kinds of proposals really could do great damage and harm to the country. Let me emphasize again—-I believe providing some real tax breaks for working families and middle-income people makes a lot of sense. Even capital gains tax reductions can really be productive in releasing the energy in our economy to increase job opportunities. But this is something that really falls at the entire other end of the spectrum and to totally eliminate the estate tax would not only add to the deficit, but I think would make it far more difficult to make the kind of intelligent investments we should be making.

So, as I end this podcast with you on this subject matter, I believe it would be a great mistake for us to come back and revisit subject matter of total repeal. If you have similar thoughts, let me know, because I would be anxious to hear how you all feel about this as well.

I’m sure you may all be aware, but if not, let me repeat that I can be contacted at my website at Dodd.Senate.gov. It’s pretty straightforward, and I’d love to hear from you.

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