WASHINGTON - A coalition of three dozen ultra-wealthy progressives, including billionaire Warren Buffett, former President Jimmy Carter, philanthropist George Soros and former Treasury Secretary Robert Rubin, launched a new effort Tuesday to press members of Congress and the White House to raise the estate tax in order to provide additional revenue for the federal budget.
"A substantial estate tax can provide revenues at a time when our federal government badly needs revenues … and the estate tax will do this without an adverse effect," Rubin said on a conference call organized by the progressive group, Responsible Wealth.
So far, negotiations between the White House and congressional Republicans surrounding the "fiscal cliff" have largely focused on added revenue from higher tax rates for top income levels. But as the December 31 deadline nears, alternative revenue streams are attracting renewed attention.
According to the nonpartisan Tax Policy Center, raising the estate tax by just 10% could produce more than $250 billion in added revenue over the next ten years. In contrast, raising the tax rate on the top 2 percent of earners would only produce around $100 billion in the same period, according to the Congressional Budget Office.
Members of Responsible Wealth, including Bill Gates Sr., Abigail Disney, and Richard Rockefeller, believe that a progressive estate tax is both sound fiscal policy and a personal civic responsibility for wealthy Americans whose families benefited from government investment at all levels of their businesses. "My grandfather Roy and his brother Walt both made their fortunes because of the American system, because there was funding for infrastructure, roads, highways, and regulations," said Disney. "I have no desire to compound my already significant advantages, especially not on the backs of the middle class."
Members of Responsible Wealth have proposed a plan that goes well beyond the one put forth by President Barack Obama, which calls for raising the current estate tax by 10 percent, to a maximum of 45% of an estate's value above a $7.5 million exemption per couple.
Responsible Wealth's proposal would lower that exemption to $4 million so more estates qualify for the tax, and would include a gradual increase in rates on the very largest fortunes -- up to as much as 55%, members said. Exact details of the increase have yet to be nailed down. The group hopes it will find congressional support for the plan, and said talks with the White House are in the works.
Winning congressional support for such a progressive plan might be tougher than it sounds. The estate tax has long been a thorny issue on Capitol Hill, where it is universally reviled by Republicans who label it a "death tax." A number of Senate Democrats from farm-heavy states also oppose estate taxes, which they say interfere with farmers' ability to pass family farms to the next generation.
Three of those Democrats, Mark Pryor (Ark.), Mary Landrieu (La.), and Senate Finance Committee Chair Max Baucus (Mont.) are up for reelection in 2014, which is likely part of the reason the White House hasn't made a bigger deal out of the estate tax.
Another part of the reason is that polls show that Americans generally favor repealing the estate tax, although polling percentages can shift significantly based on how certain questions are phrased. There is also widespread confusion over how many people might actually be eligible for the tax, with more people believing they could be eligible than actually would be.