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April 13, 2005
With projected deficits of $2 trillion over the next ten years, health care costs soaring and tens of thousands of U.S. troops fighting abroad without adequate equipment, what is on the agenda of the House of Representatives today? Permanent repeal of the estate tax for the 30,627 wealthiest Americans who actually paid the tax last year.
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The nation can ill afford to give a handful of millionaires a permanent pass on inherited wealth. Although very few Americans pay the estate tax, repealing it would do serious damage to the federal deficit. The estate tax repeal would cost more than $1 trillion over the first ten years after the full repeal goes into effect in 2011 - on top of the accumulated deficits from other tax cuts and spending priorities. When the bill comes due for all this debt, rest assured it will be middle class Americans who are forced to pick up the tab for handouts to millionaires and billionaires.
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Permanent repeal of the estate tax would be disastrous for American charities. The non-partisan Congressional Budget Office has "found that the estate tax encourages wealthy individuals to donate considerably more to charity, since estate tax liability is reduced through donations made both during life and at death." If there would have been no estate tax in 2000, for example, "charitable donations would have been between $13 billion to $25 billion lower than they actually were."
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Reform the estate tax; don't repeal it. There is bipartisan support to amend the estate tax to make sure it impacts even fewer people. The proposal on the House floor today would permanently repeal the estate tax beginning in 2011. If instead the tax exemption was raised to $3.5 million only 8,500 heirs would face the estate tax in 2011, just 0.3% of all people expected to die that year. Meanwhile, the revenue from a reformed estate tax could fill in between one-quarter and one-half of the expected Social Security shortfall over the next 75 years. E.J. Dionne rightly asks: "Why should Congress be more concerned about protecting Paris Hilton's inheritance than grandma's Social Security check?"
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