By: Joe Strupp and Todd Shields
Government Revenue, Charitable Donations At Risk Says Lobbying Group
At a time when the federal estate tax – a longtime headache for
family-owned businesses, especially newspapers – faces its best
prospects for repeal, an effort to keep the 85-year-old tax in place is
being launched by a group of powerful millionaires who claim it is needed
to maintain government revenue and fuel charitable donations.
The group, which includes the likes of William H. Gates Sr. and
billionaire investor Warren Buffett, joined last week with United for a Fair
Economy (UFE), a Boston-based nonprofit
organization, in a national petition drive aimed at persuading Congress to
reject a repeal. The petition drive includes a major newspaper
advertising campaign that began yesterday with an Op-Ed ad in The
New York Times and is expected to spread to other papers.
“We are trying to get people to take a second look at a complete repeal,”
said Chuck Collins, co-director of UFE. “We think the proponents of a
complete repeal have done a good job of framing the debate, but not
talking about the impact it would have on charities or fiscal reality.”
UFE and its supporters say a repeal of the estate tax, which raises about
$23 billion annually, would not only reduce the federal revenue stream
but also impact charities receiving donations from those seeking to
mitigate the tax.
UFE’s push to retain the estate tax comes at a time when repeal
supporters face their best prospects for eliminating the tax, which is
assessed at rates ranging from 37% to 55% on individual net worth
beginning at $675,000. After years of opposition by former President Bill
Clinton, who vetoed a bipartisan bill last year as too costly, repeal efforts
received new life from President Bush, who has said he supports a
repeal over 10 years, at a cost of $236 billion.
However, administration allies on Capitol Hill told The Wall Street
Journal they detected little enthusiasm for rushing an estate-tax
repeal through Congress, as such a move would do little to stimulate a
weakening economy – a key aim of the Bush tax plan.
“Democrats have agreed to major reform, but not to tax repeal for
multizillionaires,” said Dan Maffei, a spokesman for Democrats on the
tax-writing House Ways and Means Committee. “We’ll take care of the
farmer and small-business man.”
Family-owned newspapers also reacted cautiously to word of a new pro-
estate-tax movement. “There are always people who prefer the status
quo because they plan their lives around the way things are,” said
William Block Jr., president of Toledo, Ohio-based Blade
Communications Inc., which owns The Blade in Toledo, the
Pittsburgh Post-Gazette, and a number of other media properties.
“If you want to keep newspapers in family hands, we need to work on
Frank Blethen, publisher and CEO of The Seattle Times and a
longtime leader of efforts to repeal the tax, also criticized the opposition
camp. He said the pro-tax millionaires do not see the tax’s effect on the
average family-owned business. “You’ve got a handful of the megarich
who don’t know how to run small and medium-size businesses
pontificating about something they don’t understand,” Blethen said.
“They’re ignoring that the estate tax is one of the reasons for the gap
between the rich and poor.”
In contrast, The New York Times, most of which is owned by the
Sulzberger family, published an editorial several weeks ago strongly
supporting the estate tax. “Repeal of the estate tax would not just deprive
the federal government of substantial income, it would also cost the
states billions of dollars in lost revenue since many of them get a credit
from the federal estate tax,” the editorial stated. “In addition, many tax
experts say that bequests to universities and other charitable institutions
could dry up.”
Joe Strupp (firstname.lastname@example.org) is an associate editor and Todd Shields (email@example.com) is the Washington editor for E&P.
Copyright 2001, Editor & Publisher.