A number of prominent wealthy Americans called Tuesday for a hike in the estate tax, as a way of raising new revenue in an era of high federal deficits.
Advocates of the move include former Treasury Secretary Robert Rubin, John Bogle of the Vanguard mutual fund group, and Bill Gates Sr., an attorney whose son co-founded Microsoft Corp.
The estate tax is one of the big question marks that is unresolved in talks over the nation's "fiscal cliff," the sudden tide of tax hikes and federal spending cuts that are poised to occur on Jan. 1 unless President Obama and Congress can agree on a new fiscal plan. The goal of the current negotiations is to avoid sending the economy back into recession, while also setting a course to reduce federal deficits over time.
"We believe it is right to have a significant tax on large estates when they are passed on to the next generation," the group of wealthy Americans said in a signed joint letter. "We believe it is right morally and economically, and that an estate tax promotes democracy by slowing the concentration of wealth and power."
The signers also included former President Carter, former American Airlines CEO Robert Crandall, and billionaire investor Warren Buffett. The group United for a Fair Economy promoted their appeal.
So far, much of the fiscal-cliff discussion has focused on various ideas to raise more revenue from the rich via the income tax, not the estate tax. But the estate tax is very important, too in the amount of federal revenue at stake and it is very much in play politically.
If Congress does nothing, the tax that's levied for passing wealth from one generation to another will rise from a 35 percent rate this year to 55 percent next year. Few American families owe the tax, because current policy exempts estates worth up to about $5 million from the tax. But if the current policy expires as scheduled, the exemption would decline to cover just $1 million in assets. …