A host of notable names have signed on to a new petition urging Congress to answer the fiscal cliff issue using a stronger estate tax.
Supporters say the proposed estate tax – $4 million per couple exemption with a graduated rate starting and 45% and topping out at 55% -- is a feasible option. The list of supporters includes Warren Buffet, former President Jimmy Carter, Bill Gates, Sr., and Richard Rockefeller, MD. Together, they, along with other wealthy families and individuals, comprise the Responsible Wealth organization, a project of the group United for a Fair Economy.
"I think a substantial estate tax along the lines of this proposal — $4 million per couple exemption and a graduated rate starting at 45% — serves important economic and social purposes," said Robert Rubin, former Treasury Secretary. "We need substantial revenue for deficit reduction, public investment and providing economic security. A substantial estate tax can provide some of that revenue with no meaningful adverse impacts."
The proposed rates are much different than the current 35% with a $5 million exemption, which some ag groups say could come as a shock for many farm families. Earlier this month, Sen. Mike Johanns, R-Neb., said expensive farm ground is a key driver behind rising farm values and therefore taxable estates.
But, the group supporting the proposed tax says claims made by opponents about the estate tax's impact on small businesses and farms aren't accurate. They note that according to the Tax Policy Center, only 40 small farms and businesses are expected to pay any estate tax in 2012, and those that would pay it will pay only3.1% of the estate's value on average.
"And in most of those cases, they have enough liquid assets to easily pay the estate tax without having to touch the farm. Also, if they are cash-strapped, provisions in the law allow them to pay any tax liability over a 15-year period. Even in 2001, when there was only a $2 million per couple exemption, the Farm Bureau could not cite a single example of a farm being sold to pay the estate tax," Responsible Wealth said in a release.
John Bogle, CEO of the Vanguard Group, said the choice that is made now will have future implications.
"We all have an obligation to form a more perfect union, to promote the general welfare, and establish justice for all, and by that I mean economic justice. I see a strong estate tax as doing all those things," Bogle said. "I think this proposal is a reasonable compromise between where we are now and going all the way back to 2001 levels."
The group developed a petition to support the proposed estate tax. Click here to read it.