Contact: Will Matthews
wmatthews@usaction.org
(202) 448-6168

(Washington, D.C.)—A new report released today by USAction Education Fund finds that repeal or drastic reduction of the estate tax only benefits a small group of multimillionaires, while middle- and lower-income families will suffer from budget cuts to education, environmental protection, community development, health care, and other programs.

According to the report, revenue lost from repealing or drastically reducing the estate tax would be more than the budget cuts Congress is considering for vital community services.  Just 30,000 Americans paid the estate tax in 2003, while the proposed budget cuts to Medicaid alone could cover health care needs for 1.2 million children.

"Repealing the estate tax is wrong for the country, wrong for the budget, and reflects all the wrong priorities," said USAction President William McNary.  "How can anyone think it's more important to give a few thousand multimillionaires a tax cut than to provide more than a million children with health care?"

The report, called "Setting the Right Priorities: Why We Can't Afford Repeal or Drastic Reduction of the Federal Estate Tax," also explains why repealing or reducing the estate tax could actually force tax increases on working and middle class Americans. 

"Weakening or repealing the estate tax would enrich the heirs of America's multimillionaires and billionaires while raising taxes or cutting services for average Americans," said Jerome Trupin, a New York insurance consultant whose family will likely owe estate taxes.  "Shifting that burden is irresponsible, unnecessary, and unfair."

"We want farmers to provide us with abundant food and ensure clean water, soil conservation and safe wildlife habitats. To do this we make an investment in farm programs that encourage this," said Kathleen Vinehout, a Wisconsin farmer.  "Farmers are being used as the 'straw man' for the rich. The estate tax only applies to farms worth millions of dollars.  I should be so lucky.”

According to a recent congressional report, not a single farm in America has gone out of business due to the estate tax.  "The idea of repealing the estate tax wasn’t started by family farmers or small-business owners, anyway," said Lee Farris, senior organizer on estate tax policy at United for a Fair Economy.  "The campaign to gut the estate tax is coming from a handful of America's wealthiest heirs – the only group that would really benefit if the tax is repealed."

Arizona Sen. Jon Kyl has proposed changes to the rate and exemption level that would cut the estate tax by as much as 93 percent. These proposals are being packaged as "reform" or a "compromise," but they are anything but that.

"It's hard to understand how Senator Kyl and his supporters can call his plan a 'compromise,'" said Adam Hughes, budget policy analyst at OMB Watch.  "A 93 percent cut is no compromise - it is merely a sneaky way to achieve back door repeal."

The Senate is scheduled to vote on full repeal of the estate tax on September 6, immediately upon returning from the August recess.

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USAction Education Fund is a non-profit, non-partisan organization dedicated to research and education concerning issues of racial, social and economic justice.  The organization works with partners in 24 states to help increase civic participation and consumer advocacy.  Members of the media who wish to interview William McNary should contact Will Matthews at (202) 448-6168.