(WASHINGTON) — President Obama has proposed raising the federal estate tax on inherited wealth as part of deal with Congress to avert the fiscal cliff. And while he is facing opposition from Republicans—and even some Democrats—about raising the tax, a group of prominent millionaires and billionaires is critiquing the president’s proposal for a very different reason: they want to raise the estate tax even higher than he’s proposed.
Warren Buffett, former President Jimmy Carter, Bill Gates Sr., and former Treasury Secretary Robert Rubin are among 35 prominent wealthy individuals who’ve already signed on to a proposal that calls for limiting the estate tax exemption to a $4 million per couple, down from the current $10 million exemption, while raising the estate tax rate to a graduated rate beginning at 45 percent, which would be a 10 percent increase from the current rate. By contrast, President Obama has called for a flat rate of 45 percent and an exemption of $3.5 million in his proposal.
“A substantial estate tax can provide revenues at a time the federal government badly needs additional revenues to fund a sound fiscal regime, fund public investment, and provide economic security,” former Treasury Secretary Robert Rubin said Tuesday on a conference call to reporters and Congressional staff. “A key point here is that the estate tax will do this without any adverse economic affect.”
The proposal is organized and promoted by Responsible Wealth, a group that describes itself as a “network of business leaders, investors and inheritors in the richest 5 percent of the U.S.” who advocate for progressive taxes as a means to promote greater economic equality.
Another supporter of Responsible Wealth’s proposal is Richard Rockefeller, grandson of John D. Rockefeller, who says leaving a more economically equal society is more important valuable to his children and grandchildren’s future than is a larger inheritance.
“A strong federal estate tax will reduce inequality and prevent the rise of a hereditary aristocracy, help maintain the social and physical infrastructure that supports us all, and by doing so it will provide as much to my descendents as I could provide them on my own just by passing money to them,” Rockefeller said.
Republicans, as well as some Democrats representing rural districts, are strongly opposed to raising the estate tax. These opponents say the estate tax will hurt small businesses family farms.
When asked about the estate tax’s adverse effect on family farms and businesses during Tuesday’s conference call, director of Responsible Wealth Project Mike Lapham called the argument a “red herring.”
“The reality is that only 40 small farms and businesses are expected to pay any estate tax in 2012,” Lapham said, citing the Tax Policy Center.
Copyright 2012 ABC News Radio
Stephen Collinson, CNN Newswire
Kevin Liptak, Ariane de Vogue and Manu Raju, CNN Newswire