It's not often that those who would benefit the most from a tax break lead the charge against it, but criticism by some of America's wealthiest citizens of proposals to end the so-called "death tax" is a clear sign this reform isn't needed.
President Bush's proposal to phase out estate and gift taxes over the next eight years would cost the government at least the $236 billion he estimates. Some analyses run as high as $750 billion over the next two decades. Now, Bush has word from the rich who would pay those taxes: Forget it.
A petition by more than 120 wealthy citizens calls on the government to keep these taxes and use the money to fund needed programs or provide a break to the poorest Americans on the other end of the tax scale.
Admittedly, that's only a fraction of the Americans who actually might pay estate taxes. Each year, the government gets a cut of the estates of some 48,000 deceased citizens.
But half of the annual estate tax revenues come from the 4,000 or so wealthiest persons who leave assets of $5 million or more, and who stand to get the biggest break. Of more than 120 of those folks solicited so far in the anti-repeal petition drive organized by the father of Microsoft billionaire Bill Gates, only four persons reportedly have refused to sign.
One who did decline was investment icon Warren E. Buffett. His reason: The petition didn't adequately stress the role the estate tax plays in fostering a society in which success - and, ultimately, control of the nation's resources - is based on merit rather than heredity and inherited wealth.
In the interests of full disclosure, Buffett owns The Buffalo News. But he does not seek to influence its editorial policies, and this page consistently opposed repeal of the estate tax throughout the debates of the last Congress.
Only about 2 percent of Americans would be subject to any estate taxes. The tax only applies to estates worth more than $675,000, and a surviving spouse also is allowed to pass on another $675,000 worth of assets tax-free when he or she dies. The exemption threshold will rise to $1 million by 2006.
Republicans have disingenuously dubbed the estate tax as a "death tax" that can cost families their small businesses or farms at the owner's death, but there already is a special $1.3 million exemption in such cases and that could easily be increased. Estate planners also already have a range of options, including shifting control of businesses to heirs before death and special property-assessment provisions, to protect assets and keep estate values down.
Supporters of repeal argue that estate and gift taxes discourage savings and investment. If the rich have even greater incentive to get richer, the logic runs, they'll invest more and help fuel the general economy.
But changing the rules of this game could also have major impacts on charitable giving, by ending the incentive the rich now have to reduce the size of their estates through major contributions to favored causes during their lifetimes.
The estate tax may need adjusting. But it makes little sense to knock a sizable hole in the federal budget to provide major tax breaks for the wealthiest members of this society.