As the U.S. Senate prepares to vote on doing away with the estate tax, an Iowa group says many people don’t know what that would actually do. Peter Fisher, Research Director with the Iowa Policy Project, says it’s not much of a factor to worry about at the local level.
He says Iowa doesn’t have an estate tax any more, and the state’s inheritance tax exempts all “lineal descendants,” like kids and grandchildren, and also won’t affect parents or grandparents who may inherit, so it doesn’t hit very many folks.
Fisher says there’s not much chance you’ll pay the federal estate tax, either. In 2004, fewer than one-percent of the estates in Iowa paid federal estate tax, so 99-percent were exempt. In all, Fisher says about 263 Iowa estates that year paid any federal estate tax, as he says there’s little chance of incurring “unless your parents are really wealthy.”
A new report by the nonpartisan “Citizens for Tax Justice” finds repealing the federal estate tax wouldn’t help the average American and would add a lot to their average tax load. Some people are afraid that though they don’t have much in the bank, farmer with many acres could find themselves “land-rich” and at risk of paying estate tax when their wealth passes to a new generation.
The exemption is two-million dollars for an individual person, four-million for a couple, and that’ll rise so by the year 2009, you can leave an estate worth seven-million dollars and it won’t owe any federal estate tax. At the current level Fisher says only 123 farm estates in the entire country paid the estate tax, so he says “it’s not hitting farms, and it’s not hitting small businesses.”
Fisher says most of the estate-tax revenue is coming from a handful of very wealthy people’s very large estates. And he says if they get the break they’re lobbying Congress for, it’ll cost everyone who’s not super-rich. A month ago, he says, Congress was working to cut Medicaid health coverage in the name of solving the deficit problem. Now they’re looking at repealing the estate tax, which he says would cost the federal budget a Trillion-dollars in the first ten years and add “massively” to the federal deficit, in the name of giving tax relief to “a handful of very wealthy individuals.”
While opponents who want it phased out call it the “death tax,” opponents of repeal call it the “Paris Hilton tax break,” after the wealthy heiress and socialite. Fisher says that makes it a clear choice for him. “Paris Hilton gets a bunch of money tax-free,” he says, and most of the rest of us get a national debt our children will pay off the rest of their lives. The Iowa Fiscal Partnership is a joint tax and budget analysis initiative of the Iowa Policy Project in Mount Vernon and the Child and Family Policy Center in Des Moines.
Related web sites:
Estate-tax repeal report