Gates, du Pont Debate The Death Tax
March 29, 2001
Bill Gates, Sr., the father of Microsoft's founder, says the estate tax restrains the accumulation and concentration of massive amounts of wealth and power in a few hands.
- Gates says repeal would widen the gap in economic and political influence between the wealthiest two percent and the rest of America.
- Repeal would also squeeze state coffers by $5.5 billion a year in lost revenues.
- And it would harm philanthropy, since taxable estates give charities more than twice the amount given by nontaxable estates.
But Gov. Pete du Pont, NCPA Policy Chairman, counters that Gates' argument fails to address several key issues.
- The $28 billion repeal of the tax would have cost in 1999 represents just one-half of one percent of the $5.6 trillion surplus -- so the fiscal impact is nil.
- But the cost of dealing with the tax is immense, because millions of Americans employ accountants and attorneys to avoid the tax; for instance, estate planning costs family businesses in upstate New York an average of $125,000 each.
- Furthermore, of the 47,000 who paid some death tax last year, 40,000 had estates of $2.5 million or less.
- If the exemption from the estate tax were raised so that the heirs of business proprietors and farmers wouldn't have to sell out to pay it, say to $20 million, three-fourths of the revenue of the tax would disappear.
That's because, du Pont argues, the burden of the tax falls not on the super-rich, but on those who work, save and invest.
Source: Bill Gates, Sr. (co-chairman, Bill and Melinda Gates Foundation) and Pete du Pont, "Death and Taxes," Slate.com, February 21 to March 14, 2001.
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