7,450 Wealthy Estates Win, Millions of Working Families Lose Under Republican Leaders’ Tax Plan
As the year-end expiration date for the Bush-era income tax cuts draws nearer, taxes seem to be an increasingly hot topic. So far, however, some expiring tax provisions have largely escaped media attention. These include improvements to refundable tax credits, like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), that were enacted in 2009 as part of the American Recovery & Reinvestment Act (ARRA). These credits help low- and moderate-income families, millions of whom will lose benefits if the ARRA improvements are allowed to expire – as the tax plan proposed by Republican leaders in Congress would do, even as it maintains tax cuts for the richest two percent of Americans.
The $160,000 tax break that millionaires will receive if the Bush-era tax cuts are extended next year does not include the effect of another tax cut that also has remained mostly under the radar: the 2010 estate tax cut. If this tax cut is allowed to expire on schedule at the end of the year, and the federal estate tax reverts to its 2009 level as President Obama has proposed, 99.7 percent of estates will still be exempt from the tax. But apparently 99.7 percent is not enough for some in Congress, as the Republican leaders’ tax plan also calls for extending the 2010 estate tax cut that benefits only the wealthiest 0.3 percent of Americans who die each year. That’s an estimated 7,450 people – heirs to estates with assets of more than $3.5 million for an individual or $7 million for a couple.
A new report from the Center on Budget and Policy Priorities (CBPP) highlights the unfairness of maintaining the 2010 estate tax cut – worth an average of $1.1 million for the extremely wealthy estates that receive it – while allowing the ARRA improvements to the EITC and the CTC to expire. As CBPP points out:
CBPP crunched the numbers for all 50 states and DC, so you can take a look here at the small number of ultra-wealthy estates that would win – and how many working families would lose – in your state.
Nationally, CBPP estimates that failing to extend the ARRA improvements to the CTC and EITC would reduce the incomes of 13 million working families. (Millions more would lose tax benefits if another refundable credit in ARRA, the American Opportunity Tax Credit for college expenses, is allowed to expire.) CBPP also estimates that ending the ARRA improvements to the CTC and EITC would increase the number of people living below the poverty line by approximately 1.6 million, including 900,000 children. I’m guessing the number of people who would be pushed into poverty if the estate tax is restored to its 2009 levels is exactly zero. As the tax and budget debate enters high gear in the coming months, let’s hope more policymakers side with moms and families, not millionaires.
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