Wealthy Americans Call For Change In Death Tax Rules

by Mike Godfrey, Tax-News.com, Washington

19 May 2005

A new survey has discovered that the majority of wealthy Americans are in favor of changing the estate tax, although a significant proportion were found to be of the view that the richest citizens should still bear the greatest tax burden.

According to the study by the wealth research firm Prince Associates, sponsored by the wealth management firm Resource Network Ltd., three-quarters of the 483 millionaires polled wanted changes to the estate tax system, with one-quarter of the survey favoring an outright repeal of the tax.

Interestingly, the survey picked up on a divergence of views between those of inherited their wealth, and those who are self-made millionaires. While almost one-third of the former group felt overhauling or repealing the estate tax would make it harder for ordinary Americans to become wealthy, only 8% of the self-mades held the same view.

Also, three out of four of those who inherited their wealth agreed that the taxation system should remain progressive, whilst only 43% of the self-made respondents agreed with this.

Unsurprisingly, views also differed between the wealthy and ultra-wealthy respondents to the survey. Of those worth between $1 million and $10 million, 93% favored raising the exemption threshold at which the tax becomes payable. Meanwhile, those worth $20 million or more mostly favored a complete abolition of the tax.

The results of the survey come as lawmakers continue to debate the merits of scrapping the estate tax, or amending the law so that it affects only the very wealthiest Americans.

Currently, the estate tax threshold is $1.5 million, which is set to rise to $3.5 million (and $7 million for couples) in 2009 under tax cuts passed in 2001. Meanwhile, rates are set to decline to 45% in 2009 before being repealed for one year. However, under the 2001 legislation, the tax will then be resurrected at former rates.

In April, 42 Democrats joined Republicans as the House approved a measure abolishing the tax. In the Senate, discussions on the future of the estate tax are ongoing.

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