September 6, 2000

Dear Representative:

On behalf of the 1.3 million members of the American Federation of State, County and Municipal Employees (AFSCME), I urge you to oppose efforts to override President Clinton's veto of the repeal the inheritance tax.

No convincing case has been made that this particular legislation is needed. If you examine the facts you will se that it provides huge benefits for the wealthiest in our society. In reality, very few family businesses or family farms are affected.. This legislation is simply not needed, and if it becomes law it will squander the growing non-Social Security surplus in the most economically unproductive and unfair manner.

According to the Joint Committee on Taxation, the estate tax applies to fewer than two percent of all estates. In 1997, the estates of fewer than 58,000 had to pay any estate tax. Estates of $675,000 ($1.35 million for a couple, rising to $1 million by 2006) are already exempt from paying any taxes.

This legislation would help only a limited number of very wealthy families. In 1997, approximately 90 percent of estates were valued at less than $5 million. The 10 percent of estates worth more than $5 million generated about half of the $30 million raised by estate and gift taxes each year. Moreover, over 90 percent of all estate taxes are paid by individuals with an annual income of over $190,000 a year. According to the Treasury Department, only a very small proportion of those inherited family farms or small businesses were payers of the estate tax. In addition, family-owned businesses and farms are already eligible for special tax treatment under the law.

The cost to the federal government of this legislation is estimated to be $105 billion over the first 10 years, but it grows by $50 billion a year when it is fully phased in. Estate tax repeal also would result in loss of significant state revenues.

This legislation is simply not needed. I urge you to vote against a veto override.

Sincerely,

Charles M. Loveless
Director of Legislation