(Washington, D.C.) – On behalf of its more than one million members and supporters, the Council for Citizens Against Government Waste (CCAGW) today urged the Senate to permanently repeal the estate tax.  Senate Majority Leader Bill Frist (R-Tenn.) has signaled his intentions to push a vote on the issue before the end of the week.  The House of Representatives has already passed the Death Tax Repeal Permanency Act of 2005 (H.R. 8).  After working for months, a group of senators has failed to agree on a compromise bill that keeps the estate tax in place at a lower rate.

“The Senate must seize this opportunity to permanently rid the American people of the death tax,” CCAGW President Tom Schatz said.  “A compromise that could leave the death tax in place to be jacked up by a later Congress is not acceptable.  Members of Congress who are concerned about the deficit should be eliminating wasteful spending, not clinging to this insidious source of federal revenue.”   

Prior to the temporary repeal of the death tax in 2001, families who inherited an estate with a value of $650,000 or more were subject to a 55 percent tax.  The tax cut package gradually reduced estate tax rates and increased the exemption.  However, these changes will disappear and the death tax will return in full force in 2011.  Without passage of H.R. 8, Americans who own a home and have invested some of their earnings in the stock market for their retirement could see a large portion of their estate disappear. 

“The current situation creates complexity and uncertainty for many Americans as they plan for their future,” Schatz continued.  “In any form, the death tax reduces incentives to save and impedes economic growth.” 

A study conducted in 2001 by Douglas Holtz-Eakin and Donald Marples shows that eliminating the estate tax would correspond to increased household savings of between $800 and $3,000 annually.  A recent report by the American Council for Capital Formation concluded that U.S. estate tax rates are among the highest in the world.  The top U.S. federal marginal death tax rate is higher than that of all other countries surveyed except for Japan and Korea.  The lowest tax rate in the U.S. – at 45 percent– is also nearly twice as high as the average top foreign tax rates.

“Americans hate the death tax for a simple reason:  It taxes assets that have already been taxed,” Schatz concluded.  “People who have worked and paid taxes their entire lives have the right to pass on their earnings to whomever they choose, without politicians taking a cut for pork-barrel projects.  CCAGW will consider the Senate’s vote for its 2005 Congressional Ratings.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.