[IMC-Boston-Editorial] Op-ed submisstion-Starbucks president favors strong estate tax

[Christina Kasica]

Don¹t Gut the Estate Tax
By Howard Behar
648 words

The estate tax is still on the agenda within the halls of the U.S. Congress.

In our nation¹s capital, after Congress failed by several votes in June to
abolish the federal estate tax, the Senate will soon consider a bill to gut
the law and dramatically reduce the tax.

This change would be a mistake.  Our federal inheritance taxes raise
substantial revenue exclusively from those most able to pay -- the heirs and
heiresses of multi-millionaires and billionaires.  The federal tax will
raise over $1 trillion in the coming 15 years.

Paying an estate tax is one of the ways that those of us who have
accumulated wealth in our society re-fertilize the garden of opportunity
that we have benefited from.  As an individual and former executive at
Starbucks, I know the hundreds of ways our society¹s investments have helped
my company and me.  None of us exists on an island  -- and no wealth can be
created without a society that provides a fertile ground of opportunity.

I don¹t sympathize with the wealthy families that have spent millions to
abolish the estate tax.  Passing on unlimited inheritances is not only bad
for our children, it is also unhealthy for a democracy to tolerate
concentrations of hereditary wealth and power. It is more important to give
our kids educational opportunities and encourage them to make their own way
in the world of work. I have a moral responsibility to all the children in
our society, not just my own, to ensure access to quality education.

The advocates of repeal talk about how the tax threatens family farms and
small businesses. A responsible reform of the federal estate tax will assist
closely-held family businesses and farms that might be squeezed by the tax.
It is irresponsible, however, to let a few hundred households drive a debate
over our state and national tax systems.

In the coming week, the U.S. Senate will likely vote on an estate tax
proposal that will effectively gut the federal estate tax. This proposal
will probably raise the amount of wealth exempted from $4 million for a
couple to something like $10 million, and significantly cut the rate from
its current level of 46 percent. This kind of proposal would cost hundreds
of billions of dollars over the decade following repeal, and would closely
approximate the negative budgetary effects of full repeal.

National anti-tax groups are exerting enormous pressure on U.S. Senators who
oppose gutting the tax. Such tactics have no place in a dignified and honest
dialogue about an important policy matter.  Their proposed law change
includes pairing an estate tax cut with popular tax breaks that expired last
year. Extending these tax cuts has nothing to do with the estate tax but is
a form of political pressure. Hopefully we will be able to see through the
subterfuge to understand the vital issues at stake.

The key question is why now?  With an $8.5 trillion dollar federal debt, it
seems an odd time to give the super-haves another tax break.  How would we
replace $774 billion in lost revenue? What will this do to our investments
in equality of opportunity?

When we eliminate or dramatically reduce the most progressive tax in our
state and federal systems, we effectively shift the tax burden off the
wealthy and on to others. The estate tax should be responsibly reformed, but
not gutted. We should preserve the fundamental framework of the tax ­ and
the substantial revenue it generates.

I agree with Bill Gates, Sr., that the estate tax is a ³gratitude² or
³grateful heirs² tax.  Financially fortunate individuals like myself have a
responsibility to pay back society in many forms, including charitable
giving.  But we also have an obligation to pay an inheritance tax.  When the
revenue is linked to important services like education and healthcare, the
matter is crystal clear.

***
Howard Behar is the former President of Starbucks International. These are
his own personal views and do not represent those of Starbucks.