Cap Times Profiles One Wis. Now Petition on Estate Tax
Today the Capital Times ran a story, in its business section, highlighting OWN’s efforts on the estate tax. Legislators allowed the estate tax to expire at the end of last year costing Wisconsin some $300 million over three years. At the same time, conservatives are looking to bridge a $300 million gap in the budget by cutting important programs to the most vulnerable.
Only a few weeks ago OWN launched an online petition, asking our legislators to bridge that budgetary gap by reinstating the estate tax rather than doing it on the backs of the poor an needy. It is a simple issue of fairness. We should not be handing over new tax cuts to the children of wealth, while cutting services to those that need the most help.
If you have not yet signed OWN’s petition, make sure you do it today. Be sure to forward the petition to your friends and read the Capital Times story included below!
Death and Taxes No Longer Hand in Hand
by Mike Ivey
With Wisconsin facing yet another budget crisis — when wasn’t it? — a statewide advocacy group has launched an online petition drive to reinstate the estate tax.
Beginning quietly last month, Wisconsin stopped collecting taxes on all estates, no matter how large. The change was designed to bring the state in line with federal tax law, which has gradually been doing away with the dreaded “death tax.”
Under federal tax law, estates under $2 million are exempt from taxes this year, with the exemption climbing to $3.5 million in 2009 and ending entirely in 2010.
But the end of the estate tax also means Wisconsin will start losing out on some $100 million a year in tax collections.
So how does the state make up the difference? By cutting programs for those who can’t afford to send in big campaign contribution checks.
Some of the programs facing cuts include $20 million for FamilyCare, providing long-term care to the disabled and elderly; $7 million for health care for poor adults; $120 million for public school students; and $25 million to hold down tuition hikes in the University of Wisconsin System.
“We think there’s a better option,” says Scot Ross, executive director of One Wisconsin Now. “Let’s dump the $300 million tax break that began this year for the heirs and heiresses to Wisconsin’s largest fortunes.”
Ross gets to the $300 million figure by adding up estate tax collections from 2004 to 2006. The total estate taxes collected during those three years was actually closer to $308 million.
The point, Ross maintains, is that Wisconsin shouldn’t be offering up more tax breaks to the wealthy while cutting programs for the most needy.
Actually, the state estate tax is something of a new animal.
For much of the 20th century, Wisconsin only had an inheritance tax. The difference between estate and inheritance taxes is that the former is imposed on the estate of the person who died, while the latter is paid by survivors based on what they receive.
But beginning in the 1980s, Wisconsin’s inheritance tax was gradually phased out. By 1992, it had expired, replaced with a “pick-up tax” on estates based on federal tax policy.
“The idea was that if Wisconsin didn’t grab a piece of the estate tax, it would all go the Feds,” explains Todd Berry of the Wisconsin Taxpayers Alliance.
Moreover, since 38 states had the same policy, it reduced the risk that wealthy retirees would move away from Wisconsin to avoid taking a big tax hit on their estate when they died.
But everything changed in 2002 following a measure signed by Gov. Scott McCallum. Playing off the 2001 Bush tax cuts, the bill gradually rolled back the estate tax and ended it completely for years 2008, 2009 and 2010.
Of course, everything could change again in 2011 when the federal tax cuts expire — depending on who controls the White House. Berry said it’s likely some sort of estate tax could return at that point, perhaps with a higher threshold.
“The important thing to remember in all this is that the estate doesn’t really bring in a whole lot of money,” Berry says.
Indeed. In a $57 billion state budget, $100 million is pocket change.
But to Ross it’s a question of fairness.
“Our kids, our seniors, our disabled and our poor need this money more than Wisconsin’s next Paris Hilton,” says Ross.