Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 20, 1993 TAG: 9301200337
SECTION: EDITORIAL PAGE: A6 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
ESTATE-TAX PROPOSAL RAISES POLICY ISSUES
IN HIS commentary piece Jan. 6, "Soaking not only the rich," Johnnie C. Brake overreacted to HR Bill 4848.House Majority Leader Richard Gephardt, D-Mo., and Health and Environment Subcommittee Chairman Henry Waxman, D-Calif., introduced the bill during the last Congress, proposing to reduce the unified estate-and-gift tax credit to $54,800. This provision allows only estates of less than $200,000 to avoid taxation. Ma and Pa could each own and pass an estate of $200,000 (total $400,000 per family) to their children without taxation under the proposal. Now, Ma and Pa each may pass $600,000 at death, for a total tax-free estate of $1.2 million for a husband and wife, without estate taxation. The proposal is intended to pay for health and other benefits expended for the elderly.
While Brake found this a reason to demonize the Democrats, a closer reading of the political situation yields less concern about the legislation.
First, the House Ways and Means Committee handles all tax legislation and therefore, unless a member of the committee (which Gephardt and Waxman are not) sponsors the issue, little is likely to happen. A staff member of Ways and Means stated that the possibility of legislation this year to reduce the unified credit is "remote." Conservative Democrats, Republicans and farm-state legislators are not likely to support lowering the exemption. Even Gephardt and Waxman have backed away from the bill.
Perhaps most importantly, in a Wall Street Journal interview (Dec. 18), President Clinton reaffirmed that he is not in favor of lowering the estate-tax credit: "I think it's about where it ought to be."
As a matter of public policy, I agree with both Clinton and former President George Bush. Only 3 percent of American households had median net worth greater than $200,000 in 1988. As now, the proposed changes would only have impacted a few.
Brake misses two important issues: How should the older generation pay for the health and other care provided? For what purpose do we save for our old age - to provide for our own welfare and retirement income or to pass it along?
These important policy questions deserve serious consideration by citizens of all ages. Increasing taxes on workers to pay for parents with assets should be part of a compassionate debate and not the vitriolic hyperbole of Brake. L. LEON GEYER Associate Professor Department of Agricultural Economics Virginia Tech BLACKSBURG