Charities harden opposition to an estate-tax repeal

An unusual coalition of charities, churches, and labor groups may frustrate President Bush's plan to make permanent his major 2001 tax cuts - especially the full elimination of the estate tax that's scheduled for 2010.

"It would be a long-term disaster for this country to repeal that tax," says Gary Bass, chairman of Americans for a Fair Estate Tax, a Washington lobbying group.

Members of AFET include such influential organizations as the American Arts Alliance, American Association of University Women, the AFL-CIO, and an evangelical group. Altogether, several hundred nonprofits of all stripes are represented, directly or indirectly, by AFET.

Despite Republican success in congressional elections, Mr. Bass figures the administration will be one to three votes short of the filibuster-proof 60 votes needed in the Senate for quick passage of a bill making the entire tax cut permanent.

"I am optimistic that we will be able, when cooler heads come to the table, to come up with a more responsible approach to the estate tax," says Bass.

The administration reportedly figures it can round up 60 votes by including in a bill a wide range of further tax cuts for individuals, including middle- and lower-income taxpayers, and business.

The objections of AFET groups to repeal of the estate tax are threefold.

One is that the Bush tax cut already deprives the federal government of substantial estate-tax revenues - $206 billion between 2002 and 2012, according to a study by the Joint Economic Committee of Congress. It will cost more - at least $740 billion - in the next decade after full repeal. The result might well be cuts in various social and other programs, or at least, a limit on program expansions. Some voters welcome such revenue losses as a way of shrinking government.

But this bothers, for instance, trade- union groups, including those representing state and municipal workers.

In fiscal year 2002, Washington got about $27.5 billion from estate and gift taxes. Many states got billions, too. With the estate tax fading away in steps, its revenues will remain flat this decade, despite the increased wealth of seniors.

A second problem is that the estate tax's end would take away an incentive for people to leave money to various non-profits. They could leave all their wealth to their children without Uncle Sam taking any bite at all. It is decidedly a pocket-book issue for AFET members.

Colleges, though aware of the impact of estate-tax repeal for their endowments, are generally reluctant to take a stand on the issue for fear of offending well-to-do donors. They also may hope that if Washington doesn't take its chunk of an estate, beneficiaries will have more money to donate to schools.

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