KEJA Opposes the Repeal of the Estate Tax
hurt Kentucky in at least three ways:
1. The federal government will lose over a trillion dollars over ten
years. That means fewer dollars will come to Kentucky for housing and
other programs.
2. Kentucky stands to lose about $100 million each year in charitable giving.
3. Since Kentucky’s estate tax is linked to the federal, Kentucky would lose an additional $50 million in state revenue each year."
-K.A. Owens, Jefferson County
On Thursday, June 1st KFTC members joined with our allies in the Kentucky Economic Justice Alliance (KEJA) to oppose the reduction or repeal of the federal estate tax. At a press conference hosted by Brooklawn Child and Family Services in Louisville, KEJA also urged Kentucky lawmakers to prevent further weakening of the state’s revenue base by “decoupling” Kentucky’s estate tax from federal law.
As the US Senate was scheduling debate on permanently repealing or drastically reducing the estate tax, Jefferson County chapter member K.A. Owens emphasized the impact a repeal of the tax would have on the local community. “Repealing this tax means Kentucky will lose a substantial revenue source and may be forced to cut more worthy programs like those at Brooklawn.” Gov. Fletcher struck a $2 million bond for Brooklawn Child and Family Services from Kentucky’s budget in April.
The estate tax affects only a tiny group of wealthy individuals in Kentucky. According to a 2005 report released by U.S Action, only 352 Kentuckians paid the tax in 2003. The report also calculated that more than 50,000 Kentuckians could lose benefits—including Medicaid, energy assistance, rental vouchers and Head Start—if the federal tax is repealed. The exemption level, or the point at which one begins paying the estate tax, has risen in 2006 from $1.5 million to $2 million meaning even fewer Kentuckians will be subject to paying any estate tax.
Peter Meyer, a professor emeritus of Urban Policy and Economics at the University of Louisville and KFTC member, explained the reasons not to repeal the estate tax and used his own story as an example. He is among the narrow slice of Americans who would benefit from elimination of the estate tax, yet he supports the tax and opposes its repeal. “Is it unfair to expect someone who has won the lottery to pay taxes? That’s how I feel about what I will inherit from my parents: I’ve won the lottery. Of course taxes should be paid on their estate.”
Those sentiments were underscored in a statement presented by Father Pat Delahanty from the Catholic Conference of Kentucky. “It is clear that Kentucky already fails to meet the needs of Kentucky’s poor and vulnerable, as seen in the hollow eyes of the homeless, the broken bodies of those without health insurance, the tears of loved ones mourning for those who have died in our mines, and in the hearts of the emotionally troubled children whose families rely on homes like Brooklawn. With all these unmet needs, Kentucky cannot afford the loss of revenue that will accompany any reduction of the Kentucky tax on estates.”
In addition, the statement from the Kentucky Catholic Conference reiterated that our tax system should be progressive. “Our contribution to the common good should reflect our blessings.”
KEJA’s press conference and call to action coincided with a national effort to preserve the estate tax during the first week of June. On Tuesday, June 6th more than 700 organizations, including Kentuckians for the Commonwealth, participated in a national call-in day to the U.S. Senate—an effort is being organized by the Coalition on Human Needs. KFTC members called and expressed their opposition to any reduction or repeal of the estate tax to US Senators Mitch McConnell and Jim Bunning.
“Repealing the estate tax is irresponsible government,” said Janet Tucker, chairperson of Kentuckians For The Commonwealth. “We have insufficient funds to cover vital programs such as education and health care. And the estate tax is progressive, meaning that it asks the most of those who can best afford to pay, to the benefit of society as a whole.”
Decouple Kentucky’s estate tax from federal law
KEJA also urged Kentucky’s state legislators to follow the lead of 18 other states that have “decoupled” their state’s portion of the estate tax from federal law. Kentucky’s estate tax is linked by statute to the federal law, so any changes in Congress will automatically cause revenue loss to the state.
“It makes no sense to allow the further erosion of Kentucky’s tax base,” said Debra Miller, director of public policy with Kentucky Youth Advocates. “In the face of under-funded schools and cuts in children’s health programs, Kentucky’s leaders should stop this bleeding of state revenues. We need to preserve the estate tax at the federal level and decouple Kentucky’s estate tax from the federal.”
“Decoupling state law from the federal estate tax is an important way to save revenue and protect services. The tax affects only a few Kentuckians while benefiting so many who are impacted by the current crisis in health care and education,” said Dr. Ann Colbert, a member of KFTC’s Economic Justice Committee and physician in Rowan County.
KEJA proposed decoupling legislation sponsored by Rep. Jim Wayne in 2006 as a part of an omnibus tax reform bill, HB 506.