End of estate tax will hurt the federal budget and exacerbate the wealth gap

Washington, DC – As millions of Americans filed their income tax this week, a new white paper issued by the National Council of La Raza (NCLR), the largest national Hispanic civil rights and advocacy organization in the U.S., concludes that repeal of the estate tax would exacerbate the wealth gap between Latinos and other Americans and reduce the amount of revenue available for the community’s key policy priorities. The paper, Undercutting the American Dream: Estate Tax Repeal Would Harm Latinos, examines how the estate tax works and its effects on taxpayers, the budget, and charitable giving.

“As one of the fastest-growing groups of taxpayers in the country, Latinos have a vested interest in a fair and equitable tax system. We have grave concerns about a proposal that cuts services to the most vulnerable in our society while providing more tax relief to those in the highest income brackets,” said NCLR President and CEO Janet Murguía.

The paper notes that, contrary to public perceptions, the estate tax applies only to a small number of families; however, it does help to alleviate imbalances in the current tax system. The estate tax helps to diminish wealth disparities among Americans by providing additional revenue for federal budget programs. “The bottom line is that less federal revenue means less money for key priorities such as education, health care, and asset development programs,” noted Murguía.

The report also demonstrates the effect of estate tax repeal on the nation’s financial security. Permanent repeal would aggravate wealth inequality by exacerbating the wealth gulf that already exists between White, Latino, and Black households. For example, in 2002, a Latino household had less than 10% of the wealth of non-Hispanic White households, a figure likely to degrade even further if the tax is abolished.

The paper also cites a number of studies which show that a full repeal would reduce charitable giving by more than $15 billion per year, meaning a loss of resources equivalent to the total grants that the largest 110 foundations in the U.S. currently award annually. “Repealing the estate tax would drastically diminish an important American tradition – charitable giving,” said Murguía.

“Many Latino-serving nonprofit organizations depend on these resources to carry out vital services to their local communities. By providing these community-based organizations with resources for essential programs, the estate tax benefits the entire nation by ensuring a healthy and an educated population in the long run,” concluded Murguía.

This paper is available, free of charge, on NCLR’s website: www.nclr.org

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