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It amazes me that no one comments on  the pile of elephant shit in the living room.

All of this refusal to raise taxes on the obscene rich is a cover for the true motive.

It's the estate tax they really care about.  And the reason they care about it is because their paymasters -- the Kochs, the Waltons, the Gallos -- stand to lose major MAJOR amounts of money if the the Bush tax policy is rescinded.  And that's what it's always been about.  That's what it was about when Bush forced through that tax law.  They can't go back to the obscene rich and shake them down for more "campaign contributions" (read bribes) if they don't die trying to stop the inevitable.

Got a fiscal cliff there?  Geeronimooo!

Appendix  F of the following will be posted in a separate diary.

Spending Millions to Save Billions
The Campaign of the Super Wealthy to Kill the Estate Tax
Congress Watch
April 2006
Acknowledgments
The primary authors of Spending Millions to Save Billions were Researcher Conor Kenny and
Research Director Taylor Lincoln of Public Citizen, and Senior Fellow Chuck Collins and Senior
Organizer on Estate Tax Policy Lee Farris of United for a Fair Economy. Significant
contributions were made by Senior Researcher John O’Donnell, Research Assistant Lara
Chausow, Research Intern Tom Scherer, Field Intern Collin Jergens, Civil Justice Legislative
Counsel Jillian Aldebron, former Civil Justice Research Director Chris Schmitt, former Senior
Researcher Karen Robb, and former Legislative Assistant Beth O’Brien, all of Public Citizen;
and Researcher Esther Cervantes, Communications and Policy Specialist Christina Kasica, and
Tax Intern Nathan Shepherd, all of United for a Fair Economy. Former Congress Watch Director
Frank Clemente initiated the project.
Estate tax obligation estimates were prepared for Public Citizen by Citizens for Tax Justice. This
report relied heavily on the findings of Michael J. Graetz and Ian Shapiro that were published in
their 2005 book on the campaign for repeal of the estate tax, Death by a Thousand Cuts.
About Public Citizen
Public Citizen is a 100,000 member non-profit organization based in Washington, D.C. We
represent consumer interests through lobbying, litigation, research and public education.
Founded in 1971, Public Citizen fights for consumer rights in the marketplace, safe and
affordable health care, campaign finance reform, fair trade, clean and safe energy sources, and
corporate and government accountability. Public Citizen has five divisions and is active in every
public forum: Congress, the courts, governmental agencies and the media. Congress Watch is
one of the five divisions.
About United for a Fair Economy
United for a Fair Economy is a national, independent, nonpartisan, 501(c)(3) non-profit
organization. UFE raises awareness that concentrated wealth and power undermine the economy,
corrupt democracy, deepen the racial divide, and tear communities apart. We support and help
build social movements for greater equality.
Public Citizen’s Congress Watch United for a Fair Economy
215 Pennsylvania Ave. S.E. 29 Winter St.
Washington, D.C. 20003 Boston, Mass 02108
P: 202-546-4996 P: 617/423-2148.
F: 202-547-7392 F: 617/423-0191
http://www.citizen.org http://www.faireconomy.org/
©2006 Public Citizen and United for a Fair Economy. All rights reserved.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 3
Table of Contents
Introduction to the Estate Tax..................................................................................................... 6
Estate Tax Legislation “Sunsets” in 2011................................................................................. 6
Figure 1: The Evolving Estate Tax ..................................................................................... 7
Executive Summary...................................................................................................................... 8
Section I: The Super-Wealthy Families Behind the Campaign to Repeal the Estate Tax... 11
Figure 2: Estimated Estate Tax Obligations of Families Identified in this Report .......... 12
Section II: How the Super-Wealthy Families Have Fought for Repeal................................. 14
The Super-Wealthy Families Have Financed Outside Groups ............................................... 14
Figure 3: Anti-Estate Tax Groups Financed by the Super-Wealthy Families.................. 15
The Super-Wealthy Families Have Used their Fortunes or Businesses to Press for Repeal .. 18
Figure 4: Lobbying by the Super-Wealthy Families and their Businesses....................... 19
Trade Associations of the Families’ Businesses Have Lobbied for Repeal ........................... 19
Figure 5: Lobbying by the Trade Associations of the Families’ Businesses .................... 20
The Super-Wealthy Families Helped Create a Massive Anti-Estate Tax Coalition............... 20
Figure 6: Lobbying by Members of the Family Business Estate Tax Coalition ............... 22
Section III: The Anti-Estate Tax Campaign Has Relied on Stealth, Deception and
Dishonesty................................................................................................................................... 23
The Super Wealthy Have Strategically Stayed Out of Sight .................................................. 23
Foes Have Misled the Public About the Cost and Reach of the Estate Tax ........................... 24
Foes Have Misled Public About Harm to Family Farms and Small Businesses .................... 24
Groups Have Lied About the Cost to Collect the Tax ............................................................ 26
More Fables: The Double Tax ................................................................................................ 26
The Estate Tax Is Misleadingly Characterized as a Tax on Hard Work................................. 26
Section IV: The Super-Wealthy Families Have Pumped Millions into Campaigns and
Political Committees ................................................................................................................... 27
Figure 7: Super-Wealthy Families Giving at Least $100,000 Since 1999 ....................... 27
Figure 8: Top 20 Recipients from the Super-Wealthy Families ....................................... 28
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 4
Spending Soft Money to Defeat Daschle................................................................................ 29
Making Substantial Contributions to a Swing Senator........................................................... 29
Aiding President Bush’s Election and Re-Election ................................................................ 29
Figure 9: Top Bush Fundraisers from the Wealthy Families and their Companies ........ 30
Appendix A: Profiles of the Super-Wealthy Families ............................................................. 31
Allyn-Soderberg Family (Welch Allyn Inc.) .......................................................................... 31
Blethen Family (Seattle Times Co.)........................................................................................ 31
Cox Family (Cox Enterprises, Inc.) ........................................................................................ 32
DeVos and Van Andel Families (Alticor/Amway)................................................................. 32
Dorrance Family (Campbell Soup Company) ........................................................................ 33
Gallo (E&J Gallo Winery) ...................................................................................................... 33
Harbert Family ........................................................................................................................ 34
Johnson Family (BET, RLJ Development Co.) ...................................................................... 34
Koch Family (Koch Industries) .............................................................................................. 35
Mars Family (Mars Inc.) ......................................................................................................... 36
Mayer Family (Captiva Resources) ........................................................................................ 36
Nordstrom Family (Nordstrom Inc.)....................................................................................... 36
Sobrato Family (Sobrato Development) ................................................................................. 37
Stephens Family (Stephens Inc.)............................................................................................. 37
Timken Family (The Timken Company)................................................................................ 38
Walton Family (Wal-Mart) ..................................................................................................... 38
Wegman Family (Wegmans Food Markets, Inc.)................................................................... 39
Appendix B: Myths About the Estate Tax................................................................................ 40
Myth: The Estate Tax Forces Families to Sell their Farms .................................................... 40
Myth: The Estate Tax Destroys Family Businesses ............................................................... 40
Myth: Estate Tax is Double Taxation ..................................................................................... 40
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 5
Myth: It Costs More to Comply with the Estate Tax than the Revenue It Raises .................. 41
Myth: The Super Wealthy Avoid the Estate Tax.................................................................... 41
Myth: The Estate Tax is Confiscatory Because it Takes over Half of Someone’s Estate ...... 42
Appendix C: Reasons to Preserve the Estate Tax.................................................................... 43
The Estate Tax is a Progressive Means to Raise Revenue...................................................... 43
The Estate Tax Has a Positive Impact on the Charitable Sector............................................. 43
The Estate Tax Deters Concentrations of Wealth................................................................... 44
Appendix D: Recent Opinion Polls on the Estate Tax............................................................. 45
Appendix E: The Fiscal Context of the Estate Tax.................................................................. 46
Appendix F: Family Business Estate Tax Coalition Anti-Estate Tax Ad.............................. 48
Appendix G: Senate Votes on the Estate Tax........................................................................... 49
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 6
Introduction to the Estate Tax
The estate tax is levied when wealth is transferred at death. When people die, their assets are
typically distributed to relatives, other designated individuals, or charities. If people have
substantial wealth in their estate, an estate tax is paid before their wealth is passed on. This
means that it is not a person who pays estate tax, but the executors on behalf of an estate. The tax
is levied when an estate is settled, not at the time of death, as some opponents of the tax claim.
A surviving spouse can receive the entire estate of his or her deceased spouse, regardless of its
size, without paying any estate tax. Similarly, funds donated to charity are 100 percent
deductible and reduce the size of the estate, thereby reducing or eliminating the estate tax owed.
Only households with multiple millions or billions in net worth pay an estate tax. In 2006,
individuals receive a $2 million exemption from the estate tax and couples receive a $4 million
exemption. As a result, it is estimated that less than one-third of one percent (0.27 percent) of all
estates will pay the federal estate tax in 2006, about one out of every 370 estates. Based on
census projections for 2006, 2.3 million people will die in 2006 and only about 6,300 will have
taxable estates.1
In other words, 99.7 percent of all people who die in the U.S. this year will be able to pass on
100 percent of their assets free of any estate tax.
Estate Tax Legislation “Sunsets” in 2011
In May 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA), which included provisions to phase out and temporarily repeal the estate tax. This
law incrementally raised the amount of wealth exempted by the tax from $675,000 in 2001 to
$3.5 million in 2009. In 2010, the estate tax will be repealed for one year. But in 2011, the entire
tax law will sunset and the estate tax will revert to the pre-2001 law, but with a $1 million wealth
exemption.2
The reason for this odd sunset provision of the law is that the long-term expense of abolishing
the estate tax would be extremely high, estimated at about $1 trillion for the decade beginning in
2012.3 In 2001, estate tax repeal advocates were unable to marshal the 60 votes needed to
suspend Senate “pay as you go” rules. These Senate rules required that a tax cut be offset with
budget cuts and/or revenue increases. Congressional tax-cutters needed to mask the long-term
costs of their tax cuts, and they expected to build additional political support to return in later
years to make the tax cuts “permanent.” However, their efforts in 2002, 2003, and 2005 have so
far failed to secure the needed Senate votes to permanently repeal the estate tax.
Without congressional action, the estate tax will be gradually reduced until it disappears in 2010,
then returns one year later. [See Figure 1] This wreaks havoc on people attempting to plan for the
future. It has also been the subject of sardonic attention from columnists, legislators, and talk
show hosts, who style it as a perverse incentive for people to die in that year. Economist Paul
Krugman humorously characterized the law as the “Throw Mama from the Train Act of 2001.”4
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 7
Both pro-and anti-estate tax factions agree that provisions of the law need to be addressed. The
question is whether Congress will modify the existing law, or repeal it permanently.
Figure 1: The Evolving Estate Tax
Year Standard
Exemption
Minimum Estate
Tax Rate
Maximum Estate Tax
Rate
2001 $675,000 37% 60%
2002 $1,000,000 41% 50%
2003 $1,000,000 41% 49%
2004 $1,500,000 43% 48%
2005 $1,500,000 43% 47%
2006 $2,000,000 45% 46%
2007 $2,000,000 45% 45%
2008 $2,000,000 45% 45%
2009 $3,500,000 45% 45%
2010 (tax repealed) (tax repealed) (tax repealed)
2011 $1,000,000 41% 55%
Congressional Budget Office, “Effects of the Federal Estate Tax on Farms and
Small Businesses,” July 2005
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 8
Executive Summary
Members of a handful of super-wealthy families have quietly helped finance and coordinate a
massive campaign to repeal the estate tax.
These families – the members of which own the first and third largest privately held companies
in the United States and hold about a 40 percent share in the world’s largest retailer, Wal-Mart –
stand to save a whopping $71.6 billion if their bid succeeds.
They have relied on their fortunes, the resources of their companies and their business
connections to marshal a massive anti-estate tax juggernaut that has reported nearly a half-billion
dollars in lobbying expenditures ($490.3 million) since 1998.
The families also have helped finance outside groups that have spent millions on fear-mongering
ad campaigns intended to sway public opinion against the estate tax. These ads have shamelessly
retailed myths that the estate tax is responsible for wrecking small businesses and family farms,
and that regular Americans should fear a crushing tax bill when their loved ones die.
In fact, only about one-quarter of one percent of all estates will owe any estate taxes in 2006.
And the American Farm Bureau, a member of the anti-estate tax coalition, was unable in 2001 to
cite a single example of a family being forced to sell its farm because of estate tax liability – and
that was back when the exemption level was only a fraction of what it is today.
These families also have used their inordinate wealth to make enormous political contributions to
influence elections and to help open doors on Capitol Hill. Collectively, members of the families
identified in this report and their companies’ political action committees have, since 1999, made
at least $27.7 million in contributions to candidates and federally focused political committees,
largely to unregulated Section 527 committees.
Members of the super-wealthy families have also helped finance political campaigns by serving
as top fundraisers for President Bush. Seven members of the families, employees of the
companies they control or employees of the foundations they control have served as “Rangers”
or “Pioneers,” Bush’s term for those who have collected $200,000 (Rangers) or $100,000
(Pioneers) for his campaigns. Bush, in turn, has adopted the talking points of the repeal
advocates.
The stakes of the campaign are great, not only for the super-wealthy families, but also for the
public. If the families’ repeal bid succeeds, it will cost the U.S. Treasury about a trillion dollars
in the first decade.
The families won their first big victory in 2001, when Congress passed legislation that called for
gradually raising the estate tax exemption level – the amount people can leave to their heirs
without paying any taxes – from $675,000 in 2001 to $3.5 million in 2009. The legislation called
for complete elimination of the tax in 2010.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 9
But permanent repeal of the tax would have been too expensive to enact without violating Senate
budget rules or rounding up the necessary votes to override the rules. So, the estate tax foes
accepted a one-year repeal, in 2010, with plans to fight again another day.
That new day has arrived. The House has passed legislation calling for a permanent estate tax
repeal and Senate Majority Leader Bill Frist (R-Tenn.) has pledged to bring a vote on the issue to
the floor of the Senate in early May.
For their campaign, the estate tax foes have relied on stealth, fear and fraud.
The most fundamental facet of their strategy has been maintaining a low profile while keeping
up a steady drumbeat about the tax’s toll on small businesses. Frank Blethen, the patriarch of one
of the super-wealthy families profiled in this report, articulated this strategy plainly when he said
that the repeal campaign should not appear to be one of ultra-wealthy white millionaires. “We
need to stress the harm to women and minorities,” he told allies. The Seattle Times, Blethen’s
newspaper, promptly published an ad lamenting the tax’s toll on women and minorities.
The groups financed by the super-wealthy families have attempted to strike fear in Americans by
running commercials that falsely claim or insinuate that the estate tax is wreaking havoc on
family businesses and threatens to snatch the savings of ordinary Americans at death.
Facts do not support their claims. Only an infinitesimal percentage of all people who die in a
given year leave businesses that amount to more than half the value of their estates and are
subject to the estate tax. And those leaving legitimate family businesses are eligible for lowinterest
loans to help defer the effect of the estate tax.
Repeal advocates have resorted to extreme means to find examples to support their cause. In the
wake of Hurricane Katrina in September 2005, Sen. Jeff Sessions (R-Ala.) asked the founder of
the American Family Business Institute (AFBI), one of the anti-estate tax groups profiled in this
report, to search for an example of anyone who died during the storm and whose heirs would be
harmed by the estate tax. The AFBI founder proceeded to canvass Internet obituaries, but his
search was in vain.
Small-business owners do not feel nearly as strongly about the estate tax as the billionaires who
have used them to do their bidding. In a survey of small businesses by the National Federation of
Independent Businesses in 2004, the estate tax ranked just 36th out of 75 problems. It came in
below such concerns as “telephone cost and service,” “ability to cost effectively advertise” and
“controlling my own time.”
The estate tax foes, meanwhile, have infused the debate with a steady stream of myths and
misleading statements. Among their biggest whoppers is that the estate tax costs nearly as much
– or as much – to collect as it brings into the treasury. In fact, the annual revenue from the estate
tax is more than double the entire budget of the IRS.
Another ready talking point has been the argument that the levy represents a double tax. This one
is particularly ironic in the case of the wealthy families because most of their assets have yet to
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 10
be taxed a first time, let alone a second. A study commissioned by the pro-repeal AFBI assumed
that 70 percent of wealthy families’ assets were in the form of untaxed, unrealized capital gains.
For many families, the AFBI’s researchers said, the figure was as high as 90 percent.
A final argument against the estate tax – castigated as the “death tax” by its critics – is that it
represents an unjust levy against hard work and thrift. But most of the members of the superwealthy
families profiled in this report are unqualified to make such claims themselves. In only a
handful of the families profiled in this report is the individual who actually earned the fortune
still alive. Thus, most of the members of these families can attribute their wealth to inheritance,
not to their own hard work.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 11
Section I: The Super-Wealthy Families Behind the Campaign
to Repeal the Estate Tax
The current campaign to abolish the estate tax was initiated in the early 1990s by three repeal
pioneers, according to Michael J. Graetz, co-author of Death by a Thousand Cuts, a major book
on the movement. Graetz, in a speech at the American Enterprise Institute, cited estate plannerturned
lobbyist Pat Soldano, estate planner Harold Apolinsky, and Seattle Times publisher Frank
Blethen as the “original movers” of the campaign, which was still viewed as a long shot to
succeed even after the Republicans won control of Congress in 1994.5
In the time since, members of some of the wealthiest families in the United States have helped
finance and coordinate the anti-estate tax campaign. This report identifies 18 such families that
have been involved in the repeal movement. Each has helped finance the lobbying effort for
repeal. Several have also funded groups that have run anti-estate tax ads. All but two of these
families have been reported as having assets in excess of $100 million. The other two families
most likely do, as well.6
Collectively, these super-wealthy families have a net worth of at least $185.5 billion. They
include 23 billionaires, each of whom is listed in the Forbes 400. They stand to save $71.6
billion if their repeal campaign succeeds. [See Figure 2]
These include:
• The owners of the first-and-third largest privately held companies in the United States
(conglomerate Koch Industries Inc. and Mars Inc., maker of M&Ms); 7
• The family that owns more than 40 percent of the stock in the world’s largest retailer,
Wal-Mart;8
• The owner of the company that makes Gallo wine and the Dorrance family, which holds
more than a 40 percent interest in the Campbell Soup Company;9 and
• The wealthiest family in the state of Alabama.
The names of several of the super-wealthy families active in the estate tax fight surfaced during a
brief period in which Soldano disclosed her clients’ names. Others were identified piecemeal, by
scouring press accounts, lobbying disclosure reports and other public records.
These super-wealthy families have tried to keep their role in the estate tax debate quiet. Weak
lobbying disclosure laws and the absence of any disclosure requirements for “grassroots”
lobbying efforts, such as issue-oriented advertising campaigns, virtually ensure that other superwealthy
families active in the repeal campaign are missing from this report.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 12
Figure 2: Estimated Estate Tax Obligations of Families Identified in this Report
Name City State Family Company Approx. Net
Worth
Approx. Estate
Tax†
Allyn-Soderberg Family unknown unknown
Lew F. Allyn Skaneateles NY Welch Allyn Inc., Allyn Family
Real Estate Company unknown unknown
William F. Allyn Skaneateles NY Welch Allyn Inc., Allyn Family
Real Estate Company unknown unknown
William G. Allyn Naples FL Welch Allyn Inc., Allyn Family
Real Estate Company unknown unknown
Elsa Soderberg Skaneateles NY Welch Allyn Inc., Allyn Family
Real Estate Company unknown unknown
Peter Soderberg Skaneateles NY Welch Allyn Inc., Allyn Family
Real Estate Company unknown unknown
Blethen Family $650.0 million10 $253.9 million
Frank Blethen Seattle WA Seattle Times Co. unknown unknown
Ryan Blethen Portland ME Seattle Times Co. unknown unknown
Cox Family $24.8 billion $9.7 billion
Barbara Cox Anthony Honolulu HI Cox Enterprises Inc. $12.4 billiony $4.8 billion
Anne Cox Chambers Atlanta GA Cox Enterprises Inc. $12.4 billiony $4.8 billion
DeVos Family* $3.4 billion $1.3 billion
Doug DeVos Ada MI Alticor Inc., Amway unknown unknown
Richard DeVos Ada MI Alticor Inc., Amway $3.4 billionx $1.3 billion
Dorrance Family $6.5 billion $2.5 billion
Bennett Dorrance Paradise
Valley AZ Campbell Soup Co. $1.7 billionx $663.4 million
Dorrance Hill
Hamilton Wayne PA Campbell Soup Co. $1.0 billionx $390.4 million
Mary Alice Dorrance
Malone Coatesville PA Campbell Soup Co. $1.7 billionx $663.4 million
Hope Hill Van Beuren Middletown RI Campbell Soup Co. $1.0 billionx $390.4 million
Charlotte Colket
Weber Ocala FL Campbell Soup Co. $1.1 billiony $429.4 million
Gallo Family $1.2 billion $468.4 million
Ernest Gallo Modesto CA E&J Gallo Winery $1.2 billionx $468.4 million
Joseph Gallo E&J Gallo Winery unknown unknown
Harbert Family* $1.5 billion $585.4 million
Marguerite Harbert Birmingham AL Investments $1.5 billionx $585.4 million
Raymond Harbert Investments unknown unknown
Johnson Family* $700 million $273.4 million
Robert Johnson VA BET, RLJ Development Co. $700 million11 $273.4 million
Koch Family $24 billion $9.4 billion
Charles Koch Wichita KS Koch Industries Inc. $12 billiony $4.7 billion
David Koch Wichita KS Koch Industries Inc. $12 billiony $4.7 billion
Mars Family $30.0 billion $11.7 billion
Forrest Mars McLean VA Mars Inc. $10.0 billionx $3.9 billion
Jacqueline Mars Bedminister NJ Mars Inc. $10.0 billionx $3.9 billion
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 13
Name City State Family Company Approx. Net
Worth
Approx. Estate
Tax†
John Mars Arlington VA Mars Inc. $10.0 billionx $3.9 billion
Mayer Family* $118 million $46.4 million
Frederick R. Mayer Denver CO Captiva Resources $118 million12 $46.4 million
Nordstrom Family $2.1 billion13 $826.5 million
Blake W. Nordstrom Seattle WA Nordstrom Inc. Unknown Unknown
Peter E. Nordstrom Seattle WA Nordstrom Inc. Unknown Unknown
Erik B. Nordstrom Seattle WA Nordstrom Inc. Unknown Unknown
Sobrato Family* $2.0 billion $780.4 million
John A. Sobrato CA Sobrato Development $2.0 billionx $780.4 million
Stephens Family $795.7 million14 $310.7 million
Warren A. Stephens Little Rock AR Stephens Group unknown
Timken Family $201.5 million15 $79 million
Ward J. (Tim) Timken
Jr. Canton OH Timken Company unknown unknown
W. R. (Tim) Timken
Jr. Timken Company unknown unknown
John M. Timken Jr. Timken Company unknown unknown
Van Andel Family $1.8 billion16 $702.4 million
Steve Van Andel Ada MI Alticor Inc., Amway unknown unknown
Walton Family $83.7 billion $32.7 billion
Ann Walton Kroenke Columbia MO Wal-Mart $2.6 billionx $1.0 billion
Nancy Walton Laurie Columbia MO Wal-Mart $2.2 billionx $858.4 million
Alice L. Walton Ft. Worth TX Wal-Mart $15.7 billionx $6.1 billion
Helen R Walton Bentonville AR Wal-Mart $15.6 billionx $6.1 billion
Jim C. Walton Bentonville AR Wal-Mart $15.9 billionx $6.2 billion
Christy Walton Jackson WY Wal-Mart $15.9 billionx $6.2 billion
S. Robson Walton Bentonville AR Wal-Mart $15.8 billionx $6.2 billion
Wegman Family unknown unknown
Colleen Wegman Rochester NY Wegmans Food Markets unknown unknown
Danny Wegman Rochester NY Wegmans Food Markets unknown unknown
Totals $185.5 billion $71.6 billion
Notes: † Estate tax obligation estimates were prepared for Public Citizen by Citizens for Tax Justice. Because it is
impossible to determine at what point in time the tax would be paid, estate tax obligations are based on
assumptions that the estate would be taxed at post-2010 rates.
* Indicates that family fortune is still in its first generation
x Source of net worth: Forbes 2005 list of the 400 wealthiest Americans.
y Source of net worth: Forbes 2006 list of the world’s billionaires.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 14
Section II: How the Super-Wealthy Families
Have Fought for Repeal
The super-wealthy families pressing for repeal of the estate tax have marshaled a tremendous
lobbying juggernaut that has reported nearly a half-billion dollars in lobbying expenditures
($490.3 million) since 1998, the earliest year for which lobbying disclosure data is available
online.17 The absence of precise lobbying disclosure requirements makes it impossible to
calculate the amount spent lobbying specifically on the estate tax, but the total would almost
certainly come to tens of millions of dollars.
The families have also helped finance groups that have spent millions of dollars on
advertisements in an attempt to sway public opinion.
These families have served as the engine of the anti estate tax campaign by:
• Providing money to outside groups that have lobbied members of Congress on the estate
tax or run anti-estate tax ads, a practice commonly known as grassroots lobbying;
• Hiring lobbying firms with money from their own fortunes or deploying their companies’
lobbyists to press the case for repeal on Capitol Hill;
• Helping coordinate the anti-estate tax lobbying efforts of the trade associations to which
their companies belong; and
• Helping form, then riding the coattails of, a massive anti-estate tax business coalition
consisting primarily of trade associations.
The Super-Wealthy Families Have Financed Outside Groups
The families identified in this report have provided funding to at least four outside groups – the
Policy and Taxation Group, the American Family Business Institute, the Club for Growth, and
Citizens for a Sound Economy (now FreedomWorks) – that have either lobbied on the estate tax,
run anti-estate tax advertisements, or both.
A fifth group, the Free Enterprise Fund, was founded by the former president of the Club for
Growth and partnered with the American Family Business Institute on a $7 million ad campaign
in 2005.18 [See Figure 3]
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 15
Figure 3: Anti-Estate Tax Groups Financed by the Super-Wealthy Families
Group
Known
Family
Funders
Group Has Reported
Lobbying On the
Estate Tax?
Group Has Run Ads
Against the
Estate Tax?
American Family
Business Institute
Harbert family has
contributed more than
$500,000.
Yes ($1.5 million in
reported expenditures,
solely on the estate tax,
since 1998)
Yes (Group has
sponsored or cosponsored
at least three
ad campaigns, including a
$7 million campaign in
summer 2005)
Citizens for a Sound
Economy (now Freedom
Works)
Koch family foundations
have contributed more
than $12 million.
Yes (Group has reported
lobbying on the estate tax
in five years since 1998)
No
Club for Growth
Stephens family has
contributed nearly $1.4
million.
No
Yes (Group has run at
least two anti-estate tax
ad campaigns)
Policy and Taxation
Group
Allyn-Soderberg,
Dorrance, Gallo, Koch,
Mars, Mayer, Sobrato
(amounts unknown)
Yes ($4.1 million in
reported expenditures,
solely on the estate tax,
since 1998)
No
Policy and Taxation Group
Pat Soldano, an Orange County, Calif., estate planner is invariably cited in accounts on the estate
tax campaign as a pioneer in the movement. She formed a non-profit policy group – the Center
for the Study of Taxation – in 1992. A few years later, she formed the for-profit Policy and
Taxation Group (PTG) to lobby against the estate tax.19 Soldano also played a leading role in the
formation of the Family Business Estate Tax Coalition, a massive alliance of trade associations.20
Soldano has taken on at least seven of the families listed in this report as clients. Soldano listed
members, or companies, of the Allyn-Soderberg, Dorrance, Gallo, Koch, Mars, Mayer and
Sobrato families as clients of the Policy and Taxation Group from 1998-1999.21 Since 2000,
Soldano has chosen to mask her clients’ identities by reporting the Policy and Taxation Group as
lobbying on its own behalf, just as General Electric or General Motors would. This secrecy,
taking advantage of a lax lobbying disclosure law, is by design. “We don't disclose our
membership to anybody,” she says.22
The Policy and Taxation Group has received at least $4.1 million in revenue since 1999 to lobby
on the estate tax.23 The group has, in turn, paid $420,000 to the powerhouse lobbying firm Patton
Boggs to assist its lobbying efforts. Its separate Center for the Study of Taxation reported
$213,070 in revenue in 2004.24
The Policy and Taxation Group also claims to “assist ‘think-tank’ organizations such as Citizens
for a Sound Economy, The Heritage Foundation, CATO Institute, The Tax Foundation and
others to distribute information about the damaging effects of estate and gift taxes.”25
Soldano said in 2003 her group’s “membership” consisted of about 65 families in 25 states.26
Given that Soldano has claimed to represent 65 families, she may represent other families listed
in this report and it is likely that she represents mega-millionaires or billionaires not identified in
this report.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 16
American Family Business Institute
The AFBI, a 501(c)(6) non-profit group, was formed in 1992 by Harold Apolinsky, an estate
planner whom the AFBI’s Web site dubs the “Godfather” of the repeal campaign.27 According to
Time magazine, Apolinsky was also the “co-author” of estate tax legislation proposed by Sen.
Jeff Sessions (R-Ala.)28
Apolinsky has received significant financing from at least one of the wealthy families profiled in
this report. In the mid-1990s, Apolinsky began receiving contributions from John Harbert, the
only person in Alabama who was in the Forbes 400.29 AFBI put that money toward a grant of
approximately $200,000 to the Heritage Foundation, which resulted in a study, “The Case for
Repealing the Estate Tax,” that was influential in gaining Republican support for repeal.30
John’s son, Raymond Harbert, now serves as a leader and benefactor of the group. He is AFBI’s
“funding chairman” and has personally contributed $500,000 to the AFBI.31 The AFBI says its
members own a total of 507 businesses, but the group discloses no specific information about the
identities of its members.32 Apolinsky said in 2005 that three of his clients are billionaires.33
The AFBI has campaigned for repeal of the estate tax with a series of advertising campaigns:
• The group financed television and radio ads attacking then-Senate Minority Leader Tom
Daschle (D-S.D.) for his opposition to estate tax repeal when Daschle was up for reelection
in 2004.34
• The group paired with the Free Enterprise Fund to run a reported $7 million ad campaign
in the summer of 2005. The campaign included ads pressuring Sens. Max Baucus (DMont.),
Tim Johnson (D-S.D.), and Chuck Schumer (D-N.Y.) to vote for repeal, and
thanking Susan Collins and Olympia Snowe (both R-Maine) for their support of repeal.
The campaign also targeted senators in Arkansas, Louisiana, Nevada, North Dakota,
Washington, and Hawaii.35
• In April 2006, the group launched a new round of anti-estate tax ads, targeting Sens. Max
Baucus (D-Mont.), Olympia Snow (R-Maine), and Mark Pryor and Blanche Lincoln
(both D-Ark.)36
The group has also made substantial lobbying expenditures. Since 1998, the AFBI has spent
nearly $1.5 million lobbying. The estate tax is the only issue on which it reports lobbying.37
Club for Growth
The Club for Growth, a group registered under Section 527 of the tax code, has received nearly
$1.4 million since 2000 from the Stephens family, owners of the Stephens Group, a holding
company.38
Following the acrimonious departure of former leader Stephen Moore, former Rep. Pat Toomey
(R-Pa.) took over the reins of the Club, which had raised $1 million for Toomey and spent
another million on advertising to aid him in his narrowly unsuccessful primary challenge to Sen.
Arlen Specter (R-Pa.) in 2004.39
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 17
The Club claims more than 30,000 members, but 84 percent of the money it raised in 2004 –
$7.8 million out of $9.3 million – came from just 22 corporations and four individuals who
contributed at least $100,000 each.40
The Club has run at least two anti-estate tax ad campaigns:
• In 2004, the Club ran ads near election day attacking Sen. Tom Daschle (D-S.D.) on the
estate tax. “Senator Tom Daschle wants to keep the Death Tax. Isn't
a lifetime of taxes enough?” the ads said.41
• The Club helped fight for estate tax repeal by financing an advertising campaign in
summer 2005 that targeted senators in Arkansas, Louisiana, Montana, North Dakota,
Oregon, and Rhode Island, and Washington. The Club also attacked Sen. John McCain
(R-Ariz.) in the key presidential primary state of New Hampshire.42
Free Enterprise Fund
The Free Enterprise Fund, a 501(c)(4) organization, was founded by former Club for Growth
President Stephen Moore.43 The group partnered with American Family Business Institute on a
$7 million anti-estate tax ad campaign in 2005.44
The FEF has refused to disclose the identities of its contributors to the IRS, despite a requirement
that it provide the agency with the names of those who give $5,000 or more annually. “The Free
Enterprise Fund declines to provide specific identifying information on its donors on the grounds
that such disclosure may chill donors’ First Amendment right to associate in private with the
organization,” the group wrote to the IRS.45
The FEF has fought the estate tax by running two advertising campaigns:
• In summer 2005, the group partnered with the American Family Business Institute on a
reported $7 million anti-estate tax advertising campaign that targeted senators in at least
10 states.46 (See above)
• In March 2006, the group launched a $3.7 million ad campaign that included television
ads calling on Sens. Lincoln Chafee (R-R.I.), Blanche Lincoln and Mark Pryor (both DArk.)
and Kent Conrad and Byron Dorgan (both D-N.D.) to vote for repeal. The group
has said it also plans to run ads in Washington state.47 One of the ads used by FEF depicts
vultures picking at a carcass: “The death tax can rip away 55 percent of what you save for
loved ones. It’s a vulture of a tax on your home, your business, the family farm,
everything.”48
Freedom Works (formerly Citizens for a Sound Economy)
David Koch, co-owner of Koch Industries, the largest privately held company in the United
States, founded Citizens for a Sound Economy in 1984.49
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 18
Separate family foundations of David Koch and brother Charles Koch contributed more than $12
million to CSE between 1985 and 2002.50 David Koch served as the chairman of CSE’s
501(c)(3) division through 2002, while Charles served as a board member emeritus.51 The group
also has been supported by Koch Industries. CSE budget documents for 1998 indicate that Koch
Industries contributed $626,500 to CSE in that year alone.52
The group has lobbied on the estate tax in five years since 1998, during which years the group’s
cumulative lobbying budget has been $795,457.53 (The group’s lobbying efforts were likely
conducted by its 501(c)(4) arm, which was not eligible to receive money from the Kochs’
foundations.)
The Super-Wealthy Families Have Used their Fortunes or Businesses to Press for
Repeal
At least 15 of the families identified in this report have either hired lobbyists or deployed their
companies’ lobbyists to influence the estate tax debate. Two companies run by the super-wealthy
families – Mars and Wegmans – have reported lobbying on the issue in every year since 1998.
(Reports for 2006 are not yet due.)
The families’ businesses have poured $27 million into lobbying since 1998. While disclosure
laws do not enable a determination of how much the companies spent on estate tax lobbying
alone, the $27 million figure includes only reporting periods in which the companies reported
lobbying specifically on estate taxes, sometimes among other issues. [See Figure 4]
Estate tax lobbying accounts for a substantial share of the lobbying efforts of some, if not most,
of the families’ companies. For example, the estate tax has been the sole issue on which
Wegmans has lobbied in six of eight years, during which the firm has paid lobbying firm Patton
Boggs $570,000. Patton Boggs has lobbied on only one other issue on Wegmans’ behalf in the
other years. The Seattle Times Co. has reported lobbying on the estate tax in each of the six years
since 2000, during which it has reported lobbying expenditures of $600,000. In three of those six
years, the estate tax was the only issue upon which it reported lobbying. Lobbying reports filed
by Mars Inc. are relatively brief for a business large enough to rank as the third largest privately
held company in the United States. The estate tax figures prominently among the issues on which
the company’s outside firm, Patton Boggs, has reported lobbying since 1998. Mars has paid
Patton Boggs $9.5 million in that time.54
The companies of the families identified in this report have reported lobbying on the estate tax in
more than half of the years since 1998, on average.
At least one of the families has used its businesses to further the repeal campaign in another way.
Frank Blethen, whose family holds a controlling interest in the Seattle Times Co., used company
resources to create a pro-repeal Web site, deathtax.com.55 Blethen also used the company to
sponsor his annual “death tax summit” in May 2005. The same month, his paper ran an editorial
that echoed Blethen’s talking points on the issue. It was titled “Death Tax Squeezes Smaller
Companies.”56
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 19
Figure 4: Lobbying by the Super-Wealthy Families and their Businesses
Family Family Business
Number of Years in
Which Business Has
Lobbied on the
Estate Tax since
1998
Total Lobbying
Expenditures Since
1998
Allyn-Soderberg Welch Allyn 1 $30,000
Blethen Seattle Times Co. 6 $600,000
Cox Cox Enterprises 8 $9.5 million
DeVos & Van Andel Families Alticor Inc. 8 $420,000
Dorrance Campbell Soup 2 $10,000
Johnson BET, LJH Development 2 $20,000
Koch Koch Industries 7 $3.6 million
Mars Mars Inc. 8 $9.5 million
Mayer Captiva Resources 1 $20,000
Nordstrom Nordstrom Inc. 1 $200,000
Sobrato Sobrato Development 1 $20,000
Stephens Stephens Group 7 $1.2 million
Timken Timken Co. 4 $700,000
Wegman Wegmans Food Markets 8 $570,000
Walton* Wal-Mart, Walton Enterprises 4 $600,000
4.5 (average) $26,990,000
Source: Public Citizen analysis of lobbying disclosure records filed with the Secretary of the Senate.
* The Walton family has financed its estate tax lobbying effort through Walton Enterprises, a family company that
holds about 40 percent of Wal-Mart’s stock.
Trade Associations of the Families’ Businesses Have Lobbied for Repeal
At least 10 trade associations to which the super-wealthy families’ businesses belong have
lobbied on the estate tax since 1998, during which time they have spent $234 million. The trade
associations have reported lobbying on the estate tax in 6.5 out of the 8 years since 1988, on
average. [See Figure 5]
In at least three cases, the families’ companies enjoy influential positions within the associations.
An executive from the Timken Co. sits on the executive board of the National Association of
Manufacturers; the president of one of Cox Inc.’s subsidiaries was the chairman of the
Newspaper Association of America until April 2006; and Alticor Chairman Steve Van Andel
serves on the board of the U.S. Chamber of Commerce.57
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 20
Figure 5: Lobbying by the Trade Associations of the Families’ Businesses
Source: Public Citizen analysis of lobbying disclosure records filed with the Secretary of the Senate.
* Totals count each trade association only once.
# Membership in the U.S. Chamber of Commerce is likely broader among companies covered in this report than this
chart reflects, however a list of the Chamber’s members could not be obtained.
The Super-Wealthy Families Helped Create a Massive Anti-Estate Tax Coalition
The trade associations of the wealthy families’ companies and Patricia Soldano, the lobbyist who
has represented at least seven of the families, played a central role in the formation of a massive
anti-estate tax alliance – the Family Business Estate Tax Coalition – that has served as the main
coordinator of the repeal campaign.58
Members of the Business Coalition, which consists of about 45 organizations, have reported
combined lobbying expenditures approaching a half-billion dollars – $457 million – since 1998.
[See Figure 6]
Soldano’s Policy and Taxation Group assumed a leading role in the Business Coalition when it
was founded in 1995. Also assuming leadership roles were representatives of three trade
associations to which the super-wealthy families’ businesses belong:
Family Family
Business
Trade Association to
which Family
Business Belongs
No. of Years in which
Trade Association
Has Lobbied on the
Estate Tax
Since 1998
Total Lobbying
Expenditures Since
1998
Blethen Family Seattle Times
Co.
Newspaper Association
of America 8 $11.6 million
Newspaper Association
of America 8 $11.6 million
National Automobile
Dealers Association Cox Family Cox Enterprises 8 $4.7 million
U.S. Telecom
Association 5 $25 million
DeVos & Van
Andel Families Alticor Inc. U.S. Chamber of
Commerce# 8 $151.3 million
Dorrance Family Campbell Soup International
Foodservice Distributors
Association
8 $5.5 million
Gallo Family E & J Gallo
Winery Wine Institute 3 $307,187
National Association of
Manufacturers 8 $31.6 million
Timken Family Timken Co.
Automotive Aftermarket
Industry Associations 2 $395,840
Walton Family Wal-Mart Food Marketing Institute 8 $3.2 million
Food Marketing Institute 8 $3.2 million
Wegman Family Wegmans Food
Markets National Grocers
Association 7 $410,000
Totals 7 Families 10 Associations 6.5 (average)* $234 million*
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 21
• Food Marketing Institute (Wal-Mart and Wegmans)
• National Association of Manufacturers (Timken Co)
• Newspaper Association of America (Cox Inc. and Seattle Times Co.)
Two of the other organizations that served as leaders at the inception of the Family Business
Estate Tax Coalition – the National Federation of Independent Businesses (NFIB) and the
American Farm Bureau Federation – do not disclose their member lists. They may also have
connections to the wealthy families. The remaining organization in the leadership was the
National Cattlemen’s Beef Association.59
In 2001, the Business Coalition aligned with the Tax Relief Coalition, an alliance of some 1,000
member organizations initiated by the Bush administration.60
Bush Senior Political Advisor Karl Rove and Rove assistant Kirk Blalock recruited Dirk Van
Dongen, president of the National Association of Wholesalers and Distributors, to spearhead the
TRC.
Van Dongen, who has raised at least $300,000 for Bush’s two presidential campaigns,
acknowledged that the TRC was set up “for the express purpose of supporting the president’s
[tax cut] package.”61 Notably, he cited repeal of the estate tax as the coalition’s top priority.62
The Tax Relief Coalition’s inaugural event was a meeting in the Executive Office Building, next
to the White House, two weeks after Bush formally announced his 2001 tax cut proposal. Bush,
Treasury Secretary Paul O’Neill, economic advisor Larry Lindsey, and Rove were all present.63
The TRC subsequently worked to build support for the proposed tax cuts by generating phone
calls and letters to editorial boards and members of Congress, producing newspaper op-eds,
issuing press releases and placing advocates on talk shows.64
The families and their trade associations are well represented in the TRC. As of 2003, the TRC
was led by a “TRC Management Committee” of 11 individuals, at least four of whom had
connections to the families identified in this report.65 The organizations they represented
included:
• Citizens for a Sound Economy (which the Koch family founded and has helped finance);
• The Food Marketing Institute (of which Wal-Mart and Wegmans are members);
• The International Foodservice Distributors Association (of which Campbell Soup
Company is a member); and
• The National Association of Manufacturers (of which the Timken Co. is a member.)
The TRC’s power was reflected in correspondence in mid-2005 with Senate Majority Leader Bill
Frist (R-Tenn.) In July of that year, the TRC sent a letter to Frist asking him to schedule an estate
tax repeal vote. Frist promptly announced that he had scheduled a vote for September. In
September, after Hurricane Katrina hit, Van Dongen was consulted by the Senate Republican
leadership about whether to postpone the vote.66 The vote was delayed.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 22
Figure 6: Lobbying by Members of the Family Business Estate Tax Coalition
Group
Business of
Super-Wealthy
Families is a
Member
Group Is Also a
Member of Tax
Relief Coalition
Group’s
Lobbying
Expenditures
(1998-2005)
Air Conditioning Contractors of America Yes $880,000
American Council for Capital Formation $520,000
American Farm Bureau Federation $52,529,013
American Forest and Paper Association Yes $13,760,000
American Hotel & Lodging Association Yes $475,000
American International Automobile Dealers Association Yes $8,568,262
Associated Builders & Contractors Yes $12,060,000
Associated General Contractors of America Yes $920,000
Association for Manufacturing Technology $5,460,000
Association of Equipment Manufacturers Yes $240,000
Automotive Aftermarket Industry Association Yes Yes $395,840
Communicating For Agriculture and the Self-Employed $1,870,000
Food Marketing Institute Yes Yes $3,220,000
Independent Community Bankers of America Yes $7,718,432
Independent Insurance Agents & Brokers of America Yes $6,480,787
International Foodservice Distributors Association Yes Yes $5,471,308
International Franchise Association Yes $820,000
National Association of Convenience Stores Yes $8,750,000
National Association of Home Builders $1,891,379
National Association of Manufacturers Yes Yes $31,600,585
National Association of Realtors Yes $54,030,000
National Association of Wholesaler-Distributors Yes $3,249,318
National Automobile Dealers Association Yes Yes $4,740,224
National Beer Wholesalers Association Yes $2,950,000
National Cattlemen’s Beef Association Yes $2,560,799
National Federation of Independent Business Yes $19,090,370
National Funeral Directors Association $280,000
National Grocers Association Yes Yes $410,000
National Lumber and Building Material Dealers
Association Yes $1,409,500
National Restaurant Association Yes $6,258,280
National Roofing Contractors Association Yes $1,620,000
National Telecommunications Cooperative Association $820,000
National Utility Contractors Association Yes $440,000
Newspaper Association of America Yes Yes $11,606,700
Northwest Woodland Owners Council $420,000
Organization for the Promotion and Advancement of
Small Telecommunications Companies (OPASTCO) $480,000
Printing Industries of America Yes $2,829,454
Society of American Florists Yes $1,950,000
Tire Industry Association Yes $420,000
U.S. Business & Industry Council $540,000
U.S. Chamber of Commerce Yes Yes $151,269,445
United States Telecom Association Yes Yes $25,060,000
Wine and Spirits Wholesalers of America Yes $498,000
Wine Institute Yes $307,187
Women Impacting Public Policy $130,000
Total 10 Groups 33 Groups $456,999,883
Sources: Letter from the FEBTC to Congress, Jan. 21, 2005; Tax Relief Coalition Web site; and lobbying disclosure records filed
with the Secretary of the Senate (available at sopr.senate.gov.) Members that did not report lobbying on the estate tax are not listed,
nor are members whose lobbying activities are discussed elsewhere in this report, including the American Family Business Institute,
Policy and Taxation Group, and Patton Boggs LLP.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 23
Section III: The Anti-Estate Tax Campaign Has Relied on
Stealth, Deception and Dishonesty
The debate over estate tax legislation is divided into those who want to modify the law, such that
fewer individuals and small businesses are affected, and those who want to repeal the law, such
that nobody has to pay the tax, however wealthy.
Various repeal proposals would raise the exemption level high enough that only a minuscule
fraction of estates would be subject to the estate tax. As it is, with the $2 million exemption level
in effect for 2006, only about 0.27 percent of all estates are expected to face any liability this
year.67
But for super-wealthy families, those with hundreds of millions or billions in assets, raising the
exemption level would have little effect on their estate tax liabilities. They seek repeal.
These families have financed and directed a sophisticated campaign in which they have kept
their role secret while bankrolling advertising campaigns that have falsely vilified the tax as a
destroyer of small businesses and family farms and have sought to scare regular Americans into
believing that the estate tax will snatch their savings at death.
The Super Wealthy Have Strategically Stayed Out of Sight
The super-wealthy families and their strategists – such as estate planner-turned-lobbyist Patricia
Soldano – knew that the public would be far more sympathetic to the prospect of eliminating the
estate tax to help small businesses and family farms than to help billionaires.
As author Graetz said in a speech: “The key to success was to put a sympathetic face on the
repeal movement. Small business owners, farmers and the like, even though the bulk of the
money at stake is liquid, portfolio wealth owned by people with $20 million or more in assets.”68
So the billionaires stood back.
A key way the campaign managers have kept the spotlight off the super-wealthy families has
been by keeping their names secret, even in disclosure forms filed by their lobbyists. Soldano
claimed three years ago to represent about 65 families in 25 states, but she refused to identify
those families. “We don’t disclose our membership to anybody,” she said.69
To maintain that secrecy, Soldano takes advantage a permissive federal lobbying disclosure law
that allows special interests to use front groups to hide their role in lobbying campaigns. From
1996 to 1999, the initial years of the federal lobbying disclosure act, Soldano disclosed the
families she represented as clients. They included members or companies of seven families
identified in this report: the Allyn-Soderberg, Dorrance, Gallo, Koch, Mars, Mayer and Sobrato
families. But, since 2000, Soldano has masked her clients’ identities by listing the Policy and
Taxation Group as lobbying on its own behalf, just as General Electric or General Motors
would.70
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 24
The strategists’ plan to shine a spotlight on small business owners was also illustrated in June
2005 during the “Death Tax Summit,” an annual event coordinated by Frank Blethen, the
patriarch of the family that retains a controlling interest in the Seattle Times Co.
Blethen insisted that the campaign must not appear to be orchestrated by ultra-wealthy white
millionaires. “We need to stress the harm to women and minorities,” Blethen told attendees of
the summit.71
In July 2005, Blethen’s Seattle Times published an ad that said “Who does the Estate Tax really
hurt? It may be surprising to learn that the Estate Tax severely harms women- and minorityowned
businesses.” The ad carried the tagline of the Family Business Estate Tax Coalition, with
the addendum “Ad space donated by The Blethen Corporation, a locally owned family
business.”72
Foes Have Misled the Public About the Cost and Reach of the Estate Tax
Perhaps the most egregious technique employed by repeal proponents has been their fearmongering
strategy of insinuating that most people’s families will be affected by the tax.
Consider this claim in an advertisement that was part of a $7 million advertising campaign
jointly sponsored in summer 2005 by two groups profiled in this report, the American Family
Business Institute and the Free Enterprise Fund: “When you die, the IRS can bury your family in
crippling tax bills. It can cost them everything.”73
The Annenberg Center’s FactCheck.org, an independent watchdog group slammed the ad for
presenting “a misleading picture of who is actually affected by the tax.”
“In TV and radio ads, two conservative groups greatly overstate the burden that the federal
estate tax puts on heirs to a family farm or business,” FactCheck.org wrote. “Contrary to the ad’s
claim that ‘your family’ might be crippled, the vast majority of families actually are not affected
by the estate tax.”
The AFBI launched a new round of advertisements in April 2006. Again, the group implied to
viewers that the estate tax rate is 100 percent: “When some Americans die, their families lose
more than a loved one,” the ad’s narrator says in a sinister voice. “They lose everything they
have to the cruel and unfair IRS death tax.”74
Foes Have Misled Public About Harm to Family Farms and Small Businesses
Demonizing the estate tax as a destroyer of family farms and small businesses has been the
favorite tactic of the anti-estate tax campaigners. But they have had little success in finding
examples of small businesses or family farms that actually have been harmed by the estate tax.
Actual small business owners, meanwhile, have shown little zeal for repeal.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 25
The anti-estate tax groups have been shameless in their phony claims about the damage the tax
causes:
• “The death tax is killing American businesses ... To pay the death tax, many are forced to
sell, ” the Family Business Estate Tax Coalition said in a 2001 print ad.75 [See Appendix
F]
• “The [estate] tax often means that the family business or farm has to be sold at death to
pay the tax bill and cannot be passed on to children or other family members,” two
fellows at the Free Enterprise Fund wrote in a March 2006 op-ed in the Grand Forks
(N.D.) Herald.76
• “... the cruel and unfair death tax, the double tax that destroys family businesses, the tax
farmers and ranchers fear the most,” the American Family Business Institute said in an ad
that began running in April 2006.77
These claims are dubious. The pro-repeal American Farm Bureau in 2001 could not provide the
New York Times with a single example in which a family had to sell its farm to cover its estate
tax liability, and that was when the exemption was a fraction of what it is today.78
Of the 2.5 million people who died in 2004, only 440 left a taxable estate with farm or business
assets equal to at least half the total estate, according to the Tax Policy Center, a joint project of
the Urban Institute and the Brookings Institution.79 The Congressional Budget Office,
meanwhile, has found that with a $2 million exemption, which currently applies, only 123 farms
per year would owe any estate taxes.80
The true views of small businesses owners were revealed in a June 2004 survey commissioned
by the National Federation of Independent Businesses. The business owners ranked the estate tax
as their 36th most pressing concern out of 75, below such matters as “telephone cost and
service,” “ability to cost effectively advertise” and “controlling my own time.”81
The dearth of examples of businesses and farms harmed by the tax has prompted repeal
proponents to take desperate actions to find supporting evidence for their case.
In September 2005, in the wake of Hurricane Katrina, Sen. Jeff Sessions (R-Ala.) called the
AFBI’s Apolinsky, the co-author of Sessions’ estate tax repeal legislation, seeking examples of
“anybody that owned a business that lost life in the storm.” Sessions was looking for something
“push back with” in the debate over estate tax repeal.82
Apolinsky subsequently “reached out to [AFBI] members along the Gulf Coast to hunt for the
dead,” Time reported. Apolinsky’s “estate-sniffing sleuths” spent their time “searching Internet
obituaries among other places” to find examples of people who had been harmed by the estate
tax.83
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 26
The search was evidently unsuccessful. Asked if he had found any people who were jointly
victimized by the hurricane and the estate tax, Apolinsky responded “not yet ... but I’m still
looking.”84
Groups Have Lied About the Cost to Collect the Tax
Possibly the biggest whopper told by the estate tax foes is that the cost of collecting it is equal to
– or approaches – the amount collected.
Soldano’s PTG Web site claims “it costs as much to collect death taxes as it raises.”85
Blethen’s DeathTax.com Web site put forth a claim that “it costs the government 65 cents of
every dollar raised for enforcement and compliance.”86 The absurdity of this claim is revealed
when one considers that the estate tax brought in $21.1 billion in 2004, more than double the
entire budget of the IRS for that year ($10.2 billion).87
More Fables: The Double Tax
Another favored ploy of anti-estate tax groups has been to label the estate tax as a “double tax,”
that “is unfair because the government already has taxed all savings when it first was earned as
income and then has taxed the return to that savings all of the worker’s life.”88
But the super-wealthy families described in this report are less likely than most Americans to be
afflicted with such a double tax.
A disproportionate percentage of these super-wealthy families’ assets are in the form of
unrealized capital gains that has never been taxed. The Center on Budget and Policy Priorities
reported that in estates with assets over $10 million, more than 56 percent of the wealth takes the
form of appreciated property, stocks and bonds.89
A study commissioned by the anti-estate tax American Family Business Institute went further.
The study’s researchers assumed that 70 percent of the total estates of wealthy families was tied
up in unrealized capital gains and that the figure was often even higher, “90 percent or more.”90
The Estate Tax Is Misleadingly Characterized as a Tax on Hard Work
A final argument against the estate tax – castigated as the “death tax” by its critics – is that it
represents an unjust levy against hard work and thrift. But most of the members of the superwealthy
families profiled in this report are unqualified to make such a claim themselves. In only
a handful of the families is the individual who actually earned the fortune still alive. Thus, most
of the members of these families became wealthy due to inheritance, not hard work.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 27
Section IV: The Super-Wealthy Families Have Pumped
Millions into Campaigns and Political Committees
The super-wealthy families have used their inordinate wealth to make enormous political
contributions to enhance the chances of candidates that hold their views and to open doors on
Capitol Hill for their lobbyists. Since 1999, members of the families identified in this report and
their companies’ political action committees have made at least $27.7 million in contributions to
candidates and federally focused political committees. [See Figure 7]
Nearly 80 percent of the money they have contributed has gone to candidates, committees or
independent groups allied with the Republican Party, which has been unwavering in its support
of estate tax repeal. This includes nearly $3 million they have lavished on the Republican
National Committee.
The families have taken advantage of the loophole in campaign finance law that allows
corporations and wealthy individuals to evade campaign finance regulations by contributing
“soft money” to unregulated Section 527 groups. More than 41 percent ($11.4 million) of the
money the families have contributed has gone to 527 groups. They have been among the top
fundraisers of two prominent 527 groups, the Club for Growth and Progress for America.
Figure 7: Super-Wealthy Families Giving at Least $100,000 Since 1999
Family / Family
Business PAC
Percent to
Democrats
Percent to
Repubs.
Total
Individual
$
Total
PAC
$
Total
527
$
Total
Contribs.
Walton/
Wal-Mart 11.8% 88.1% $2,324,185 $4,479,600 $3,365,260 $10,169,045
DeVos-Van Andel/
Alticor-Amway 0.2% 99.8% $1,559,812 $104,650 $4,428,750 $6,093,212
Koch/
Koch Industries 13.4% 86.6% $1,213,700 $2,377,366 $648,700 $4,239,766
Cox/
Cox Enterprises 98.6% 1.3% $520,000 $0 $1,199,400 $1,719,400
Stephens/
Stephens Group 7.6% 90% $363,500 $204,849 $1,471,000 $2,039,349
Johnson/
BET & RLJ Development 99% 1% $1,447,850 $0 $56,000 $1,503,850
Timken/
Timken Co. 3.3% 96.7% $749,361 $510,000 $50,000 $1,309,361
Gallo/
E & J Gallo Wineries 89.3% 10.7% $294,593 $0 $49,000 $343,593
Mars/
Mars Inc. 87.2% 12.8% $15,500 $0 $100,000 $115,500
Total 20.2% 79.6% $8,644,501 $7,689,352 $11,368,310 $27,702,163
Sources: Center for Responsive Politics and Public Citizen analysis of Section 527 data maintained by the Center for
Public Integrity.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 28
Of the top 10 recipients of campaign contributions from the super-wealthy families, six are 527
groups. The other four are national party committees that were permitted to receive unlimited
campaign contributions in the 2000 and 2002 election cycles. [See Figure 8]
Figure 8: Top 20 Recipients from the Super-Wealthy Families
Recipient Type of
Recipient
Party
Affiliation*
Total Received
1999 to 2005
Progress For America Voter Fund 527 R $6,600,000
Republican National Committee Party
Committee R $2,952,808
Club for Growth Inc. 527 R $1,373,700
Democratic National Committee Party
Committee D $1,217,000
America Coming Together - Nonfederal Account 527 D $657,000
National Republican Congressional Committee Party
Committee R $597,100
National Republican Senatorial Committee Party
Committee R $534,500
Joint Victory Campaign 2004 527 D $500,000
Republican Governors Association 527 R $440,760
Republican Majority Issues Committee 527 R $365,000
Democratic Senatorial Campaign Committee Party
Committee D $357,000
Democratic Congressional Campaign Committee Party
Committee D $342,190
Committee for Quality Education 527 R $341,500
Republican State Leadership Committee 527 R $186,500
President George W. Bush Candidate R $168,599
Sen. Elizabeth Dole (R-N.C.) Candidate R $153,000
Restoring the American Dream 527 R $137,000
Rep. Tom Delay (R-Texas) Candidate R $116,500
Lincoln, Sen. Blanche Lincoln (D-Ark.) Candidate D $111,600
Rep. John Boozman (R-Ark.) Candidate R $102,600
Sources: Center for Responsive Politics and Public Citizen analysis of Section 527 data maintained by the Center for
Public Integrity.
Party affiliation was assigned to PACs if at least 80 percent of their contributions were given to one party. Party
affiliation was assigned to 527s based on their mission statements and activities.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 29
The families have used their political contributions to increase their chances of winning repeal of
the estate tax by using their money to defeat former Senate Minority Leader Tom Daschle (DS.
D.), by making substantial contributions to Sen. Blanche Lincoln (D-Ark.) and by playing a
significant role in the re-election of President Bush, whose victory ensured that they would not
face a veto threat if Congress passes a repeal.
Spending Soft Money to Defeat Daschle
The Club for Growth, a Section 527 group that has received nearly $1.4 million from the
Stephens family, ran advertisements to defeat Daschle in 2004, during which time Jackson
Stephens Jr. served on the Club’s board.91 The Club’s ads were different than conventional
“issue-advocacy” messages that seek to influence votes on an issue. These ads sought to
influence the outcome of the election.
“When you die, the IRS can tax you again, taking as much as 55 percent of everything you’ve
saved for your children,” one of the Club’s commercials said, adding, “Sen. Tom Daschle wants
to keep the death tax.”92
Daschle was narrowly defeated, and the Club celebrated: “One of the reasons we were so keen
on spending so much money to defeat Daschle is we really felt that if we could take the other
team’s general out we can march over them,” former Club for Growth President Stephen Moore
said days after the election.93
In September 2005, the Federal Election Commission sued the Club, alleging that it engaged in
federal races in 2004 to a sufficient degree that the group should have registered as a federal
political action committee and abided by contributions limits and reporting requirements.94
Making Substantial Contributions to a Swing Senator
Sen. Blanche Lincoln (D-Ark.), who is viewed as an important swing vote in the estate tax repeal
debate, ranks No. 3 among all members of Congress in contributions from members of the superwealthy
families and their companies PACs. She has received $111,600 since 1999, trailing only
Sen. Elizabeth Dole (R-N.C.) and Rep. Tom DeLay (R-Texas.) Of Lincoln’s contributions from
the super-wealthy families and their companies’ PACs, 72 percent came from Arkansas-based
Wal-Mart and the Walton family. Others came from the Koch family (13 percent), the Stephens
family (12 percent) and the Cox family (2 percent.)
Aiding President Bush’s Election and Re-Election
The families used their financial resources and their connections to assist President Bush in
winning election in 2000 and re-election in 2004. Four of the family members have served as
“Rangers” or “Pioneers” for President Bush’s campaigns, meaning that they pledged to raise
$200,000 (Rangers) or $100,000 (Pioneers) for his campaign. Two of these people, Betsy DeVos
and Warren “Tim” Timken went a step further: in addition to raising at least $200,000 for Bush,
they raised an additional $300,000 for the Republican National Committee.95
Aside from the four family member Ranger-Pioneers, three employees of companies or
foundations of the members of the super wealthy families served as Pioneers in 2004. [See
Figure 9]
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 30
Figure 9: Top Bush Fundraisers from the Wealthy Families and their Companies
Name Connection to
Wealthy Families Fundraiser Status Minimum Raised
Jay Allen Senior vice president of Wal-Mart
(Walton Family) 2004 Pioneer $100,000
Betsy DeVos DeVos family Member 2004 Pioneer
2004 Super-Ranger $400,000
Richard DeVos DeVos family Member 2000 Pioneer
--
Richard Fink Executive vice president of Koch
Industries (Koch Family) 2004 Pioneer $100,000
Kevin Gentry
Vice president of Charles G. Koch
Charitable Foundation
(Koch Family)
2004 Pioneer $100,000
Warren Stephens Stephens family Member 2004 Ranger $200,000
William “Tim” Timken Timken family Member 2004 Ranger
2004 Super-Ranger $500,000
7 fundraisers 4 family members, 3 employees $1.4 million
Sources: Public Citizen’s www.WhiteHouseForSale.org project and press reports.
* Richard DeVos pledged to raise $100,000 in 2000. The campaign did not report that he succeeded.
Aside from their roles as major fundraisers for Bush’s campaign, the families proved to be
among the major funders of a soft-money group, Progress for America, that spent tens of
millions of dollars late in the 2004 campaign to assist Bush. The group’s efforts might have tilted
the election. Its $35.6 million in expenditures in the 2004 campaign cycle included a $17 million
investment in “Ashley’s story,” an ad that described 11-year-old Ashley Faulkner – whose
mother had been killed in the attack on the World Trade Center – meeting with President Bush.
Post-election surveys indicated that the “Ashley’s story” ad significantly affected the race.96
The families profiled in this report contributed $6.6 million to Progress to America: $2.6 million
from Alice Walton and $2 million each from Richard DeVos and Jay Van Andel.97
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 31
Appendix A:
Profiles of the Super-Wealthy Families
Allyn-Soderberg Family (Welch Allyn Inc.)
The Allyns and Soderbergs own Welch Allyn Inc., a $650 million privately held medical device
manufacturer based in Skaneateles, N.Y.98 The company was co-founded by Allyn family
patriarch William Noah Allyn in 1915.99 Peter Soderberg, who resigned in early 2006 after six
years as CEO of the firm, is married to Elsa Allyn Soderberg, granddaughter of co-founder,
William Noah Allyn.100 The privately held company publishes little financial information, but its
annual revenue has grown from $200 million to more than $600 million since 1993.101 The
company has purchased four other businesses since 1994, one for $145 million.102 In January
2006, the firm announced plans to build a factory in Mexico and over the next two years, to close
plants in San Diego, Calif., and Chicago, and to consolidate its operations at facilities in
Skaneateles and Beaverton, Ore.103
Using a family-controlled entity called the Allyn Family Real Estate Company (AFRE), the
Allyn-Soderbergs paid at least $30,000 to Patricia Soldano’s Policy and Taxation Group to lobby
on the estate tax in 1998 and 1999, before Soldano’s group ceased to disclose its donors.104
Welch Allyn is also a member of the Advanced Medical Technology Association, which, in turn
is a member of the Tax Relief Coalition, a group that has put particular emphasis on winning
repeal of the estate tax.105 Former Welch Allyn CEO Peter Soderberg has also personally given
money to the Advanced Medical Technology Association Political Action Committee.106
It is not possible to estimate how much members of this family would save if the estate tax were
repealed because information on the family’s net worth could not be obtained.
Blethen Family (Seattle Times Co.)
Through the Blethen Corp., sixteen members of the Blethen family hold a controlling interest in
the Seattle Times Co. That company, in turn, owns assorted real estate properties in Maine and
Washington state, in addition to publications including the Seattle Times, Walla-Walla Union
Bulletin, Yakima Herald-Republic, Issaquah Press, Sammamish Review, Newcastle News,
Portland (Maine) Press Herald, Maine Sunday Telegram, Kennebec Journal and Morning
Sentinel (Maine). In 2000, Knight-Ridder, which owns 49.5 percent of the Times, offered the
Blethens $650 million for their 50.5 percent share of the paper.107
Frank Blethen is the fourth generation Blethen to run the company.108 Ryan Blethen, son of
Frank, was appointed a regional editor of the Portland Press after accumulating less than two
years of reporting experience.109
Frank Blethen is one of the most vocal advocates of estate tax repeal and has exploited his
control of a prominent newspaper use it to promote his cause. The Times has sponsored at least
one of Blethen’s annual “Death Tax Summits” – in May 2005.110 Also in May 2005, the Seattle
Times ran an editorial titled “Death Tax Squeezes Smaller Companies,” which argued that “the
supporters of the death tax portray it as an egalitarian measure that taxes only the rich. But its
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 32
effect in the real world of business is to squeeze middle-sized companies into selling out to
bigger ones.”111
The Seattle Times Co. has lobbied Congress on the estate tax in every year since 2000, during
which time its lobbying bill has been $600,000. In three of those years, the estate tax was the
only issue the company lobbied upon.112 The Times is also a member of the Newspaper
Association of America, which, in turn, is a member of the two of the most prominent
organizations pushing for repeal of the estate tax: the Family Business Estate Tax Coalition and
the Tax Relief Coalition.113 The Newspaper Association of America has lobbied on the estate tax
in every year since 1998.114
Based on an estimate of that the Blethen family has a net worth of $650 million, a minimal
estimate derived from Knight-Ridder’s offer to buy the company’s share of the Seattle Times, the
family would save approximately $253.9 million if the tax were repealed.115
Cox Family (Cox Enterprises, Inc.)
The two Cox sisters, Barbara Cox Anthony and Anne Cox Chambers, inherited Cox Enterprises
Inc. from their father, James Cox, who died in 1957.116 Cox Enterprises Inc. owns 17 daily
newspapers (including the Atlanta Journal-Constitution), 25 weekly publications and shoppers,
15 television stations, a 62 percent stake in an 80-radio station subsidiary, and one of the
country’s largest cable systems (with 6.6 million subscribers in 22 states.)117 The firm also owns
Manheim Auctions, the largest U.S. used-car auction business, which sold 10 million vehicles
worldwide in 2005, and a majority stake in AutoTrader.com, an Internet auto classifieds
marketplace that claims to carry 2.8 million vehicle listings from 40,000 dealers and 250,000
private owners.118
Cox Enterprises has lobbied on the estate tax in every year since 1998, during which time the
firm’s lobbying tab has been $9.5 million.119 The family, through its company, has close ties to
three other organizations that have lobbied on the estate tax – the Newspaper Association of
America, the National Automobile Dealers Association (NADA) and the U.S. Telecom
Association. The president of a Cox subsidiary is a former chairman of the newspaper
association. Although neither the NADA nor U.S. Telecom publicly identifies its members, Cox
Enterprises is closely associated with both. Its subsidiary Manheim Auctions conducts training
for NADA members and Manheim’s chief economist worked for NADA for 23 years before
joining Manheim in 2000. Abolition of the estate tax was called a “key NADA objective” of the
association’s incoming president. Cox Communications had a role at the U.S. Telecom 2005
convention.120
The Cox sisters have a net worth of about $12.4 billion each, according to Forbes.121 Repealing
the estate tax would save their heirs an estimated $9.7 billion.122
DeVos and Van Andel Families (Alticor/Amway)
Jay Van Andel and Richard DeVos founded direct-selling giant Amway in 1959. Control of the
company, through their Alticor holding company, is now in the hands of sons Doug DeVos,
company president, and Steve Van Andel, now company chairman.123 The company had
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 33
estimated sales of $6.4 billion in 2005. Jay Van Andel died in late 2004, but the two families
maintain ownership of the company.124
Alticor Inc. has lobbied on the estate tax in every year since 1998.125 Steve Van Andel also
represents the family business on the board of the U.S. Chamber of Commerce, which has
lobbied on the estate tax in each year since 1998.126
In 2004, Forbes estimated that the founders of Alticor had an estimated combined net worth of
$5.9 billion. Since Jay Van Andel’s death in December, 2004, none of his family members has
been included in the Forbes list of the 400 richest Americans.
In 2005, Forbes pegged co-founder Richard M. DeVos’ net worth at $3.4 billion.127 Their family
heirs would save an estimated $1.3 billion if the estate tax were repealed.128
Dorrance Family (Campbell Soup Company)
The current Campbell heirs, Bennett Dorrance (net worth: $1.7 billion), Dorrance Hill Hamilton
($1 billion), May Alice Dorrance Malone ($1.7 billion), Hope Hill Van Beuren ($1 billion) and
Charlotte Colket Weber ($1.1 billion) inherited their fortunes from their grandfather, condensedsoup
inventor and Campbell Soup head John T. Dorrance, who died in 1930.129 Members of the
family possess about a 43 percent stake in the Campbell Soup Company, which also produces
food under the brand names Pepperidge Farm, Godiva, Swanson, Mrs. Paul’s, Prego,
SpaghettiOs, Marie’s, Healthy Request, Hungry-Man and Healthy Treasures.130 Their share is
worth about $5.1 billion.131 The family has a history of tax avoidance. Fellow heir John Dorrance
III, now worth $1.7 billion, absconded to Ireland in 1994 to avoid U.S. taxes.132
Dorrance Hill Hamilton paid Patricia Soldano’s Policy and Taxation Group $10,000 in the latter
half of 1998, before Soldano’s group ceased to disclose its clients’ names.133 Campbell Soup,
itself, has not disclosed lobbying on the estate tax, but it is a “Partner” member of the
International Foodservice Distributors Association, which is a member of both the Tax Relief
Coalition and the Family Business Estate Tax Coalition and has lobbied on the estate tax in each
year since 1998.134
Collectively worth $6.5 billion, the five members of the Dorrance family would save an
estimated $2.5 billion if the estate tax were repealed.135
Gallo (E&J Gallo Winery)
The Gallo family owns E&J Gallo Winery, which posted an estimated $3 billion in sales in
2004.136 Ernest Gallo started the company with his brother Julio in the 1930s, but the operation is
now run by Joseph, Ernest’s son.137
The Gallo family has been fighting the estate tax for at least 18 years. In 1978, former Sen. Alan
Cranston (D-Calif.), who received at least $3,000 in Gallo family contributions for his 1974
campaign, sponsored an amendment to give the Gallos ten years to pay any estate taxes. In 1986,
another recipient of Gallo family campaign contributions, Sen. Robert Dole (R-Kansas),
sponsored another “Gallo amendment” to provide a tax exemption on $5 million that the Gallos
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 34
passed on to each grandchild. A $2 million per grandchild exemption was approved, but it was
later reduced to $1 million.138
The family company was listed as a client of Patricia Soldano’s Policy and Taxation Group in
1998. When the lobbying disclosure law took effect in 1998, Soldano filed a report officially
terminating her lobbying for the Gallos.139 Although official records are scant, the family has
reportedly contributed tens of thousands of dollars to the Group and another Soldano’s estate tax
groups, the Center for the Study of Taxation.140 While the company discloses no specific
lobbying on the estate tax, it has recently had at least two representatives on the board of the
Wine Institute, the California wine industry association, which has lobbied on the estate tax
during three years since 1998 and is a member of the Family Business Estate Tax Coalition.141
Ernest Gallo, alone, has an estimated net worth of $1.2 billion. His heirs would save
approximately $468.4 million if the estate tax were repealed.142
Harbert Family
Marguerite Harbert, 82, the richest person in Alabama, inherited her fortune, now worth an
estimated $1.5 billion, from her husband, John Murdoch Harbert III, when he died in 1995.143
John’s fortune sprang from the $6,000 he won at dice on the troop ship that brought him back
from World War II in the Pacific. He used the money to start a construction company that
became a worldwide conglomerate involved in real estate, mining and oil and gas ventures in
addition to construction.144
In 1990, five years before he died, John Harbert turned the Birmingham, Ala., company over to
his son, Raymond, who sold some parts of the business and kept others.145 Today, the firm has
evolved into the B.L. Harbert International Group, composed of five firms, headed by Billy
Harbert Jr., son of John’s brother and business partner, Bill Harbert.146
Shortly before his death, John Harbert contributed money to the American Family Business
Institute (AFBI), which had been founded in 1992 by Birmingham estate attorney and anti-tax
crusader, Harold Apolinsky, who serves as its general counsel.147 Since 1998, the earliest year
for which lobbying disclosure data is available online, the AFBI has spent nearly $1.5 million
lobbying on the estate tax.148
John Harbert’s son, Raymond Harbert is described on the AFBI Web site as the organization’s
funding chairman.149 This is how the Web site describes him: “Raymond is Chairman of Harbert
Management Corporation, a global investment firm. Before asking others to invest in the AFBI,
Raymond committed $500,000 personally.150
If the estate tax were repealed, the Harbert family would save an estimated $585.4 million, based
on Marguerite Harbert’s estimated fortune of $1.5 billion.151
Johnson Family (BET, RLJ Development Co.)
Robert L. Johnson founded Black Entertainment Television in 1980, stepped aside from day-today
operations in 1996, sold the company to Viacom for about $3 billion in 2000 and formally
left the company in 2005.152 Johnson bought the Charlotte Bobcats, of the National Basketball
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 35
Association, and the Charlotte Sting of the WNBA for $300 million in 2003.153 In early 2006,
Johnson’s RLJ Development Co. added to its $1 billion in hotel assets by agreeing to purchase
100 Marriott and Hilton hotels for $1.7 billion.154 He is also in the process of setting up a new
bank chain called the Urban Trust Bank, obtaining a charter from federal regulators in February
2006 and buying banks for the chain as recently as March 2006.155
Johnson received about $240 million in taxpayer subsidies from the Charlotte government when
he acquired the franchises in 2002. That’s the amount the city pledged, largely out of tax
revenues, to build Johnson’s NBA and WNBA teams a new 18,500-seat arena. Johnson gets to
keep all the revenue from ticket sales and even 50 percent of the food, beverage and parking
revenues from the city-financed stadium.156
Johnson told the Washington Post he made his case against the estate tax directly to President
Bush in July 2005.157
Johnson’s wealth is hard to pin down. In 2003, Forbes estimated his net worth at $1.3 billion. A
year later, it said he was worth $700 million and attributed the dramatic decline to a divorce
settlement.158 Based on his reported wealth of $700 million, Johnson’s heirs would save about
$273.4 million if the estate tax were repealed.159
Koch Family (Koch Industries)
Family patriarch Fred C. Koch founded Koch Industries, now the largest privately held company
in the U.S. Its $21 billion purchase of Georgia-Pacific Corp. in December 2005 vaulted Koch
past Cargill to take first place on Forbes’ list of privately held companies.160 With a presence in
60 countries, Koch now has 80,000 employees and annual revenue of $80 billion. Charles Koch
is chairman of the board and chief executive officer.161
The Koch brothers have used their remarkable wealth to found and support several organizations,
including Citizens for a Sound Economy (CSE), now Freedom Works. David Koch served as the
chairman of the organization’s 501(c)(3) division through 2002 and Charles was a board member
emeritus.162 Foundations established by the Koch brothers have generously supported CSE,
contributing more than $12 million to the group between 1985 and 2002.163 The group also has
received contributions from the company co-owned by the Koch brothers. In 1998, alone, the
group received an additional $626,500 from Koch Industries.164
Citizens for a Sound Economy has reported lobbying on the estate tax in five years since 1998,
although such work was likely done by its 501(c)(4) arm, while the bulk of the Koch money has
been contributed to CSE’s 501(c)(3) division. Koch Industries has lobbied on the estate tax in
seven years since 1998. The company has also been a client of Soldano’s Policy & Taxation
Group.165
Charles and his brother, Koch Executive Vice President David, are tied for 33rd on Forbes 2006
list of the World’s Richest People. Each has a net worth estimated at $12 billion.166 Based on
their combined estimated wealth of $24 billion, the heirs of the Koch brothers would save about
$9.4 billion if the estate tax were repealed.167
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 36
Mars Family (Mars Inc.)
The Mars family owns the entirety of Mars Inc., which is the third largest privately held
company in America with $19.1 billion in annual revenue. Candy is the firm’s flagship product,
but Mars Inc.’s products also include vending machines, electronics components and the
Pedigree, Whiskas and Uncle Ben’s brands.168
Three Mars siblings, Jacqueline, Forrest Jr. and John, have served as Mars Inc.’s vice president,
CEO and chairman.169 They inherited their wealth from their grandparents, who founded the
company. Each of them is estimated to be worth about $10 billion, placing them in a tie for 19th
place among the wealthiest people in America in 2005.170
The family’s first efforts to repeal the estate tax under a Democratic Congress in the 1990s were
limited in their effectiveness. Washington Post reporter Jonathan Weisman wrote: “In 1992,
when heirs to the Mars Inc. fortune joined a few other wealthy families to hire the law firm
Patton Boggs LLP to lobby for estate tax repeal, the joke on K Street was that few Washington
sightseers had paid so much for a fruitless tour of the Capitol.”171
However, as the anti-estate tax campaign began to gain traction following the Republican
takeover of the House in 1994, the family began to pour more resources into it, largely using the
company as a conduit. Patricia Soldano’s Policy and Taxation Group reported receipt of a total
of $30,000 from Mars Inc. in 1998 and 1999. The family also reportedly contributed tens of
thousands of dollars to Soldano’s “research group,” the Center for the Study of Taxation.172 Mars
Inc., itself, has reported lobbying on the estate tax in each year since 1998.173
Based on an estimated wealth of $30 billion, the Mars heirs would save approximately $11.7
billion if the estate tax were repealed.174
Mayer Family (Captiva Resources)
Frederick R. Mayer is the chairman of Captiva Resources, a family-owned oil and gas
exploration company. Much of Mayer’s fortune came from the sale of his first oil company,
Exeter Inc.175
Captiva Resources paid the Policy and Taxation Group at least $20,000 to lobby against the
estate tax in 1998 and 1999 before the Group stopped disclosing its donors.176
The best estimate of Frederick Mayer’s net worth, made in 1996, is between $118 million and
$218 million.177 His heirs would thus stand to save a minimum of $46.4 million if the estate tax
were repealed.178
Nordstrom Family (Nordstrom Inc.)
The upscale department store chain dates to 1901, when family patriarch John W. Nordstrom and
a partner opened a small shoe store. In 1971, Nordstrom’s heirs took the company public to raise
retirement money for the second generation of Nordstroms.179 After a series of leadership
changes, the family reasserted control of the company in 2000, ousting the top leaders and
replacing them with family members.180
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 37
Five of the Nordstrom family’s third and fourth generation family members now head the
company: Chairman Bruce A. Nordstrom (grandson of the founder) and four of the founder’s
great-grandsons. These great grandsons are President Blake W. Nordstrom and executive vice
presidents, Erik B. Nordstrom and Peter E. Nordstrom and James (Jamie) F. Nordstrom, Jr.181
Nordstrom Inc. paid a total of $140,000 to two lobbying firms, Kurzweil & Associates and R.
Duffy Wall & Associates, to lobby on a 1999 bill that would have reduced and eventually
repealed the estate tax. The bill was vetoed by President Clinton but Nordstrom continued to
lobby on tax issues until just after a similar bill, the 2001 tax cut, was signed by President
Bush.182
Collectively, the Nordstrom family holds about 20 percent of the company stock, which is worth
about $2.1 billion.183 If the estate tax were eliminated, the family’s heirs would save about
$826.5 million, based on the estimate that the fortune is worth $2.1 billion.184
Sobrato Family (Sobrato Development)
John A. Sobrato is one of the largest commercial landlords in Silicon Valley, controlling 11
million square feet of commercial property, and has a net worth of about $2 billion.185 His career
in real estate dates to 1957. Today, his son, John M. Sobrato, runs the business on a day-to-day
basis.186
Sobrato Development paid the Policy and Taxation Group at least $20,000 to lobby on the estate
tax before 2000, when the Group ceased disclosing its clients’ identities.187
Based on an estimated net worth of $2 billion, John Sobrato’s heirs would save an estimated
$780.4 million if the estate tax were repealed.188
Stephens Family (Stephens Inc.)
Jackson Thomas Stephens joined the family investment bank, Stephens Inc., benefited from
rising prices after the Great Depression, and built the firm into one of the nation’s largest
investment banks outside Wall Street.189 Current holdings include Stephens Media, which
operates 24 newspapers, including the Las Vegas Review-Journal.190 Son Warren Stephens is
now President and CEO of Stephens Inc. and was designated as a “Ranger” by the 2004 Bush-
Cheney campaign, meaning he raised at least $200,000 for the presidential campaign.191 Son
Jackson Jr. served on the board in 2004 of the Club for Growth, which has run anti-estate tax
ads.192
Jackson Stephens’ fortune was estimated at $1.5 billion in 2004.193 He died in July 2005.194 None
of his heirs is listed in the Forbes 400 list of the richest Americans or the Forbes “World’s
Richest People” list.
The Stephens family business has lobbied on the estate tax during seven years since 1998.195
Public Citizen estimated that the Stephens family fortune would have shrunk to $795.7 million
after taxes are paid on Jackson Stephens’ estate. With that net worth, the family would save
$310.7 million if the estate tax were repealed.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 38
Timken Family (The Timken Company)
Henry Timken started the Timken Company, which now makes bearings, in 1899. Since the
1920’s, this company has ranked among the 250 largest U.S. corporations, and has had only five
chairmen in its history, all of whom have been Timken family members.196
The family has been a major backer of President Bush, who is a staunch proponent of abolishing
the estate tax. Former chairman W.R. “Tim” Timken, Jr. was the finance co-chair of Bush’s 2004
campaign in Ohio and achieved “Ranger” fundraiser status, having raised at least $200,000 for
the Bush-Cheney 2004 campaign.197 The Timken family contributed $100,000 to Bush’s first
inaugural celebration and the company itself contributed $250,000 to the second.198 After Bush
was reelected, W. R. “Tim” Timken, Jr. was appointed ambassador to Germany, despite the fact
that he spoke no German and had no diplomatic experience. He passed the company’s
chairmanship of the company on to Ward J. “Tim” Timken Jr, the fifth generation Timken
family chairman.199 Another Timken, John M. Timken, Jr., sits on the company’s board. These
three Timkens and trusts they control collectively own about $201.5 million in company stock.200
Bush visited a Timken plant in Canton, Ohio, in April 2003 to talk up his 2001 tax cut package –
which included the estate tax phase-out – and to push for new tax cuts, saying they would create
a million new jobs by the end of 2004.201 In fact, the first set of tax cuts had helped push the
Timken Company’s taxes so low that the company didn’t pay any corporate income taxes at all
for two years during Bush’s first term.202 The company had also seen its profits rise from $38.7
million in 2002 to $260.3 million in 2005 and had received $395 million in government subsidies
from 2001 to 2004 under a federal anti-dumping trade program.203 In mid 2004, however, the
company told its Canton workers, just before contract negotiations, that it intended to cut at least
900 jobs. Its hardball tactics enabled it to extract concessions from the union on health care
benefits in exchange for a guarantee that at least 500 of the jobs would be saved.204
The family, through its company, is a member of two industry associations that are members of
two of the leading anti-estate tax groups: the Tax Relief Coalition and the Family Business
Estate Tax Coalition. A company representative is in the leadership of the Automotive
Aftermarket Industry Association, which has lobbied on the estate tax and a company
representative is on the board of the National Association of Manufacturers, which has lobbied
on the estate tax in every year since 1998.205 The Timken Co., itself, has reported lobbying on
the estate tax during four years since 2000.206
Based on the family’s estimated $201.5 million stake in the Timken Co., family heirs would save
about $79 million if the estate tax were repealed.207
Walton Family (Wal-Mart)
Family patriarch Sam Walton, a former J.C. Penney clerk, opened his first discount store in
Arkansas in 1962 and built it into a retailing giant that he left to his heirs in 1992. Wal-Mart is
now the world’s largest retailer. S. Robson Walton serves as the company’s chairman. Although
other heirs are not active in the company, they retain about a 40 percent share in it, worth about
$83.7 billion.208
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 39
Walton Enterprises, controlled by the Walton family, has paid Patton Boggs $600,000 since 1999
to lobby on the estate tax and other issues.209 Wal-Mart is a member of the Food Marketing
Institute, which has lobbied on the estate tax in every year since 1998.210 The Food Marketing
Institute, in turn, is a member of the two leading anti-estate tax coalitions, the Family Business
Estate Tax Coalition and the Tax Relief Coalition.
Given its estimated net worth is $83.7 billion, the family would save approximately $32.6 billion
if the tax were repealed.211
Wegman Family (Wegmans Food Markets, Inc.)
Wegmans traces its history back to 1916, when brothers Walter and John Wegman founded their
first grocery store.212 The family now owns a gourmet supermarket chain of 70 stores, primarily
in New York, Pennsylvania and New Jersey. The family-owned business reported that it had
$3.8 billion in annual sales in 2005.213 In 2005, a fourth generation Wegman, Colleen, was
named president of the chain and her father, Danny, was named chief executive officer.214
Wegmans has paid the lobbying firm of Patton Boggs $570,000 in fees to lobby on the estate tax
in every year since 1998. In six of these years, the estate tax has been the sole issue on which
Patton Boggs has lobbied on Wegmans’ behalf.215
Because the family’s net worth has not been reported, it is not possible to estimate how much the
Wegmans would save if the estate tax were repealed.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 40
Appendix B:
Myths About the Estate Tax
Many of the arguments and messages that super-wealthy families, their lobbyists and trade
associations use to criticize the estate tax are full of inaccuracies and distortions. These
arguments are often made in media outlets owned by the families. For example, Frank Blethen,
the owner of The Seattle Times, produced advertisements calling for repeal and invited more than
75 independent newspaper owners to run them.216
Research and investigative reporting have debunked many of the assertions about the negative
aspects of the estate tax, yet these claims continue to be repeated in the media and in public
discourse. What follows is an analysis of some of the most frequent examples.
Myth: The Estate Tax Forces Families to Sell their Farms
Several years of investigative journalism articles and congressional reports have made it clear
that the notion of any farm being destroyed by the estate tax is a myth. In 2001, the pro-repeal
American Farm Bureau could not provide the New York Times with a single example of a farm
having been sold to pay the estate taxes.217
A 2005 report by the Congressional Budget Office found that at the current exemption level of
$2 million, very few family farms would owe an estate tax. If the $2 million threshold existed in
2000, as many reform proposals would have allowed, only 123 farms in the entire country would
have owed estate taxes that year. The CBO study also found that among the very few that would
owe taxes, the vast majority would have sufficient liquid assets (savings, investments and
insurance) to pay the taxes without having to sell off any farm assets. For example, at the $2
million threshold, only 15 of the farms would have had insufficient liquid assets to pay.218
Myth: The Estate Tax Destroys Family Businesses
Like the allegations about family farms, the notion that the estate tax forces family-owned
enterprises out of business is equally fallacious.
Of the 2.5 million people who died in 2004, only 440 left a taxable estate with farm or business
assets equal to at least half the total estate, according to the Tax Policy Center, a joint project of
the Urban Institute and the Brookings Institution, and 210 of these owed less than $100,000.219
Myth: Estate Tax is Double Taxation
Advocates of estate tax repeal claim that the estate tax is unfair because it taxes the same money
twice: once when it is earned as income and again as part of an estate. But this reflects a
misunderstanding of the tax structure and of what is actually taxed in most estates.
Money in our society is frequently taxed upon transfer, so the same dollar is often taxed more
than once.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 41
The reality is that the bulk of wealth in large taxable estates has never been taxed at all. This is
wealth in the form of appreciated property, stocks, and bonds that have increased in value since
they were acquired or inherited – and have never been taxed. Without an estate tax, billions of
dollars of untaxed capital gains would pass within wealthy families without any tax. 220
In estates with assets over $10 million, over 56 percent of the wealth takes the form of
appreciated property, stocks and bonds. As estate tax wealth exemptions rise, the tax will
increasingly be levied on estates with higher percentages of appreciated property that has not
been taxed.221
Myth: It Costs More to Comply with the Estate Tax than the Revenue It Raises
Compliance costs include both the cost to the IRS of administering the tax and the personal costs
of preparing tax returns, planning for the tax, and administering an estate.222 A 1999 study by
two professors at Rutgers University concluded that the cost of estate tax compliance ranges
from 6 to 9 percent of estate tax revenues. This is consistent with other forms of taxation,
including the federal income tax. “The costs of administering the estate tax have been grossly
overstated. We do not know why,” they wrote. “Instead of high cost, we find the estate tax to be
an efficient tax.”223
About half the costs associated with estate taxation would remain even if the tax were repealed.
Researchers Joel Friedman and Ruth Carlitz observe “activities such as selecting executors and
trustees, drafting provisions and documents for the disposition of property, and allocating
bequests among family members would still have to be undertaken in the absence of an estate
tax.”224
Repeal advocates continue to propagate myths about costs of administering the estate tax. The
Policy and Taxation Group’s Center on Taxation and Policy publishes a list of “Reasons the
Death Tax Does Not Work,” which asserts that “it collects just 1 percent of the nation’s
revenues, and dollar for dollar, it costs as much to collect death taxes as it raises.”225 Seattle
Times publisher Frank Blethen, patriarch of the family that owns a majority interest in the Seattle
Times Co., used his deathtax.com Web site to claim, falsely, that “it costs the government 65
cents of every dollar raised for enforcement and compliance.”226
Myth: The Super Wealthy Avoid the Estate Tax
There is a myth that the estate tax is “voluntary” for the super wealthy and that the people who
pay the estate tax have small estates and less resources to hire planners. It is true that doing estate
tax planning – such as planned giving to heirs – can reduce one’s tax bill. This favors estates
with greater liquidity of wealth.
But the super wealthy do pay significant estate taxes, under current law. In 2004, the 520 largest
estates – those valued at over $20 million – paid a net average tax of $10.8 million each.227
There are only three ways that super wealthy individuals can entirely avoid paying estate taxes at
death:
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 42
• Pass all wealth above the given year’s exemption level to one’s spouse, taking advantage
of the “unlimited marital deduction;
• give all wealth above the given year’s exemption level to charity, thereby reducing one’s
estate; or
• die in 2010, the only year that the estate tax is currently scheduled to be repealed.
Some people purchase life insurance in an amount sufficient to pay their estate taxes when they
die. This doesn’t enable them to avoid the tax but, in essence, to pre-pay it through insurance
premiums. This effectively shields heirs from having their inheritances reduced by the amount of
estate taxes, while still providing for the tax itself to be paid in full.
Myth: The Estate Tax is Confiscatory Because it Takes over Half of Someone’s
Estate
The top marginal estate tax rate in 2006 is 46 percent. In 2009 it will be 45 percent. But this rate
applies only to amounts that do not go to a spouse or charity and that exceed the exemption. In
2006, only amounts higher than $2 million for an individual or $4 million for a couple will be
taxed at that rate, and that’s if no other spousal or charitable provision has been made. Therefore,
a substantial portion of most estates is passed on untaxed.
According to IRS data, the “effective” rate – the percentage of estates that is actually paid in
taxes – averaged about 19 percent in 2003, a year in which the top rate was 49 percent. 228
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 43
Appendix C:
Reasons to Preserve the Estate Tax
There are three general reasons to maintain the estate tax: the revenue it raises, its positive
impact on charitable giving, and its role in discouraging concentrations of wealth and power.
The Estate Tax is a Progressive Means to Raise Revenue
The federal estate tax raises substantial revenue from those most able to pay. It is the most
progressive tax in the federal system, raising revenue solely from high-net-worth households.
Phasing out and then permanently abolishing the estate tax would cost $369 billion in the short
term (between 2007 and 2016).229
If the estate tax were fully repealed between 2012 and 2021, it would cost the country almost $1
trillion in revenue, including interest on the debt.230 Over time, the cost would mushroom to
several trillion dollars.231
The potential revenue gap caused by elimination of the estate tax would have to be filled from a
source other than the estates of the super wealthy. Potentially, $1 trillion in budget cuts or tax
increases on wage earners could fill the gap. The most likely scenario is that the shortfall will be
borrowed from creditor nations such as China and Japan, and will be repaid by future generations
to service interest on our national debt.
The Estate Tax Has a Positive Impact on the Charitable Sector
Recent studies indicate that repeal of the estate tax would have a significant negative impact on
the non-profit charitable sector. The estate tax is a substantial catalyst for giving to charities.
While research shows that people with a charitable impulse give generously regardless of tax
rules, the estate tax provides an incentive for additional giving as part of an estate plan.232 The
existence of the estate tax is also an incentive for increased giving while someone is alive.
Large estates are the biggest users of the deduction for charitable bequests. Absent the incentive
of the estate tax, an estimated $10 billion less per year would be given to charity, according to a
study by the Brookings Institution. The Brookings study found that repeal would reduce
charitable bequests by 22 to 37 percent (between $3.6 to $6 billion per year), with a reduction in
non-bequest donations making up the balance.233 Data from the non-partisan Congressional
Budget Office confirmed these findings but found the estimated loss of charitable giving to be
even higher, at between $13 and $25 billion a year.234
Without the incentive of the estate tax, gifts to colleges, medical research facilities, arts and
culture, religious institutions, social services and other nonprofit organizations will decline.
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 44
The Estate Tax Deters Concentrations of Wealth
The federal estate tax was instituted in 1916 as a means to address imbalances in the national tax
system and respond to the extreme inequalities of wealth and power at the beginning of the 20th
century. Around 1900, before the income tax was instituted, the country’s federal revenue came
from trade tariffs that primarily affected America’s rural states. Prior to 1916, inheritance and
estate taxes had only been instituted during times of war, such as the Civil War, and were then
repealed. Rural populist social movements teamed up with urban reformers to push for
permanent income and inheritance taxes in order to shift some of the tax burden off the
agricultural states of the Midwest and South and onto the wealthier industrial Northeast.
They found allies among some of America’s elite thinkers and wealthy individuals who were
alarmed at the country’s growing economic divide during America’s Gilded Age (the 30 years
prior to World War I). They believed that such concentrations of wealth were “un-American”
and posed dangers to America’s fragile experiment in democratic self-governance.
Estate tax supporters included steel magnate Andrew Carnegie, who testified before Congress in
support of a robust inheritance tax. He believed that the tax would discourage the wealthy from
having undue advantages and would encourage charitable giving during a person’s lifetime,
rather than wealth accumulation.235 When President Theodore Roosevelt first proposed the estate
tax in 1906, he observed that, “the man of great wealth owes a particular obligation to the State
because he derives special advantages from the mere existence of government.”236 The estate tax
was viewed as both a brake on the accumulation of wealth and a fair way for the wealthy to pay
back society for their individual opportunities.
Ironically, as the U.S. enters another period of marked income and wealth inequality, Congress is
now contemplating abolishing the estate tax. A recent Business Week article quotes Nobel Prizewinning
economist James Heckman as observing, “The big finding in recent years is that the
notion of America being a highly mobile society isn’t as true as it used to be.”237
The wealthiest families in the U.S. have seen their share of national income and wealth
dramatically increase in the last three decades. The 145,000 households in the top one-tenth of
one percent had an average income of over $3 million in 2002, 2.5 times what those in the top
one-tenth of one percent earned in 1980.238 Over the same period, the top 10 percent saw their
share of income more than double while the share going to the bottom 90 percent has declined.239
Ownership of wealth is even more concentrated, with the top 1 percent of households owning 33
percent of all wealth and 40 percent of all financial assets.240
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 45
Appendix D:
Recent Opinion Polls on the Estate Tax
Advertising and public relations campaigns by anti-estate tax groups have confused the public
about who pays the estate tax and how much is paid. The super-wealthy families profiled in this
report have expended a great deal of money on promulgating fear, uncertainty and doubt in the
minds of ordinary Americans about the estate tax, the effects of which show up in the results of
simplistic public opinion polls commissioned by anti-estate tax organizations.
Opponents of the estate tax claim that the general public is overwhelmingly anti-estate tax. R. J.
Lehmann, the Washington correspondent of BestWire magazine, reported on a Harris Interactive
poll in which 30 percent of respondents believed the estate tax was the least fair form of taxation
and 68 percent wanted to eliminate it.241 Among respondents earning between $35,000 and
$75,000 per year, 73 percent were anti-estate tax.242
As with most polling, the response depends on the way questions are phrased and what choices
voters are offered. If posed as stand-alone questions, all forms of taxation poll negatively. When
the question of the estate tax is presented baldly without any context or connection to the benefits
the government provides, results tend to be negative, but polls that offer voters more information
and choices show pro-estate tax results. Two such polls conducted in 2002 and 2006 reveal that
Americans prefer to either keep the estate tax as-is or reform it.243 An additional poll shows the
estate tax is their preferred way of balancing the budget:
• When asked to rank a list of potential changes to the tax system, abolishing the estate tax
ranks last, and is opposed by 55 percent of respondents.244
• When offered the option of reforming the estate tax – rather than abolishing it – 72
percent of voters support reforming the tax or keeping the tax as it currently is, versus 22
percent who would repeal it.245
• When asked how they viewed eight possible choices to balance the budget, 69 percent
chose keeping the estate tax on estates over $2 million as their first choice.246
• When asked whether to repeal the tax or keep it and use its revenue for other purposes,
strong majorities of up to 76 percent preferred that Congress use funds for other
purposes.247
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 46
Appendix E:
The Fiscal Context of the Estate Tax
Abolishing the federal estate tax would cost about $1 trillion over the first ten years of full repeal,
from 2012 to 2021. This would include $745 billion in direct lost revenue plus an additional $225
billion in increased interest payments on the national debt.248 An examination of current and
possible federal budget expenditures puts this amount in perspective:
• The Cost of the Iraq War ($750 billion to $1.27 trillion). In the short term, the Iraq War
will be a costly federal expense, and Congress is likely to support requests for additional
funding. Nobel prize-winning economist Joseph Stiglitz and his coauthor Linda Bilmes
estimate a total cost of between $750 billion and $1.27 trillion.249 This estimate includes
direct military spending, estimated demobilization costs, health care and payments to
veterans, and interest. Stiglitz and Bilmes estimate the total economic cost of the war will
be much higher than this budgetary estimate, due to its negative impact on oil prices,
economic dislocation, and the dollar costs associated with human casualties.250
• Cost of Medicare Prescription Drug Benefit ($797 billion). In late 2003, Congress
passed an expansion to the Medicare Prescription Drug benefit (Medicare Part D).
According to the Center for Medicare and Medical Services, the cost of this benefit will
be $797 billion between 2006 and 2015.251
• Repeal of the Alternative Minimum Tax ($611 billion to $790 billion). Congressional
leaders have indicated a bi-partisan preference for abolishing the Alternative Minimum
Tax (AMT) for individuals. When it was originally created in 1969, the AMT was a
means to ensure that wealthy individuals could not use loopholes to entirely avoid paying
taxes. However, the Urban Institute’s Tax Policy Center estimates that by 2010, 31
million taxpayers – many in the middle class – will pay the AMT.252 This is an unintended
result of the lack of any provision in the original legislation to adjust AMT tax brackets
for inflation.
According to research by the Congressional Budget Office and the Joint Committee on
Taxation, abolishing the AMT would reduce federal revenues by $611 billion between
2006 and 2015.253 Assuming that Congress fails to offset lost AMT revenue with budget
cuts, the real cost, including additional interest payments, would be $790 billion.254
• Extension of 2001 and 2003 Tax Cuts ($1.1 trillion). Between 2007 and 2016, the cost
of extending the tax cuts passed in 2001 and 2003, excluding their estate tax and
alternative minimum tax provisions, would be $1.1 trillion, according to the
Congressional Budget Office and the Joint Committee on Taxation.255
• Interest on National Debt ($2.9 trillion). The Congressional Budget Office estimates
that in 2006 the nation will pay $2.9 trillion in interest on the national debt between 2007
and 2016, assuming that the 2001 and 2003 tax cuts are not extended. If those tax cuts are
extended interest payments will be higher.256
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 47
• Health Care Coverage for Uninsured Americans ($34 to $69 billion). In 2004, there
were 46 million Americans without health insurance.257 The Urban Institute estimates the
annual cost of insuring the uninsured at between $34 billion (using public programs) and
$69 billion (using private insurance).258
Public Citizen’s Congress Watch & United for a Fair Economy: Spending Millions to Save Billions 48

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