Super rich: Tax my estate, please

NEW YORK (CNNMoney.com) -- Some high-profile, high net-worth folks on Wednesday called on Congress to impose a "strong" estate tax going forward.

"Our country is on an unsustainable fiscal path. [Revenue from an estate tax can] fund deficit reduction, additional public investment, or added assistance to those affected by the economic crisis," said Robert Rubin, who served as Treasury secretary during the Clinton administration and more recently as chairman of Citigroup.

Moreover, Rubin added, "our nation has always held itself out as a meritocracy and a land of opportunity, and an estate tax helps avoid accumulation of inherited economic and political power that is antithetical to this historical vision of our society."

Rubin was joined by former hedge fund manager Julian Robertson, Walt Disney's grand-niece Abigail Disney and AFL-CIO president Richard Trumka on a call organized by liberal group United for a Fair Economy.

Like a lot of other tax provisions, the ultimate fate of the estate tax is still very much in limbo on Capitol Hill.

This year, to everyone's surprise, Congress allowed the estate tax to lapse altogether for one year. And barring further action, the estate tax will be restored in January to its 2001 levels, which no one likes -- a $1 million exemption and 55% top rate.

But there is no consensus on what to do about that.

What next for the estate tax: The debate is made more complex by growing concern over the country's fiscal situation given the economic slowdown and the approach of unsustainable spending by the end of the decade.

The individuals who spoke out on Wednesday are advocating for an estate tax that is equal to or stronger than what was in place in 2009.

Last year, the first $3.5 million of a person's estate was exempt from the tax, and the rest was taxed at a top rate of 45%. President Obama has proposed making the estate tax permanent at those levels.

But there are other proposals, including some for full repeal. The most well-known is a bipartisan proposal from Sens. Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz., which calls for a $5 million exemption level and a top rate of 35%.

The Lincoln-Kyl proposal didn't get a thumbs-up from the players at Wednesday's press conference. Instead, their preferences fell within a range of proposals calling for exemption levels somewhere between $2 million and $3.5 million with a top rate between 45% and 55%.

All of these proposals would affect far fewer than 1% of all estates, according to estimates from the Tax Policy Center.

The Congressional Budget Office estimates that if nothing were done and a $1 million exemption level were restored, the estate tax would raise $419 billion over 10 years. Obama's proposal would reduce that intake by $244 billion, while full repeal would reduce revenue by $502 billion.

The estate tax debate: Those who want the estate tax extinguished altogether contend, among other things, that it can harm economic growth by reducing efforts to work and build wealth through savings and investments.

And, they say, it places an unfair burden on family businesses and farms, the heirs to which may be forced to sell pieces of the business just to pay the estate tax bill.

The Tax Policy Center estimates that 2,630 such businesses would be affected if the exemption level falls to $1 million. But only 100 would have taxable estates if the exemption level is set at $3.5 million, and only 40 would be affected at a $5 million exemption level.

Those who support an estate tax say, among other things, that it bolsters charitable giving, since making bequests is a tax-deductible event and reduces the size of one's taxable estate.

Warren Buffett and Bill Gates have called on billionaires to become uber-philanthropists by giving away at least half of their net worth to charity. Doing so would substantially reduce the taxes their heirs would owe and therefore greatly reduce Uncle Sam's take.

"It's a wonderful idea. But the nonprofit sector can't do what the government does," said Disney, who runs the Daphne Foundation. She noted that directing money to a given cause is worthy but no substitute for putting money into a communal pot that the government can use to perform vital functions that no charity does -- like provide infrastructure and defense.

"What you do around estate taxes should not be to avoid paying your fair share," she said.