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The Oregonian
Page B1, B2

Saturday, July 12, 2003

Bill Gates' Dad Decries Limits on Estate Tax

By Julie Tripp


The father of the world's richest man got on the stump in Stumptown on
Friday urging America to tax the rich.

William Gates Sr., a retired Seattle attorney and the man Microsoft's
Bill Gates calls Dad, does not find his support for the federal estate
tax incongruous. He thinks people who have made money with the help of
the laws and freedoms of the United States owe something to their
country.

"What's it worth to be an American?" he asked. "What's it worth to be
an Oregonian? A little death tax is not a bad thing."

The senior Gates made his case before a mostly supportive crowd at the
City Club of Portland, a downtown civic organization that studies a
range of policy issues. He is co-chairman of the Bill & Melinda Gates
Foundation, the world's largest charitable foundation with an


Should Tax Ac***ulated Fortunes."

Gates, who speaks on the topic, reviewed some of the history of the
estate tax, which dates to 1916. It is levied when a person dies and
is based on their assets that exceed certain amounts.

Under current law, individuals can pass $1 million ($2 million for
married couples) to their heirs without paying the tax. The exemption
increases to $3.5 million ($7 million for couples) in 2009.

Amounts exceeding the exemption are taxed at up to 49 percent. The
rate drops to 45 percent by 2009.

But after that, the estate tax disappears for one year, only to
reappear in 2011 in the full-blown proportions it had before the law
was changed in 2001.

For some heirs, that makes 2010 the "Throw-Mama-From-the-Train" year,
Gates joked.

"But it's an anomaly we can't live with," Gates said of the law.
"That's a totally irresponsible scenario that is going to change."

But change to what?

Repealing the tax at a time when government deficits are huge and
growing is "reckless," he said. The repeal is supported by some of the
country's richest families, but it is guised in a sophisticated and
high-powered public relations campaign that Congress and the public at
large have swallowed, Gates said.

"They've left the impression that the estate tax is imposed on
everyone," he said. In reality, fewer than 2 percent of Americans pay
the tax in any one year.

In 1999, for example, the latest year for which detailed IRS
statistics are available, nearly 50,000 returns for taxable estates
were filed. Together, the estates owed $40.2 billion in tax. Of those,
3,282 estates of $5 million or more paid nearly half -- $17.3 billion
-- of the total tax.

Gates quoted President Bill Clinton on why he vetoed the repeal three
years ago, saying "half of the benefit goes to just 3,000 people."

Supporters of repeal contend that the estate tax puts family
businesses and small farms out of business when heirs are forced to
sell to pay estate taxes. But Gates said the effect on family business
is exaggerated. He decried the "enormous cynicism of the legislative
process" in which lawmakers could vote to repeal the estate tax for
the very wealthy but not to approve a plan that would have given
bigger exemptions to farms and family businesses.

Oregon's Democratic Sen. Ron Wyden joined the Republicans in voting
for repeal and against the alternative plan that would have helped
family business, Gates said after a question from the audience.
Oregon's other senator, Republican Gordon Smith, also voted for
repeal.


Julie Tripp: 503-221-8208;
julietripp@news.oregonian.com