Black Group Seeks Repeal Of Estate Tax (The Washington Post)

Businessmen Say Levy Increases Disparity In Wealth Among Races
By Glenn Kessler, The Washington Post
Monday, April 2, 2001

Opening a new front in the battle over the estate tax, more than three dozen African American business leaders this week plan to support repeal of the tax because they say it helps widen the wealth gap between whites and blacks.

President Bush has made repeal of the tax levied on the assets of wealthy Americans when they die a key part of his $1.6 trillion, 10-year tax plan. The House is scheduled to vote Wednesday on a bill that would repeal the estate tax by 2011, and that day the group will run full-page advertisements in major newspapers to make clear its support for repeal. Bush fared poorly among African American voters in the presidential election.

Robert L. Johnson, chief executive of Black Entertainment Television and organizer of the campaign, said yesterday the group was influenced by recent efforts by "very wealthy white Americans," such as William Gates Sr. and members of the Rockefeller family, to fight repeal with similar ads.

Johnson, who said he is worth more than $1.5 billion, said although it might be easy for people who have accumulated assets for generations to support the tax, many African Americans have built up wealth only since the passage of the Civil Rights Act in 1964.

Even then, he said, African Americans often face subtle forms of discrimination, such as difficulty in getting bank loans, and have had to build up businesses by catering mostly to black customers.

Now, Johnson said, this first generation of significant black wealth is threatened by the estate tax. Not only might the tax force the sale of businesses with few liquid assets to pay it, but it also prevents passing on wealth to the next generation, he said.

"Many members of a white family may be wealthy in their own right," he said. In the black community, where a business executive may have been the first in a family to go to college, "all that wealth is in one person's hand, but others are living hand to hand."

Repealing the tax, he said, will help close a wealth gap that has left the net worth of the average black family one-tenth that of the average white family. He also said that the group believes the estate tax is a form of double taxation, because businesses have already paid taxes on earnings.

About 98 percent of all descendants do not pay estate tax because the first $675,000 of an estate is exempt from taxation, an exemption that is due to rise to $1 million by 2006 under current law. Only 47,500 estates paid estate tax in 1998, the most recent year for which figures are available. Businesses that oppose the tax say preparations for it, such as buying insurance, are costly and a drain on capital.

Johnson estimates he pays about $200,000 to $300,000 in annual insurance premiums, and said insurance costs were akin to "transferring wealth out of the black community to the majority community."

Other members of the group include Earl Graves, publisher of Black Enterprise magazine; Ernie Green, managing director of Lehman Brothers Inc.; Ed Lewis, chief executive of Essence Communications; and Dave Bing, chairman of the Big Group of automotive suppliers.

Johnson said the black community's support for repealing the estate tax might give Bush an opening.

"If he's smart, he'd take the opportunity to reach out to these African American business leaders and say, 'We agree on at least one thing. What else can we talk about?'

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