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Letters from alumni about the Estate tax repeal

September 29, 2001

For reasons not known only to me, Robert Durkee, a senior administration official, was given authorization to represent Princeton in discussions with government officials to object to the elimination of the Estate Tax.

Our trustees have either authorized or support, and thus condone, the efforts of the administration.

It is incomprehensible that a Board of Trustees of Princeton University would put themselves in a position of compromising the strong beliefs and financial well being held by so many of its alumni/ae.

Our modest family wealth has been gained not only from inheritance, generated by hard-working forefathers and mothers, but also through very hard work on the part of my wife and myself. We obviously favor retaining our various assets, which we have spent a lifetime nourishing and building. We, like so many others, have paid taxes both on the estates we inherited, as well as the earnings and investments we have produced over our lifetime.

We believe that we, and our heirs, not the government, should handle our financial assets. We, not the government or Princeton University, are best suited to determine how and where we would allocate our gifts or charity funding. We have and will continue to support worthy organizations regardless of whether or not the gifts are tax deductible.

The larger our estate, the more fun0s our family would have available for giving. Our children (who have been brought up to understand the concept of charitable giving) would certainly benefit from a tax free estate "transfer." We trust that they would invest wisely and increase their inheritance, were the equity which we have spent our lives building and accumulating, continue to be productively employed. There is no reason to believe that they would be any less generous, particularly were they to inherit a tax free estate.

My wife and I fail to understand why intelligent men and women on Princeton's Board of Trustees, who presumably, in the most part, have substantial assets and sizeable estates, and who profess to represent our alumni/ae, can't see how counterproductive Durkee's attempt is to block estate tax relief. It is all the more incomprehensible and incongruous, especially when our trustees constantly promote fundraising from the Princeton family.

Have those to whom we have entrusted the governance of the premier university in the U.S. forgotten that the material as well as intellectual greatness Of our university, was created and. succored by private largess? How in the world can a board so often "shoot itself in the foot" or bury it's head in the sands?

Bailey Brower, Jr. ’49
Madison, N.J.

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June 6, 2001

Whenever I hear a lament that a reduction in income or capital gain tax rates would adversely affect charitable giving I am reminded of the seven-figure donor to Princeton some years ago who made a gift pledged over several years but specified that his commitment for the future years was conditioned on there being no increase in the income tax rates. He was giving such a large amount because he had more money after taxes, not because he wanted to avoid taxes. Give your donors some credit for their loyalty, and stop crying, “Wolf!”. The advantages of a repeal of the estate tax are not just “slight”; they are substantial.

Van Zandt Williams is certainly more levelheaded about this prospect than the Ad-Hoc Tax Group.

Joseph Neff Ewing, Jr. ’47
West Chester, Pa.

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June 6, 2001

According to your article in the April 4 issue (Notebook), Robert Durkee ’69, Princeton’s vice president for public affairs “ . . . has been working most closely with the Ad-Hoc Tax Group, a collection of 40-odd colleges and universities that are concerned about the repeal effort.” Princeton and the others are trying to prevent repeal of the estate tax, and thus to keep hurting a lot of heirs, including those of alumni and those who are or will be alumni. Also hurt are the employees and customers of family-owned businesses forced to sell out or liquidate, for some of whom the business is the most important family they have. Thanks, guys.

Charles W. McCutchen ’50
Bethesda, Md.

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May 27, 2001

Mr. Stankiewicz in his letter of May 16 errs when he says that the death tax does not force "grieving families to sell their inherited business and farms." He quotes an April 8 New York Times article as well as Paul Krugman as support evidence.

Unfortunately, both the New York Times and Professor Krugman are incorrect. Had they taken the time to review the facts, they would have found ample evidence. Several such examples can be found in the "home of rural legends", the Senate Finance Committee's Subcommittee Hearing on Taxation on March 15, 2001. (Complete testimony is found at http://www.smartertimes.com/archive/2001/04/010411.html.)

There are, of course, valid differences of opinion when it comes to the death tax. But keeping the facts straight is a necessary prerequisite before judgment.

Isaiah Cox '94
London, England

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April 20, 2001

Although I am relieved to read that Princeton may be shielded from some of the negative effects of a repeal of the estate tax, I am troubled that your story downplayed its potentially devastating impact for the rest of the nation (Notebook, April 4). I am even more troubled by the comments of a university official, who is quoted as stating that alumni should "celebrate" if full repeal is passed and call the university development office to see "how much fun you can have with all this money."

Even if said tongue-in-cheek, such a statement ignores the terrible toll repeal would take on all nonprofit institutions. As the story points out, a U.S. Treasury study estimates that repeal could reduce donations to charitable institutions by $4 billion a year (other estimates are even higher).

Furthermore, an immediate repeal of the estate tax would cost the federal government $660 billion over 10 years, according to the latest estimates by the Congressional Joint Committee on Taxation, and also would reduce state revenues. What is the justification for such drastic cuts? Proponents portray the estate tax as forcing grieving families to sell their inherited businesses and farms. In fact, very few inheritances even qualify, and an April 8 New York Times article was unable to document a single instance of a farm being sold because of the estate tax. In Princeton professor Paul Krugman's words, this is a "rural legend."

However, repeal of the estate tax could result in a situation where very wealthy families can protect their capital gains from ever being taxed. Rather than stimulating entrepreneurship, such a situation would only stunt economic growth. That is why Andrew Carnegie argued for an estate tax in 1889, writing that, "Why should men leave great fortunes to their children?". It is not well for the children that they should be so burdened. Neither is it well for the state."

Gregory M. Stankiewicz *91
Cambridge, Mass.

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