Illinois Family Institute joins the Family Research Council and the American Family Business Foundation in releasing a new report analyzing the effects of the estate tax (“death tax”) on jobs, government revenues, and economic growth.
The report, “Repealing Death Tax Will Create Jobs and Boost Economy,” combines two recent analyses of the death tax by Douglas Holtz-Eakin, former Congressional Budget Office director, and Stephen J. Entin, president and executive director of the Institute for Research on the Economics of Taxation (IRET).
Considering that Congress will have to act on the estate tax this fall, given its scheduled elimination in 2010 and reversion to the high tax rate and low exemption of 2001 in 2011, this report detailing the economic effects of the estate tax is critical. Among its findings:
- Eliminating the Death Tax could create over 1.5 million jobs for small and family business workers, including 65,708 jobs in Illinois.
- The distortion the Death Tax causes with respect to other tax collection methods results in a net revenue decrease for the federal government. Government could bring in nearly twice the revenue with no death tax at all.
- Ending the Death Tax would add $119 billion to GDP. Allowing the rates to revert to 2001 law, 55% with only a $1 million exemption, would reduce GDP by $183 billion.
- Ending the Death Tax would boost workers’ income by $79 billion.
- The Death Tax targets America’s main economic engine-small businesses. Small businesses have been responsible for 60 to 80 percent of all net new jobs in the last decade.
- Large publicly traded corporations pay no Death Tax at all. Thus, family businesses undergo repeated trauma as they are passed from one generation of employers to the next, while their publicly traded competitors gain a strong competitive advantage.