The Right Kind of Stimulus:
Putting the death tax to rest, once and for all
Mere mention of the inheritance or death tax strikes fear and even anger in the hearts of many Americans. The tax goes against some of the values we cherish most. We want our citizens to work hard, to build and save, and to try to leave something to their kids to give them a head start on a better life. But the death tax discourages all of those things. It would have us all adopt a “use it or lose it” approach to life. And that’s never been the American way.
But in addition, in a tough economy like this one, we should be finding ways to cut taxes and let people and businesses keep more of their hard-earned money. If President Obama and the majority in Congress are serious about creating jobs and getting the economy on track, fully repealing the death tax is the right kind of stimulus. A new study finds that repealing the tax would create 1.5 million new small business jobs, increase small business capital by more than $1.6 trillion, and expand payrolls by 2.6 percent.
Many farmers, ranchers, and other small business owners find that they have a lot invested in the land and equipment needed to run their business. Their hope is to pass along that business to the next generation. If their kids must pay up to 55 percent tax on the value of that land and equipment, however, continuing the business may not be an option. And as every American with a savings account knows, you pay taxes on the money when you earn it. It just seems wrong for your heirs to have to pay taxes on it again when you die.
Some studies have found that it costs about as much to plan for and enforce the death tax as the revenue it raises. Even at its height, the tax was a tiny percentage of federal revenue. It is a tax that just does not make sense.
That is the reason that in 2001, a bill passed to eliminate the death tax. Unfortunately, the tax was phased out gradually, rather than eliminated all at once. And the bill that phased it out was only good for ten years under a Senate procedure to avoid a filibuster. Thus, under current law, the death tax will be eliminated for 2010, but in 2011 it zoom back up to where it was before 2001.
Few of us can be so precise in planning our deaths. With the current state of the law, it is virtually impossible for anyone to make sensible plans for their estate. If the tax is allowed to return anywhere close to its pre-2001 levels, many Americans will be surprised to find that much of what they have worked and sacrificed for is lost to the government.
I have consistently worked to repeal the death tax permanently. My bill to do so in this Congress has close to 100 cosponsors. It is unlikely, however, that Speaker Pelosi will bring my bill up for a vote, and it is doubtful that President Obama and the current majority in Congress will allow the tax to die even for one year.
I remain convinced that the death tax is just wrong--period. It is wrong for estates of $50 and $50 million. There is no such thing as a “fair” death tax and that’s why I want to put it to rest once and for all. But I am willing to consider a compromise if it will put certainty into the law and will exclude the vast majority of farmers, ranchers, small business owners, and other hard working Americans.
The death tax punishes some of the most productive and hard-working Americans who invest in our economy and create jobs. It discourages work, savings, growth – the very things we need these days. Now is the time to put a measure of common sense into the tax law -- permanently.
