PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Ending the Death Tax Should be an Easy Priority for Tax Reform

By at 25 September, 2017, 10:33 pm

by Raymond J. Keating-

No economic or fiscal reasoning can justify the imposition of an estate, or death, tax. It’s merely a political tool of the class-warfare variety. Ending the death tax should be an easy item to check off the tax reform priority list. It destroys family-owned businesses and wastes vast amounts of resources that could instead be directed toward wealth creation, quality job growth and productive investment.

Yet, assorted reports, such as from Reuters, indicate that there are discussions among the White House and congressional negotiators hammering out a tax reform plan that the death tax might stay with us. That would be a big mistake and a missed opportunity to promote fairness and sanity within our tax system.

In an August 17, 2017, analysis, SBE Council spelled out “5 Solid Reasons to End the Death Tax.” In that piece, it was explained that the death tax:

• Fails to provide any net revenue to the federal government as it “reduces incentives for investing and entrepreneurship, and increases the likelihood of businesses being closed or sold”;

• Imposes broad economic costs;

• Is an unfair levy, being imposed at death on total assets after a lifetime of paying taxes and fees;

• Is rooted in class warfare and envy;

•  And, ending the death tax would boost private investment, productivity, income and jobs.

But tax negotiators seem to be hung up on possible revenue losses to the federal government. Such a conclusion can only come from a static, unrealistic view of how taxes affect decision-making and the economy.

The full, real-world economic impact of the death tax should guide such decisions. For example, a study by the Institute for Research on the Economics of Taxation laid out a comprehensive assessment of the economic ills of the estate and gift taxes, and it was concluded:

“The economy, the pre-tax and post-tax incomes of workers, savers, and investors, and federal, state, and local revenue would all be higher if the estate and gift taxes were eliminated.”

If tax reform is supposed to be about growth, fairness and simplicity, then ending the death tax is non-negotiable. There is no rationale or benefit to keeping this destructive and wasteful tax.

See the September 12, 2017 coalition letter signed by more than 150 organizations, including SBE Council, in support of death tax repeal.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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