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It’s Time to Kill off the Death Tax

Washington, Apr 22 -

In the last two years, our economy has created over 3 million jobs. The unemployment rate is down; our nation’s total output, or Gross Domestic Product is up; homeownership is at a record high; and personal income has increased.

Our economy is strong. To ensure that we continue to enjoy prosperity, Congress must support a pro-economic growth agenda that creates jobs and helps small businesses grow. This includes continuing to reduce taxes across the board.

Our families and our country are better off when government lets people keep more of what they earn. To that end, Congress is expected to consider several legislative measures this year to lower the tax burden on families and small businesses.

One bill the House of Representatives has already passed this year is a measure to permanently repeal the punitive death tax.

More formally known as the “estate” tax, the death tax is a levy imposed on wealth transfers at the time of an estate holder`s death. It affects many Americans, and has a particularly negative impact on small-business owners.

Collecting this tax often prevents families from passing along their life’s work and savings to their children. Family farms, ranches and small businesses have to be sold in order satisfy the death tax`s punishing marginal rates, which reach upwards of 55%.

According to the Seattle Times based website Deathtax.com, 70% of businesses do not survive the second generation and 87% do not make it to the third generation in part because of the tax.

Furthermore, according to the National Federation of Independent Businesses (NFIB), the nation`s largest small-business group, much of the cost of the tax in fact occurs before the tax itself is levied. The threat of it forces small-business owners to pay for expensive estate planning if they want to keep their business in the family.

NFIB estimates that small businesses spend on average $125,000 per company over a five-year period for tax planning services. This is money that can be better spent on hiring more employees to increase productivity or to upgrade needed business equipment.

Not surprisingly, a survey by the same organization found that 89% of small business owners favor permanent repeal of the death tax.

Congress took the first step toward death tax repeal in 2001 when it temporarily wiped the tax off the books. But unless Congress permanently repeals the tax, it will be reinstated in 2011.

That’s not only bad tax policy, it’s also bad for families and small businesses.

No one should be taxed throughout their lifetime and then have their property re-taxed at the time of their death. It’s the wrong tax, at the wrong time, on the wrong people.

The House of Representatives recently did its part to wipe out this punitive levy. It is time to remove this unfair burden from the backs of American small business owners and their families.