The federal estate tax can place a tough burden on family-owned businesses. Entrepreneurs and small business owners across America – including many NAED members – are subject to a punitive tax on wealth creation, making planning and passing on family businesses to the next generation difficult. Repealing the death tax will provide an immediate means to strengthen our economy by allowing small business owners to invest more in their enterprises and less in accountants and lawyers.
The estate tax is levied on the assets of an estate before it is passed on to heirs. Current law exempts the first $5 million of the remaining estate after deducting debts and certain other expenses. For couples, the exemption applies separately to the estate of each spouse. The remaining assets are taxed on a schedule with a top marginal rate of 40%.
Repealing the death tax would spur job creation. According to a study by Douglas Holtz-Eakin, former Director of the Congressional Budget Office, repealing the death tax would add 1.5 million additional small business jobs.
The death tax contributes such a small portion of federal revenues that there is a good argument that not collecting the death tax would lead to higher economic growth and thereby increase federal revenue from other taxes. Former undersecretary of the Treasury Steve Entin found, by using a “dynamic” economic analysis, that repealing the death tax would increase tax revenues by nearly $89 billion over 10 years.
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