NFIB supports full and permanent repeal of the death tax.
A Bad Tax
- The death tax is unfair. The estate passed on from parents to their children didn't just appear by magic. Someone worked over a lifetime to earn that money. During that lifetime the government collected income and other taxes. The government has already taken its fair share and the estate should not be taxed again upon the owner's death.
- The death tax is an extremely inefficient way to raise revenues. The costs for small businesses to comply with death tax laws are roughly equal to the amount of money the tax generates for the government -- about $23 billion in 1998. ("The Economics of the Estate Tax," Joint Economic Committee, December 1998)
- The death tax is confusing and complex. The threat of the death tax forces small business owners to spend thousands of dollars on accountants, lawyers and financial planners so that they can try to ensure the survival of their business after their death.
Kicking Them When They're Down
- The death tax can deal a deathblow to a small business. Small, family-owned businesses are especially vulnerable to this unfair tax. Unlike corporate CEOs, most small-business owners have the entire value of their business in their estate. While heirs to a family business work to carry an enterprise to the next generation, the government immediately "inherits" a 37 to 55 percent bite of the estate, a blow that many small businesses cannot survive.
- The threat of the tax actually forces small-business owners to pay for expensive "estate planning" if they want to keep their business in the family. As shown by a survey in upstate New York, average spending for tax planning (i.e. attorney/consultant fees, life insurance premiums, internal labor costs, etc.) by small-business owners can run nearly $125,000 per company over a five-year period (Survey of the Impact of the Federal Estate Tax on Family Business Employment Levels in Upstate New York, June 22, 1999). This is in addition to the burden of the tax itself.
In a recent NFIB Member Ballot, 89 percent of small-business owners said they want full repeal of the death tax. Opponents of permanently repealing the death tax claim that eliminating this tax will do nothing to stimulate economic growth. Studies tell a different story.
- Provisions for death tax liabilities have caused 26 percent of family businesses to reduce capital investment in their firms. (MassMutual 1995 Family Business Survey)
- Permanently repealing the death tax would add more than 100,000 extra jobs a year. ("The Economic and Fiscal Effects of Repealing Federal Estate, Gift and Generation Skipping Taxes," Alfredo Gouburu, Nov. 25, 2002)
- Nearly 60 percent of business owners say they would add jobs over the coming year if death taxes were eliminated completely. (Wall Street Journal, July 28, 1999)
