Today’s release of the Senate tax reform plan is simply unfair to the many family-owned businesses and farms who provide jobs and prosperity for communities across the country. Its failure to repeal the death tax continues a 101-year-old tradition of penalizing success. Statistics show that repeal of this destructive tax – would represent a major leap forward in the economic prospects for the nation. Yet after the Senate decision to not include a repeal in their tax reform bill, it lingers, under myths and misconceptions of being a tax only on the rich. Well, that is simply untrue.
From a national standpoint, America’s estate tax is the fourth-highest in the world. Russia, China, Canada, Mexico, Sweden and Norway are among the many nations which have repealed their death taxes. Today, our elected failed to end longstanding and fiscally unsound policy.
According to the Tax Foundation, the death tax is an economy killer. A full repeal would have created more than 159,000 new jobs, increased capital investment by 2.3 percent, and increased after tax by 0.8 percent for middle income families. For a family of four making $80,000 that is an extra $640 every year. The same Tax Foundation report says that the death tax would increase the economy by 0.8 percent (or $137 billion in today’s dollars). The death tax is not a penalty on the business owners, but, rather their employees.
The death tax destroys jobs by targeting America’s main economic engine – small (and often family-owned) businesses. Small businesses have been responsible for 60 to 80 percent of all net new jobs in the last decade. The Joint Economic Committee found that the death tax has destroyed roughly $1.1 trillion in capital stock in the economy. Lost capital means fewer jobs and lower wages. Ending the death tax would add $119 billion to GDP and boost workers’ income by $79 billion.
Proponents of the death tax would like you to believe that the majority of the American public is in favor of it. In fact, a 2017 poll by NPR found that 76% of respondents favored abolishing the death tax. For decades, the death tax has consistently been opposed by 60 to 70 percent of adults, registered voters, and likely voters. Several statewide polls have found an overwhelming majority, despite their socioeconomic background, are opposed to it. Americans instinctually understand taxing someone because they have died is wrong.
This Senate bill will discourage progress and innovation by keeping the death tax. Maintaining this tax is forcing family businesses that support thousands of employees to close up, and/or sell off huge assets to survive. This failure to repeal an onerous and outdated tax, will be the death sentence for our farms and small family businesses.
Palmer Schoening is Chairman of the Family Business Coalition, a diverse collection of organizations and industry groups united for the common purpose of protecting America’s family businesses across the country.