House Votes to Extend “Death Tax”
On December 3, 2009, the House of Representatives passed H.R. 4154, which extended the Estate Tax with a $3.5 million per person exemption. The Estate Tax is slated to be eliminated in 2010, and then return in 2011 under a higher rate and with a much lower exemption. If the Senate does not act on the issue before the end of the year, this is what will occur.
House Majority Leader Steny Hoyer (D-MD) argued, “Abolishing the estate tax would add billions and billions to our deficit — and while a small number of wealthy families would benefit, the growth of our economy as a whole would suffer.”
A report by the American Family Business Foundation reaches a different conclusion however. It argues that the elimination of the Estate Tax could:
• Create 1.5 million jobs
• Increase small business capital by over $1.6 trillion
• Increase the probability of hiring by 8.6 percent
• Increase payrolls by 2.6 percent
• Expand investment by 3 percent
Additionally, the Heritage Foundation calls for the elimination of the Estate Tax. They argue that the tax punishes hard work, undermines job creation, is a drag on the economy, and hurts family owned businesses.
The Tax Policy Center estimates that at current rates only 0.2% of deaths trigger an estate tax. Additionally, this tax will raise around $14 billion in 2009. Going by these numbers, the best economic outcome would be the complete elimination of the Estate Tax.