It Destroys Jobs
- Economist Dr. Douglas Holtz Eakin found that Death Tax repeal will create 1.5 million jobs.
- 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.
It is a Poor Revenue Producer
- In 2011 the Death Tax collected $3 billion, less than one tenth of one percent of federal revenues.
- The economic distortion the Death Tax causes with respect to other tax collection methods results in a net revenue decrease for the federal government. Congress could raise nearly twice the current revenue-an increase of 23.3 billion - by repealing the Death Tax.
- Alicia Munnell, a member of President Clinton's Council on Economic Advisors, found that the Death Tax imposes compliance costs (tax planning, collection, etc) in excess of $26 billion. This compliance cost exceeds the Death Tax's revenue yield.
It Accomplishes the Opposite of it's intended purpose
- oJoseph Stiglitz, Nobel laureate and member of President Clinton's Counsil of Economic Advisors found the Death Tax increases income equiality by reducing savings.
- Famous Death Tax proponent, Warren Buffet favors the tax because it provides his companies with cash reserves through the sale of life insurance to buy companies forced to sell to pay for the tax.
- The Death Tax is consistently ranked as the least fair and most unpopular tax in America. Nearly _ of Americans believe the Death Tax should be repealed.
- Only 25 nations impose a Death Tax, and of those that do, America's Death Tax is the third-highest. Russia, China, Canada, Mexico and Sweden are among the many nations which impose no Death Tax.
- 33.6 million businesses filed taxes as a pass through entity, meaning income is taxes at the personal tax rate.
- Lowering the tax burden of a pass through entity increases the likelihood of hiring according to a study by Earnst & Young.
- Increasing after tax income allows more funds to be reinvested and helps increase business receipts.
- Increased employment and wages increases overall consumption and helps grow the economy.
State Death Tax Facts
- 21 States (and the District of Columbia) impose stand-alone death taxes on top of the Federal Estate Tax. These estate taxes compound misery for family business owners and farmers and according to multiple studies, are a major source of state-to-state migration.
- The federal exemption is $5 million but states with estate taxes not tied to the federal exemption typically exempt $1 million or less per estate from their tax and impose a top rate of 16%.
- People and capital are highly mobile and taxpayers will move to states without a death tax to protect their heirs from the tax.
- States with death taxes tend to lose income, sales, and property tax revenue from people who move to other states without state death taxes.
- High death tax states miss out on tax revenue from sales tax, state income tax, property tax, etc. as taxpayers move to avoid state death taxes.
- Instead of fleeing the state and retaining expensive estate lawyers, your residents should reinvest their productive capital in the local economy, enabling local businesses to hire more workers and grow their operations.
- Phil Mickelson's latest comments show that he is thinking what others are doing - moving their capital out of high tax states.
State Death Tax Studies
- A 2007 study by the Connecticut Department of Revenue found that states without death taxes produced twice as many new jobs and their economies grew nearly 50 percent more from 2004-2007 than the 24 states with death taxes.
- The Connecticut Treasury Department's study determined the state's death tax was the leading cause of migration and Florida, a state constitutionally barred from imposing a death tax was the top destination. The study stated, “It's not just the nice weather which causes family businesses to head south.”
- Connecticut learned the hard way that capital - and the people who own it - is highly fluid between states. Those who are impacted by one state's inheritance or estate tax are able to easily “flee” - with their investments - to a state which does not impose death taxes.
- Connecticut lost over 27,000 total residents over a five-year period to Florida. The average taxable income of those moving out of state to Florida was $446,000.
- State to state migration caused by unfavorable taxes is not a new phenomenon. In 2004, the National Bureau of Economic Research published a study, “Do the Rich Flee from High Tax States?” which found that “wealthy elderly people change their state of residence to avoid high state taxes.” As people move out, the study found that states lose as much as one out of three dollars from their death tax revenue.
- The Ocean State Policy Research Institute, in Rhode Island, combed the Census Bureau and Internal Revenue Service migration data to determine where their citizens were going, and why. As with Connecticut, Rhode Island's citizens are leaving the state in droves -- over 100,000 over the past 20 years, the state lost an estimated $1 billion in capital, and $150 million in annual tax income.
- Similarly, capital income declined in Rhode Island by 10 percent following the enactment of the state death tax. In Florida, capital income increased following the repeal of its estate tax, as entrepreneurs invested their funds and built businesses.
- Even more corroborating evidence comes from a recent study on the Tennessee Inheritance tax by Laffer Associates. The study states “Tennessee's estate and gift tax is the single greatest reason why wealthy people don't want to live in Tennessee.” Tennessee's estate and gift tax has already reduced state GDP by up to $18.2 billion over the past ten years. In addition, the robust economic growth resulting from elimination of the state's inheritance tax, would have added at least $7 billion to state coffers over the last ten years.