New Estate Tax Law Will Cost Jobs

The American Family Business Institute looks at the numbers:

With family businesses and farms accounting for a significant percentage of the “wealth” of elderly Americans (those 65 years of age or older), the return of the estate tax starting on January 1st will force many families to divert resources into measures to minimize the tax, rather than grow their businesses, according to a new report released today and authored by Duquesne University Economist Antony Davies.

Published by the American Family Business Foundation (AFBF), the report finds that up to 67% of estates subject to the estate tax in 2011 would own small business assets, with more than 22,000 farms, 29,000 private corporations and 14,000 real estate partnerships likely to be affected if the owner dies.

Under the “compromise” tax plan signed into law just before Christmas, the estate tax will be reinstated next year at a rate of 35%, with a $5 million exemption.

“The more assets small business owners need to redirect toward preparing for the impact of the estate tax,” Davies stressed, “the fewer assets they have to create jobs.”

Indeed, he said, the historical data show that the size of small businesses increases as the size of the estate tax exemption increases – meaning that “higher exemptions encourage entrepreneurs to shift assets into small businesses rather than reserving the assets to protect against estate tax liabilities.”

The correct estate tax is zero. The government has no right to take a person's accumulated wealth, especially given that the funds that make up that wealth were previously taxed as income. It's legalized theft.