Estate tax rates, which range from 41% to 47%, are substantially higher than other tax rates - the lowest estate tax rate is almost as high as the highest income tax rate of 39.6%. Moreover, the estate tax is imposed on earnings and assets that have already been subject to income, social security, and other taxes at the federal and state level.

Under the current tax system, it is cheaper to sell the family-owned business before death rather than pass the business to one's heirs. Growing business can not remain competitive in a tax regime that imposes rates as high as 47% upon the death of the founder/owner.

Small business has long been recognized as the backbone of America's economy - employing almost 60% of the workforce and creating about two-thirds of the new jobs in the U.S. since the 1970's. Our tax laws should encourage rather than discourage the perpetuation of these businesses.

The estate tax costs jobs. Potential employment is lost when business owners decide not to expand or open another store because of the ever looming death tax, and current employment is destroyed when businesses are liquidated to pay estate taxes. If estate taxes and gift taxes are eliminated in 1999, 275,000 jobs would be created between 1999 and 2010.  (IPI Policy Report #150)

With Americans living longer, we need to encourage individuals/families to save and invest in order to plan for their future. However, the estate tax creates a disincentive to save, and instead, encourages consumption. The more assets one has at death, the more he/she may have to pay to the federal government (death taxes).

The estate tax, which was intended to break up large concentrations of wealth and promote economic opportunity, has instead become a barrier to economic growth and job creation.  This "disincentive to growth" effect of the estate tax is equivalent to doubling income tax rates. (Tax Foundation)

The estate tax has a negative impact on current business decisions.  Critical resources are diverted away from investing in people and growth, and spent on attorneys, accountants and insurance.  It is estimated that family-owned businesses spent approximately $33,138 over 6.5 years on attorneys, accountants and financial experts to assist in estate planning. (Gallup Poll, 1995)

The estate tax amounts to less than 2% of total federal revenues while costing the government and taxpayers approximately the same amount collected for enforcement and compliance. (Joint Economic Committee Report, 1998)