Issues to Consider in Evaluating the Estate Tax
 

ISSUE  - Only 2% of Americans pay the estate tax.

CONSIDERATION - Many families sell their business early to avoid a 47% tax on the market value of all their assets which eliminates the livelihood of the family business  and each year a new 2% of taxpayer pays the tax.  With the growth of small business, this number is expected to grow substantially.

ISSUE - Charitable donations will decrease without the estate tax.

CONSIDERATION - Less than 20% of donations come from estates and bequests, and charitable giving has been on a constant rise, after inflation, for the last 40 years even though tax laws have changed substantially.  This is because families give first because they have the ability to give and a passion to give, than use the tax laws to structure.

ISSUE  - The tax is needed to eliminate concentrations of wealth.

CONSIDERATION - As the economy has moved to the "new economy" - the income distribution between the wealthy and the poor has widened because skilled labor, who are paid more, are in greater demand than the unskilled labor in this country.  Greater growth has occurred at higher levels of employment not concentrations of wealth.

ISSUE - 1) Raising the lifetime exemption or 2) expanding the family business definition is the solution to the problem.

CONSIDERATION - 1) Small businesses are opposed to raising the exemption because that has not solved the problem in the past.  With profit and inflation, eventually it will not be high enough and they will soon be faced with the same problem they have today. 
2) To take advantage of the "family business carve-out," families must spend thousands of $'s in attorneys and accounting fees only to discover that it will not work for their business because family businesses are unique and difficult to define.  That is why few can take advantage of the current benefit.  And, many family businesses do not take advantage of the current exemptions and allowances because they are unaware of the need to plan for the estate tax before their death.

ISSUE - Eliminating the estate tax will cost $350 billion over ten years.

CONSIDERATION - This revenue estimate does not consider the increase in revenue from the elimination of the "step-up in basis" of the asset once the tax is repealed, which could, over time, be as much as the tax currently generates.

ISSUE  - The estate tax only effects the wealthy.

CONSIDERATION - When a family business sells out early or after death to pay the tax, many times to a larger corporation whose not faced with the estate tax, the employees positions are eliminated or consolidated, the community looses and jobs are lost.