Thursday, April 15, 2010

Time to Bury the ‘Death Tax’

With the current administration's policies, the accumulation of wealth will be an impossibility thus putting a damper on incentive, innovation and growth. The wealth of these entrepreneurs, farmers and ranchers was hard earned by families, in most cases working as a unit, The income has already been taxed once. The "death tax" is double taxation and is only used as a redistribution of wealth.

Kevin Hancock wants to harvest trees—sustainably—and create jobs in the process. The federal government may put a stop to all that.

His business, Hancock Lumber, has been in the family for six generations. It owns 30,000 acres of Maine timberland and employs 550 people. But Kevin already knows that when his elderly mother dies, he’ll have to sell off huge swaths of his land to pay the ensuing tax bill.

He recently warned a Senate committee that, “Once it has been sold to a developer, it will be parceled off and will no longer be maintained as publicly-open forests. This is particularly a shame in southern Maine, where green-space and curtailment of sprawl is a major political issue.”

It’s an example of the long reach of the death tax—the penalty families have to pay when a loved one dies and leaves them significant assets. Yet, for Hancock and many others, some relief may be in sight. In 2001, lawmakers passed a law that gradually phased out the levy, which has destroyed countless family-owned businesses over the years.

The death tax is a job killer. Heritage Foundation economists found that the federal levy leads to the loss of between 170,000 and 250,000 potential jobs each year.

How does it kill jobs? Partly because it encourages wealthy Americans to spend their money today rather than invest it in growing a business. After all, we’re all going to die. What’s the point of building a bigger nest egg if Washington is just going to take a third of it, a half of it, or even more?

Because the estate tax discourages investment, it also holds down wage growth. Since businesses have less funding, they’re less able to purchase new tools and equipment. So workers are less productive and suffer slower wage and salary growth.
Time to Bury the ‘Death Tax’

No comments:

Post a Comment