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Friday, November 19, 2010

Very Sobering on Death and Taxes

Congress and the White House persist in being oblivious to the economic negatives of the death tax -- which is thankfully gone for 2010, but is scheduled to come back from the dead in 2011, with a top tax rate of 55% (60% for some). The death tax is a negative for output, investment and jobs, for wasting resources on tax avoidance measures, for killing off or forcing the sale of businesses, and for draining dollars from the private sector.

A new Wall Street Journal report ("Estate Taxes: How to Beat the Levy That Won't Die") opens this way:

An elderly client recently asked Bruce Bettigole, an attorney with Gilmore, Rees & Carlson in Wellesley Hills, Mass., whether her children would inherit her considerable estate if she committed suicide this year.

His response: "I took a long, hard look at her, and said, 'I'm going to make believe I didn't hear that question.'"

That's scary, dreadful and sobering. This tax needs to be permanently terminated.

By the way, the reporter made the following parenthetical note in the piece:

The one-year lapse was hastily enacted in 2001 and never expected to take effect, but lawmakers failed to fix it.

That is way off target. The assumption at the time was that all of the 2001 and 2003 tax relief measures would be made permanent some time in the future. But, of course, that has not happened, and now entrepreneurs, investors, the economy and jobs are being threatened further by a huge, looming tax hike at the end of this year.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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