The staff on the Republican side of the Joint Economic Committee have been busy, as they’ve produced some great new material. First, an infographic showing the myriad ways Washington uses red tape to micromanage and control small businesses.
Second, they’ve conducted a fresh analysis of the estate tax—known to everyone outside the Beltway as the death tax. Here are some of their conclusions:
- The estate tax impedes economic growth because it discourages savings and capital accumulation.
- As of 2008, the estate tax has cumulatively reduced the amount of capital stock (buildings, equipment and software) in the U.S. economy by roughly $1.1 trillion since its introduction as a permanent tax in 1916, equivalent to 3.2 percent of the total capital stock.
- The estate tax is an overwhelming cause of the dissolution of family businesses. The estate tax is a significant hindrance to entrepreneurial activity because many family businesses lack sufficient liquid assets to pay estate tax liabilities.
- The estate tax does not reduce income and wealth inequality. Perversely, the estate tax creates a barrier to income and wealth mobility.
- Economic inefficiencies due to the distortionary effects of the estate tax are burdensome, and the costs of compliance associated with the estate tax add to the paperwork and time necessary to comply with other taxes.
- The estate tax raises a negligible amount of revenue. Since its inception nearly 100 years ago, the estate tax has raised just under $1.3 trillion in total revenue; by comparison, that is equivalent to the U.S. federal deficit for fiscal year 2011 alone.
- Many studies have indicated that abolition of the estate tax would actually increase overall federal tax revenue in at least two ways: (1) the estate tax robs additional federal tax revenues from the collection of other taxes like the income tax, and (2) a larger total capital stock could increase income tax revenue.