33,000 New Jobs Could be Added at No Cost to Taxpayers

Seattle - Washington state could add some 33,000 new jobs at no cost to taxpayers if the federal estate tax were repealed, according to WPC analysis of a new study from the American Family Business Foundation.

The estimates are based on research by the former director of the nonpartisan Congressional Budget Office, Douglas Holtz-Eakin. The research was conducted for the nonprofit American Family Business Foundation (AFBF), Washington, DC. 

Holtz-Eakin, who served as chairman of the economics department at Syracuse University before going to Washington, D.C., estimated in his study that repeal of the Estate Tax, which impacts mostly small and family business owners and the owners of family farms, would lead to an increase of 1.5 million jobs nationwide. The state estimate is calculated based on the percentage of small-business jobs nationally located in Washington. 

 “In the midst of tough economic times, it seems obvious that policymakers would support ideas that could boost employment without boosting taxes or the deficit. Repealing the estate tax, or the ‘Death Tax’ as it is commonly known, could do just that,” said WPC Small Business Director Carl Gipson.   “If there is one thing our state could use, it’s an increase in the number of available jobs.” 

Under current law, the estate tax is assessed at a 45 percent rate on assets in an estate exceeding $3.5 million.  Legislation passed during the Bush administration has slated the tax to sunset – or expire – at the end of 2009, only to return in 2011 at a higher rate. In Washington, the state’s estate tax ranges from 10-19% and is assessed on estates larger than $2 million – family farms are currently the only exemption.

Congress is expected to take some action on the estate tax this fall, before the “sunset” provision kicks in.  In his first budget proposal, President Obama proposed a permanent estate tax rate of 45 percent on estates valued over $3.5 million.  Some lawmakers are pressing to raise the rate and lower the exclusion, while others would like to do just the reverse.

“What is certain is that the future of the estate tax should be decided based on facts and not rhetoric,” says WPC President Daniel Mead Smith.  “If doing away with the estate tax will trigger the creation of more jobs at no cost to taxpayers, then it would make good sense to eliminate the tax.”

Washington Policy Center is a 501(c)(3) non-profit research and education organization based in Seattle and Olympia. The American Family Business Foundation is the research and education voice of the American Family Business Institute, an organization representing American family business owners and farmers.

“Changing Views of the Estate Tax: Implications for Legislative Options” is available online:
http://www.washingtonpolicy.org/Centers/smallbusiness/policybrief/EstateTaxPB.pdf

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