The high economic payoff makes reducing the estate tax an excellent candidate for a pro-growth tax cut. And elimination of the estate tax should be one element of any broad-based tax reform that aims to reduce the double taxation of saving and investment. Conclusions Estate taxes have increasingly reached into middle-class America over the last several decades. The largest estates do not pay the highest tax rates. That dubious honor falls on medium-sized estates, often belonging to people who have started and shepherded successful businesses.
Estate taxation hurts the economy.
Estate taxes have hit small businesses particularly hard. Heirs sometimes must liquidate at least part of a successful enterprise to pay the estate tax bill. High marginal tax rates on estate assets raise capital costs and depress saving and investment. Almost any move to reduce estate taxes should more than pay for itself through higher growth. All in all, American taxpayers, the economy and government would be better off without estate taxes.