After all, business owners already pay income and capital gains taxes, yet when they die, they must pay taxes again. And Mr. Chairman, despite the fact the estate tax only accounts for approximately one percent of federal revenues, eliminating the estate tax would have created salutary effects on the economy. For example, a 1996 study by the Heritage Foundation found that a repeal of the death tax would have positive effects on the American economy over a nine year period. Due to our scoring system, we decided abolition of the estate tax was too costly in 1997. Should we again make that determination, I believe we should make further modifications to the estate and gift tax.
Many people believe only the wealthy pay estate taxes.
While the affluent can afford the costs of attorneys and accountants to avoid or minimize the estate tax, the small businessperson cannot. Since the unified credit has not been indexed beyond 2006, small businesses will continue to find their assets can easily exceed the threshold for taxation. Therefore, please consider the following proposals. First, the family business exemption should be increased. Considering the devaluation this credit will experience over the course of ten years, many businesses may decide not to incur the costs of applying for the credit and instead continue to spend down their assets in an attempt to avoid the death tax.