Another impediment to innovation and economic growth is the uncertainty surrounding whether the current Research and Experimentation tax credit will continue to exist. The credit encourages the technological developments that are an important component of economic growth. However, extensions of the tax credit have resulted in three gaps in coverage, two of which were retroactively filled. Thus, President Bush will make the Research and Experimentation tax credit permanent. The death tax also impedes economic growth because it levies yet another layer of taxes on capital.
More capital investment means higher incomes for all workers.
The punitively high death tax can fall most heavily on small businesses and family farms that are asset rich but cash poor. According to a 1993 survey, nine of ten successors whose family businesses failed within three years of the owner's death listed the death tax as a contributing factor. Finally, by encouraging intricate planning techniques to reduce taxes, the death tax has created an entire industry of specialized lawyers and accountants. The added complexity and compliance costs make this one of the least efficient federal taxes. President Bush believes that the bias of the death tax against the family farm and family business is the antithesis of the American Dream.