Wednesday, January 04, 2006

WOULD ESTATE TAX REPEAL REALLY REDUCE TAX REVENUES?

It is commonly accepted that the repeal of the estate tax would reduce tax revenues, since such taxes would no longer be collected. Here is some food for thought that this may not be the case:
  • The American Family Business Institute notes that (a) the Joint Committee on Taxation has dramatically overestimated lost tax revenues for the 1997, 2003 and 2004 tax reductions, and thus should not be trusted when it estimates lost revenue for estate tax repeal, (b) repeal would boost employment by an estimated 175,000 to 200,000 jobs a year, which would provide increased federal tax receipts over time.
  • A computer model of the CONSAD Research Corporation forecasts that an immediate repeal would result in a net increase in federal tax revenues of $1.7 billion between 2005 and 2014 as a result of capital gains revenue from the sale of assets by heirs, and inherited real estate being depreciated only from its original value.
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