As the President of the American Family Business Foundation, I hear the stories of family businesses and their employees everyday. Stories of family businesses that have survived for generations only to be lost to estate taxes are heart wrenching. Contrary to what is commonly known about the estate tax, the biggest losers in the estate tax schema are the 57% of American workers employed in those family businesses.
Family business owners who are compelled to pay additional, second-to-die life insurance premiums in order to pay the estate tax cannot put those funds back into expanding their businesses and hiring new employees. That, in turn, is a drain on federal revenues that could be generated from additional income tax in order to provide meaningful government services.
The estate tax isn't a progressive or conservative issue: It's an economic one. Family businesses -- the backbone of economic growth in America -- don't deserve to have Congress colluding with life insurance companies to keep alive an archaic tax that only results in the elimination of jobs and decreased federal revenues. Lawmakers have a responsibility to encourage small businesses, not weaken or diminish destroy them.
Big Insurance's interest in the estate tax goes far beyond their agents' interest in representing their clients. Large life insurance companies see the estate tax as their primary sales point with aging family business owners. This year, alone, the top eight life insurance companies spent more than $18 million lobbying to secure favorable estate tax legislation. Insurance companies have done this purely to pad their own pocketbooks. And they have padded them well. The life insurance industry brought in over $12 billion on second-to-die policies in 2005. Rest assured, that Warren Buffett, whose company owns several insurance companies did not testify in favor of the estate tax out of the goodness of his heart.
A recent study by Douglas Holtz-Eakin, the former head of the Congressional Budget Office, found that eliminating the estate tax could get President Obama half way to his goal of saving or creating 3 million jobs. According to that study, eliminating the estate tax would create the conditions necessary to produce 1.5 million new U.S. jobs.
While many proponents of the estate tax argue that it is the most progressive tax in the tax code, the fact is that it produces less than 1 percent of annual federal tax revenue. By comparison, the income tax generates more than 50 times that amount. In an economy that has reached 10.2% unemployment can we really afford not to ask: Is it worth maintaining what amounts to little more than corporate welfare for Big Insurance at the cost of family business created jobs?
For more information visit www.estatetaxtruth.org and watch the video.