I'm Pete du Pont with the National Center for Policy Analysis. Bill Clinton's veto of the bill ending the estate tax was a poke in the eye for a lot of middle-income taxpayers.
Wealthy people don't care. Estate planning techniques make the tax essentially voluntary for them. In fact, the wealthy are generally the best at avoiding the tax, because many estate-planning techniques are costly and require long lead-times to implement.
So who loses? Those with recently acquired, modest wealth: farmers, small businessmen and entrepreneurs. In 1997, more than half the estate tax revenue came from estates under $5 million. Fifty-one percent of family businesses would have significant difficulty surviving in the event of a principal owner's death because of the estate tax.
What's more, preparing for the estate tax is expensive, and causes entrepreneurs to cut back on, investment, and risk-taking.
And the worst of it? Because of the interaction of estate and income taxes, economist B. Douglas Bernheim estimates lost income tax revenue may offset all of the revenue the estate tax gains.
Class envy politics strikes again.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, Bush's tax cut.