WASHINGTON (FNS) -- Repealing the estate tax got some backing late last month by a study detailing how the economy, small businesses and families suffer because of the tax, which ultimately doesn't add much to federal coffers.
l to be included in a catch-all targeted tax package.
The study concluded that estate taxes amount to less than 1% of federal revenues and compliance costs are almost as much as the revenue raised. More middle-class families and small businesses are being hit by the tax, which the study said penalizes entrepreneurship and personal savings with rates as high as 55%.
The tax was initially designed as a means to redistribute wealth by targeting the highest incomes.
According to the study, if the tax was repealed, the untaxed inheritance would lead to $700 billion in additional Gross Domestic Product between 1999 and 2008.
This would in turn create $148.7 billion more in payroll, excise and other federal taxes, almost offsetting the $191.5 billion loss to the Treasury, the study said.
Although the study underscores the populace message for repeal furthered by supporters, passage of an all-out elimination of the tax remains uncertain.
Sen. Richard Lugar, (R-Ind.), recently told a joint public affairs meeting of supermarket associations there's competition for tax legislation.
Lawmakers also could decide their 1997 gradual increase of the estate tax exemption to $1 million from $600,000 by the year 2007 may be enough of a change for the time being. If there are further estate tax changes this year Lugar said, "I suspect an incremental (change) will be more satisfying" to lawmakers.
Reps. Jennifer Dunn (R-Wash.) and John Tanner (D-Tenn.) have introduced a bill that would phase out the tax at 5% a year until its elimination in 2010. A Senate bill sponsored by John Kyl (R-Az.) calls for outright repeal.
