ManuFACTS: The Death Tax

Permanently Repeal the Tax Killing Small and Medium-Sized Manufacturers
• In 2010, Congress passed compromise legislation settling the estate tax at 35 percent with an exemption of $5 million.

• Without congressional action, that rate will skyrocket to 55 percent in 2013. • Small and medium-sized manufacturers spend an average of $94,000 a year to plan for the death tax. These costs have increased significantly since the legislation was passed in 2001. • According to a recent survey, one-third of small business owners will have to sell or liquidate part of their companies to pay estate taxes. When the temporary repeal expires, half of those companies that liquidate to afford the taxes will be forced to eliminate 30 or more jobs each.

How Congress Can Help
Support legislation to repeal or make permanent lower rates.

Sources of Federal Revenue, 2007

More Information
According to the Joint Economic Committee (JEC), the death tax costs the economy more than it adds to federal revenues. It has generated $761 billion since 1942 while reducing the stock of capital in the economy by $847 billion. The May 2006 study by JEC, “Costs and Consequences of the Federal Estate Tax,” found no compelling reason to continue to collect the tax and several compelling reasons to reduce or abolish it.

Bottom Line
The death tax hurts small and medium-sized manufacturers by discouraging savings and investments. It reduces wages, stifles job creation and ranks as the leading cause of dissolution of thousands of family-run businesses. Congress must end this major deterrent to productivity and growth.

More Information
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March 2011

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