Count Down to the Good, the Bad, or the Ugly

Margot Crouch / April 16, 2010

Believe it or not, there is currently no death tax. The 2001 and 2003 tax cuts repealed it but because of budgetary quirks the death tax remains dead only through the end of this year. And because Congress is itching for any revenue it can get its hands on, most regretfully expect the death tax to come back to life sometime soon. That is unless Congress can be persuaded to do the right thing and abolish the death tax once and for all.

All this uncertainty can be boiled down to three likely scenarios – the good, the bad and the ugly – that could occur at any time before the end of this year. Either the death tax will be permanently repealed and American families will no longer have to face the nightmare of paying it; Congress will breathe new life into the tax and bring it back at some rate below where it was prior to the 2001 and 2003 tax cuts; or it will return to its pre-tax cut levels with a punitively high 55 percent rate and small exemption level.

Let’s start with the good. Permanently killing the death tax would help create jobs. In a recent paper written by Heritage expert Curtis Dubay, a new study estimates that a permanent repeal of the death tax would create 1.5 million jobs. According to The Heritage Foundation’s Bill Beach, killing the death tax would also encourage saving and investing. (more…)