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 The 2001 and 2003 tax cuts repealed it but because of budgetary quirks the death tax remains dead only through the end of this year.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 Either the death tax will be permanently repealed and American families will no longer have to face the nightmare of paying it; Congress will breathe new life into the tax and bring it back at some rate below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.

Abolishing the death tax would also restore one of the central tenets to the American dream, that if you work hard, live frugally and invest wisely you can pass the fruits of your labor on to succeeding generation so they can build upon your success. The death tax prevents the full realization of the American dream because it stops families from fully passing on what they worked hard to build. The death tax is a deterrent from living a virtuous life because it encourages people to blow through their life savings before they die rather than hand over half to Uncle Sam.

Now for the bad. No matter which way you slice it the death tax is detrimental to family-owned businesses. When the owner of such a business passes away, half the capital is often drained away from the business because of the death tax. That is because these businesses often look valuable on paper because they own lots of property, plant and equipment which they have acquired by reinvesting their profits back into their businesses. But comparatively they have little cash on hand. When the death tax hits, the families have to pay the tax on the full value of the business, including all the assets, even though they don’t have the cash to pay the bill. To pay the tab to the IRS, the family has to sell off some or all of the assets, which costs jobs and lowers wages.

Knowing that there is going to be a hefty amount to pay in the future, businesses pour a considerable amount of their resources into estate planning, instead of hiring new workers and increasing wages. Of course they can’t afford pricey estate tax lawyers like the super-wealthy can, so they often buy expensive life insurance policies instead. The life insurance diverts precious cash flow that could be used to expand the business nonetheless.

Last but certainly not least is the ugly, which is allowing the death tax to come back at 55 percent. Unfortunately the ugly for thousands of Americans can be devastating. If Congress allows the death tax is to return to its pre-2001 levels it would not only be devastating to business owners, but their employees and their employees’ families. The death tax is probably one of the most misunderstood taxes. While many people think that it is taxing heirs and heiresses of vast fortunes, this is essentially wrong. The incredibly rich can afford the expensive estate planning avoidance measures, which leaves the burden on independent business and farm owners.

So what will happen at the stroke of midnight on New Year’s Eve? Will there finally be a policy for a real stimulus that creates jobs and promotes the American ideals? Or will the economically draining death tax come back to life to haunt family-owned businesses? Congress holds all the cards. Let’s hope they do the right thing.

Margot Crouch currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: