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NTU Supports Effort to Permanently Repeal the "Death Tax"

January 4, 2005

The Honorable Chris Cox
United States House of Representatives
2402 Rayburn House Office Building
Washington, DC 20515

Dear Representative Cox:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to strongly endorse your efforts, as expressed in the Family Heritage Preservation Act, to permanently repeal the "death tax." As you may know, repeal of this unfair and immoral tax is one of the core goals of NTU and it was a centerpiece of both President Bush's successful re-election campaign and many successful Congressional campaigns nationwide. In other words, after years of making inroads against the death tax, the 109th Congress represents the best opportunity for killing it once-and-for-all.

Considering the economically dubious nature of the death tax, it is quite surprising just how difficult it has been to kill. After all, most economists would agree that the death tax is an inefficient means of raising revenue. In fact, due to private and public sector collection, compliance, and avoidance costs, eliminating the tax is likely to increase rather than decrease the net revenue yield to the federal government. A recent Congressional study projected $24.4 billion in increased personal income (and therefore higher revenue) if the tax were axed.

While the economic case against the death tax is persuasive enough, the moral case is even more powerful. Because it taxes virtue -- living frugally and accumulating wealth -- the tax wastes the talent of able people, both those engaged in enforcing the tax and the probably even greater number engaged in devising arrangements to escape the tax. The death tax is also punitive, because it adds a second or third layer of taxation on the same assets.

Although some in the charitable community have expressed fears that repealing the death tax will result in a significant decline in giving, such fears are overblown. It is far more likely that eliminating the tax will lead to higher economic growth, which is the most important variable in determining the level of charitable giving.

Having been in place for more than 80 years, the main effects of the estate and gift taxes have been to create an industry for thousands of highly paid lawyers and estate planners, to help the super-wealthy waste time and money avoiding it, and to bankrupt successful family businesses when their original owners die. For this reason and those outlined above, any votes in favor of permanent repeal of the death tax will be among the most heavily weighted votes in our ratings of the 109th Congress.


Paul J. Gessing
Director of Government Affairs