Time to bury the 'death tax'
Kevin Hancock simply wants to harvest trees -- sustainably -- and create jobs in the process. The federal government may put a stop to all that.
His business, Hancock Lumber, has been in the family for six generations. It owns 30,000 acres of Maine timberland and employs 550 people. But Kevin already knows that when his elderly mother dies, he'll have to sell off huge swaths of his land to pay the ensuing tax bill.
He recently warned a Senate committee that "once it has been sold to a developer, it will be parceled off and will no longer be maintained as publicly open forests. This is particularly a shame in southern Maine, where green space and curtailment of sprawl is a major political issue."
It's an example of the long reach of the death tax -- the penalty families have to pay when a loved one dies and leaves them significant assets. Yet, for Hancock and many others, some relief may be in sight.
In 2001, lawmakers passed a law that gradually phased out the levy. The death tax has been stepped down from 55 percent (for those in the top tax bracket) eight years ago to 45 percent. But that gradual decline was just a prelude for 2010, when the tax will -- finally -- disappear altogether.
Unfortunately, like the killer in so many slasher movies, the death tax could return to menace family businesses again in 2011. Unless Congress acts, it's scheduled to return to the obscene 55 percent rate after next year.
Lawmakers are poised to take action soon. But Americans should insist they take the right action.
For example, earlier this year the Senate passed a nonbinding amendment that would set the death tax at 35 percent starting next year. That's quite a jump from zero percent and would be a big step in the wrong direction.
The sensible thing would be for lawmakers to leave the current policy in place and allow the death tax to go away completely. Besides, Americans deserve to see how much better things would be without the death tax, especially since repealing it might help our country -- finally -- pull out of recession.
The death tax is a job killer. Heritage Foundation economists found that the federal levy leads to the loss of between 170,000 and 250,000 potential jobs each year.
How does it kill jobs• Partly by encouraging wealthy Americans to spend their money today rather than invest it in growing a business. After all, we're all going to die. What's the point of building a bigger nest egg if Washington is just going to take a third of it, a half of it or even more?
Because the estate tax discourages investment, it also holds down wage growth. Since businesses have less funding, they're less able to purchase new tools and equipment. So workers are less productive and suffer slower wage and salary growth.
The death tax also hammers some Americans more than others, since it especially targets landowners. Millions of farmers, ranchers and homeowners have, like the Hancock family, improved their land. Yet when they die, the federal government punishes their heirs.
Death and taxes, they say, are both inevitable. But it's not inevitable that one must lead to the other.
Americans are set to get a glimpse of life without the death tax next year. After that, lawmakers should act to make sure this levy goes away. Completely and forever.
Ed Feulner is president of The Heritage Foundation (heritage.org).
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Route 28 accident victim suffered ‘moderate’ injury; expressway reopens after 5.5 hours
- Highmark to switch its workers to high-deductible insurance plans
- Volquez goes distance as Pirates roll to victory over Cardinals
- Based on glowing recommendation, Pens hire Agnew as assistant
- ‘Hero’ mom from Bethel Park drowns in Lake Erie trying to save son
- Pirates notebook: Pirates recall Decker, send Cumpton back to Indy
- Penguins re-sign Megna, Samuelsson to 1-year deals
- 67 who blew lid off VA scandal claim agency retaliated against them
- Gov. Corbett signs Pennsylvania state budget, vetoes legislative funding
- LaBar: Kurt Angle preparing for WWE return
- Bayer produces blast-resistant safety glass for U.S. embassies