For years, a coalition of small business owners, farmers, trade organizations and anti-tax groups have fought ardently for the permanent elimination of the estate tax, but suddenly, a few of these opponents appear to have fallen away from the fold.
In a letter to Congress dated September 24th, forty-six business groups including the National Federation of Independent Businesses and the U.S. Chamber of Commerce called for Congress to impose a permanent 35 percent tax on estates worth more than $10 million.
As recently as January, the U.S. Chamber has spoken out in favor of permanent repeal of the tax, stating that in order to jumpstart the economy, Congress can start by sending the death tax to the grave once and for all.”
The change of heart by national business groups has some activists feeling a mix of bewilderment and disappointment. Dick Patten, President of the American Family Business Institute, is surprised at this sudden change of tune, especially given the potential positive economic impact that a permanent, full repeal would have on a struggling economy.
According to Patten, a permanent repeal of the tax would spur the growth of 12,817 new jobs in the state of Nevada. The Bureau of Labor Statistics reports that Nevada’s current unemployment rate is at 13.2%, second only to Michigan.
So, why would business groups change their mind now? Capitulation, says Patten. “This is the difference between people fighting for principles and rights and lobbyists who are cutting a deal to make their lives easier.”
While business interest groups may have fallen away, grassroots activist groups remain tough on the full-repeal stance, noting that public opinion is on the side of elimination. According to Americans for Tax Reform in Washington, D.C., “between two-thirds and three-fourths of Americans support killing the death tax.”
Some Nevadans aren’t taking kindly to the news that some longtime business groups are softening their stance. “The tragedy is that you expect groups like the National Federation of Independent Businesses and the Chamber to fight for small businesses”, stated former state senator Bob Beers.
Other small business owners in Nevada, like Joan Delgado, note the flaws in the estate tax, no matter the rate. Asked Delgado, “This money has already been taxed once, how many times do you have to tax it?”
The “death tax”, as it is often called by opponents, is imposed on inheritance as it is transferred from one generation to the next following an individual’s death. Originally enacted in 1916 as part of an effort to fund World War I and maintained in the following decades to prevent the concentration of wealth, the tax is set to phase-out for a one-year period starting in 2010. When it returns in 2011, the top rate of 55 percent will apply to estates worth more than $1 million.