Death Tax Newsletter

Issue #7 — May 6, 1999

To: Pacific Northwest Family Owned Daily Newspapers

cc:

CRUNCH TIME

This is the moment family-owned businesses have been waiting for, but never thought would happen! There is a real chance for death tax repeal in this Congress.

This is the moment of truth — time for each of us to step up to help.

It is critical that we let Congress know how important this is and that we get additional sponsors on the repeal bills now.

If everyone who receives this newsletter dedicated themselves to getting, at a minimum, one new House sponsor and one new Senate sponsor for the repeal bills, our chances for death tax repeal in this year's tax bill will increase substantially.

ACT NOW — Time is critical. Our window extends through the end of summer, but now is the time it's critical to secure new sponsors.

Current bills in the Senate:

Bill #	Description	Sponsor	Co-Sponsors
S.56	A bill to repeal the Federal Senator estate and gift taxes and the tax on generation-skipping transfers	Jon Kyl	24 (no Democrats)
S.38	A bill to amend the Internal Senator Revenue Code of 1986 to phase out the estate and gift taxes over a 10-year period.	Ben Nighthorse Campbell	12 (no Democrats)

Current bills in the House:

Bill #	Description	Sponsor	Co-Sponsors
H.R. 86	A bill to repeal the Federal Rep. estate and gift taxes and the tax on generation-skipping transfers.	Christopher Cox	200 (11 Democrats)
H.R. 8	A bill to amend the Internal Rep. Revenue Code of 1986 to phase out the estate and gift taxes over a 10-year period.	Jennifer Dunn	172 (24 Democrats)

House members = 435 (223 Republicans/212 Democrats)
Senate members = 200 (55 Republicans/45 Democrats)

KEY TALKING POINTS

• The estate tax does not contribute to budget
• Represents less than 1.4 percent of total federal revenue budget
• Compliance and enforcement cost the government 65 cents/dollar
• Net to federal revenue less than 1/3 of one percent
• Hurts the economy and jobs
• Reduces the stock of capital in the economy
• 90% of family businesses fail shortly after the death of the founder
• 91% of all businesses in America are family owned
• Contributes to lost jobs

RECENT STUDIES

The Economics of the Estate Tax

The Joint Economic Committee is one of four bi-partisan joint committees of Congress. The JEC's primary tasks are to review economic conditions and to recommend improvements in economic policy. The study provides compelling independent evidence that costs associated with the estate tax exceed the revenue it generates. Key findings include:

• The estate tax violates the basic principles of a good tax system: It is complicated, unfair and inefficient.
• The estate tax is a leading cause of dissolution for family-run businesses. Estate tax planning further diverts resources available for investment and employment.
• Empirical and theoretical research indicates that the estate tax is ineffective at reducing inequality, and may actually increase inequality of consumption.
• The estate tax raises very little, if any, net revenue for the federal government. The distortionary effects of the estate tax result in losses under the income tax that are roughly the same size as estate tax revenue.
• The existence of the estate tax this century has reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent.

For a full copy of the JEC report, go to www.house.gov/jec/ or call 202-224-5171.

The Case for Burying the Estate Tax

The Institute for Policy Innovation (IPI) is a non-profit, non-partisan organization whose purpose is to conduct research, aid development, and promote innovative solutions to today's public policy problems. IPI recently released this study by Gary and Aldona Robbins, Economists, Fiscal Associates, with these findings:

• Estate tax compliance cost the economy almost as much as the revenue raised.
• Estate taxes today are far out of line with historical precedent. Today, estates over $650,000 are taxed, compared to $9 million (in today's dollars) in 1916.
• The largest estates don't even pay the highest taxes. Typically small business and farmers pay significantly higher marginal estate tax rates than the very rich.

For more info, or a copy of the full report, go to www.ipi.org., or call Suzanne Dorris, (206)464-2605.

WASHINGTON, DC MEETING

On May 25, 1999 from 9:00-noon, The Seattle Times, NAA, and the U.S. Chamber of Commerce will be hosting the second annual death tax summit. In attendance will be representation from more than 15 organizations whose key legislative agenda is repeal of the estate tax.

Also attending will be the authors of both the JEC report on The Economics of the Estate Tax and the IPI study, The Case for Burying The Estate Tax.

Representatives from the House and Senate have agreed to participate. To date, Jennifer Dunn, Adam Smith, Brian Baird, and Patty Murray have agreed to join this discussion for at least part of the morning.

Key to the agenda will be affirming our basic guiding principle, highlighting case studies that we can grow from, and hearing from lawmakers, some who have co-sponsored repeal bills, and others who have not.

For more information about this summit, please call Suzanne Dorris at 206-464-2605.

THIRD GENERATION OF DEATH TAX ADS

A sample of the strategy follows:

Heading: Why in the world is the Death Tax still alive?

Body Bullets: Voters say it's bad — 77% would vote for delegates in favor of Repeal of the Death Tax.

Communities say it's bad — The Death Tax is a leading cause of why family farms and small businesses go under — leading to thousands of layoffs across America.

Experts say it's bad — The existence of the Death Tax has reduced America's common pool of capital by nearly half a trillion dollars.

Businesses say it's bad — For every $1 taken from a small business to pay estate taxes, another $1 is wasted in order to comply with the tax.

Congress says it's bad — The Joint Economic Committee found that the costs to collect the tax are roughly equivalent to what it takes in — about $23 billion in 1998.

America gets it
You get it
Get your legislator to get it

Did You Know?

• The death tax brings in less than 1.1 percent of total federal revenues.
• And, it is estimated it costs the government 65 cents of every dollar raised for enforcement and compliance.
• The death tax is a jobs issue.
• Repeal of the tax would result in 145,000 new jobs over the first 9 years of repeal.
• And that doesn't include the countless jobs that would be saved if the death tax didn't force 70% of family and small businesses to liquidate or sell out after only one generation.
• 99% of all private businesses have fewer than 500 employees. This represents 50% of all private sector jobs which generate 50% of all revenue.
• 77% of the American voters polled by the 60 Plus Association indicated that they would be "more likely" to vote for their member of Congress if he or she voted to eliminate the death tax.

Please e-mail us with your comments, death tax horror stories and suggestions on-line at feedback@deathtax.com.

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