Study Claims Estate Tax Repeal May Actually Increase
Federal Revenues
A recent study by the pro-estate tax repeal group, American
Family Business Institute (AFBI), claims repealing the estate tax would
increase jobs and economic activity in the United States and bolster federal
tax revenues over time, directly contradicting the Joint Committee on Taxation
(JCT), who estimate eliminating the estate tax would cost $140 billion in
federal revenues. A vote on repealing the estate tax is expected in the
U.S. Senate within weeks.
"The JCT is grossly overestimating the cost of repealing
the Death Tax," said Dick Patten, Executive Director of the American
Family Business Institute. "The JCT's method of scoring tax cuts is
inherently inaccurate – its estimates in '97, '03, and '04 completely
missed the mark."
The AFBI study estimates the capital gain tax cut of 1997
increased federal revenues by $5 billion, contrary to the JCT’s projected
net loss due to the tax cut. It also claims the JCT and the Congressional
Budget Office underestimated economic growth brought on by President Bush’s
2003 tax cuts, pointing out that, since the tax cuts, growth has averaged
4.4% per quarter, more than doubling the growth rate of the two previous
years (1.6%).
Opponents of repeal don’t deny the unexpected growth
following the 2003 cuts, but they say the deficit would be even lower if
not for the tax cuts.
The AFBI study attempted to quantify the effects of economic
growth on tax revenue by comparing past JCT revenue estimates with actual
amounts collected by the treasury. It then outlined its projections using
dynamic models, and measured the revenue effects of estate tax repeal based
on those models.
A copy of the AFBI study is available by calling 202-969-2444.
Source: US Newswire, 7-13-05
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