And it is not just large-scale operations that are squeezed by the death tax. In Lancaster County, Pennsylvania the average farm is 103 acres, with the land valued at roughly $8,000 per acre. That makes the average farm worth over $800,000 in land alone. Add a house, a barn, livestock, and the necessary equipment, and that farm is worth well over the $1 million deduction that the estate tax will revert to in 2011 if the Senate fails to act. To demand that a family dissolve its livelihood simply to pay an unfair tax is bad policy at best, callous governance at worst.
The death tax also stifles competitiveness in the U.S. economy. Small businesses drive our economy, creating the majority of America’s new jobs. Often, these businesses are owned by families and passed down through generations. Yet this tax punishes the entrepreneurial spirit of the initial owner and creates disincentives to take forward-looking, responsible risks in the marketplace. With a dwindling number of family owned and operated businesses, only the giants in the marketplace will be able to survive. Besides being inherently unfair to family farmers and small business owners, the death tax is simply not sound economic policy.
Finally, contrary to some claims, the death tax is also not an important source of government revenue. Some analysts estimate that up to two-thirds of all revenue collected by the death tax is spent on collecting and administering the tax itself. Others estimate that the costs of the tax are equal to any revenue the tax collects. The Wall Street Journal has reported that repeal of the death tax would actually yield additional government revenue immediately.
Right now, families expend large amounts of money on "estate planning" services just to keep their business afloat, rather than investing in the business itself. Repealing the death tax would end this practice and keep capital where it belongs—in the marketplace. With reasons aplenty and logic on our side, the Senate should take the House’s lead and repeal the death tax.
Former Senator Rick Santorum is the author of Blue Collar Conservatives: Recommitting to an America That Works.
Be the first to read Rick Santorum's column. Sign up today and receive Townhall.com delivered each morning to your inbox.