Estate Tax is Killing 58,000 Ohio Jobs Study Says
COLUMBUS - Ohio could add 58,363 new jobs at no cost to taxpayers if the federal estate tax were repealed, according to a new analysis by the Buckeye Institute for Public Policy Solutions. The estimates are based on research by the former director of the nonpartisan Congressional Budget Office, Douglas Holtz-Eakin. The research was conducted for the nonprofit American Family Business Foundation (AFBF), Washington, DC. The full report can be found here.
"As this study clearly shows, the federal estate tax is hurting Ohio's families and businesses," said Buckeye Institute analyst Marc Kilmer. "The penalties this tax imposes on Ohioans who save and invest are ridiculous. Our state's economy would be in better shape if this death tax died and Ohioans were allowed to keep and pass on the assets they worked so hard to build."
The AFBF study found the estate tax has a significant impact on family businesses. Many small businesses are hit especially hard by the estate tax's high marginal tax rate. The current federal estate tax will be eliminated for one year, 2010, but in 2011 it will be reimposed at a rate of 55% on estates over $1 million.
The study found permanently eliminating the death tax would create 1.5 million additional small business jobs. In addition, it would increase hiring by almost 9%, increase payrolls by almost 3%, and expand investment by 3%. The state estimate is calculated based on the percentage of national small-business jobs located in Ohio.
By imposing a high marginal rate on savings and asset accumulation, an estate tax gives entrepreneurs incentives to spend and not save. In a small business context, this hurts the ability of businesses to grow and expand, leading to higher unemployment.
"President Obama has put job creation at the top of his priority list," said Kilmer. "Permanently eliminating the estate tax would be one of the most effective stimulus packages our nation could see."
The Buckeye Institute for Public Policy Solutions is a nonpartisan research and educational institute devoted to individual liberty, economic freedom, personal responsibility and limited government in Ohio. The American Family Business Foundation is the research and education voice of the American Family Business Institute, an organization representing American family business owners and farmers.
