Economic Growth

• The Joint economic Committee of the U.S. Congress reported in June of this year that the death tax nationally has "reduced the stock of capital in the economy by approximately $497 billion, or 3.2 percent, based on the 1998 analysis."

• Further, they reported that "the distortionary incentives in the estate tax result in the inefficient allocation of resources, discouraging savings and investment and lowering after-tax return on investments.

• "The estate tax is a leading cause for dissolution for thousands of family-run businesses. Estate planning further diverts resources available for investment and employment.

• Compliance costs associated with the death tax are of the same magnitude as the tax's revenue yield according to Alicia Munnell, a member of former President Clinton's Council of economic Advisors.

• Joseph Stiglitz, former Chairman of President Bill Clinton's Council of Economic Advisors said "the desirability of the estate tax may still be questioned, not only because of the distortions which it introduces but also because it may actually increase the inequality in the distribution of consumption."

• The compliance costs of the death tax divert investment from jobs and growth.

• Failure to repeal Virginia’s death tax will result in loss of taxpaying families and job-producing businesses to other states that are eliminating death taxes.

• REPEAL STATES. Nearly 30 states have followed the federal government’s lead and are phasing out their death taxes.

• Many of these states have worse budget situations than Virginia.

• Failure to repeal Virginia’s death tax will result in loss of taxpaying families and job-producing businesses to other states that are eliminating death taxes.

• Given Virginia is just coming out of an economic slump and given the intense competition among states for new jobs and investment, why would it be good policy for Virginia to be a death-taxing island in an ocean of death-tax-free states?

In 2004 Governor Warner supports the case for repeal on the basis of economic growth and jobs. In his administration's analysis, the Department of Planning and Budget Division of Economic and Regulatory Analysis specifically concluded that the death tax has a positive impact on Virginia’s economy and job growth. "Evidence suggests that the reduction in the estate tax may have a significant positive effect on capital formation and investment in Virginia. This will be balanced, to some extent, by reduced charitable contributions by those previously subject to the estate tax." (Economic Analysis of Governor Warner’s Budget and Tax Reform Plan, January 7, 2004).

Moreover, in a January 13, 2004 memo to the House Republican Caucus Speaker Bill Howell and Appropriation Chairman Vince Callahan challenged their party to use the best economic impact forecasting tools available in considering sensible tax law changes that will promote long-term economic growth and prosperity. Citing the death tax as their primary example, full repeal stood out as a key factor for economic growth. "For example, repealing the unfair Virginia death tax remains important; the loss of jobs, investment and tax revenues to other states if we keep the tax in place will likely outweigh the revenues produced by the tax itself, and even the Governor now concedes that the death tax is a job-killer," wrote Howell and Callahan.

Senate President John Chichester has also included full repeal in his Virginia Investment Act.

The National Federation of Independent Business, which represents about 5,000 small businesses and the Virginia Agribusiness Council are among 60 organizations advocating full repeal of the death tax. These member organizations agree with the legislative leadership that the death tax must go. Donna Pugh Johnson, President of the Virginia Agribusiness Council, said "the Estate Tax is an unfair burden on our agribusinesses and the 40,000 farmers of the Commonwealth. Repeal of the Virginia Estate Tax would help ensure the future and sustainability of agriculture, the state's leading economic industry"(During legislative testimony, January 22, 2003).

Question: If the repeal of the death tax has economic benefit wouldn't it make sense that preventing full repeal for those employers with the capital, who have more employees at risk of being laid off, could potentially damage the economy more greatly? Or that adopting full and honest repeal would be of greater benefit to the economy?

Learn more about how the Death Tax Impacts...

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