The research refutes claims that repeal would have a minimal impact on the economy. “In fact, the study makes a strong case for repealing the tax immediately or, at least, for accelerating the phase-out period,” said FMI President and CEO Tim Hammonds.
Immediate repeal would increase the U.S. Gross Domestic Product (GDP) by up to $38.8 billion in the first year, according to the research. Three-year and five-year phase-outs would increase the first-year GDP by up to $12.8 billion and $7.7 billion, respectively.
The study is the first to analyze how estate tax repeal would affect the GDP, using the econometric model known as REMI (Regional Economic Models, Inc.). It takes into account how the funds formerly used to pay the tax and for special life insurance and estate tax planning would be reinvested in the economy.
The research shows the economic impact on 49 different industry sectors. The sectors that would benefit the most have a combined workforce of nearly 49 million people, representing more than one-third of all employees of U.S. companies.
“Under current estate tax law,” said Hammonds, “Almost every family business in America must conduct expensive tax planning and carry excess life insurance policies to ensure that their heirs will be able to pay their estate tax liabilities without having to liquidate the business. This represents a financial burden to family businesses each and every year they operate — a burden public companies do not have to bear.
“Repeal removes this inequity and frees those funds to be reinvested in the family business stimulating job growth in every community in the country. Taken by itself, this is sound economic policy. Taken in the context of an economy now in need of immediate economic stimulus, it is essential.”