The estate tax returns on January 1, 2011. While liberals, anti-capitalists, and haters of the wealthy applaud this development, they do not realize that the tax they favor encourages the corporatism they despise so much.
When the owner of a successful small business or small farm passes away, he would love to leave his profitable business to his children, if they want it. However, with the return of the estate tax, the inheritors of the business will have to turn over to the government 55 percent of the value of the business over one million dollars. Not many business owners have 55 percent of their wealth sitting in cash available to cover the estate tax. The heirs are now left with few choices. The easiest solution for the business owner before his death or the heirs after they inherit the business is to sell the business and the most likely buyer would be a large corporation. Another option would be to close the business entirely, also benefiting the corporation competing with it. Other options include selling part of the business or taking a loan, though these are just short-term solutions that add nothing to the business’s ability to succeed.
As a result, many small businesses are shut down or sold to corporations upon the death of its founder because of estate taxes. Furthermore, this discourages many individuals from starting their own businesses because they know it will be very difficult to pass it on to their children and all their success will end up in the hands of some large faceless corporation.
If we want a nation of entrepreneurs, small business, and a thriving Main Street, we need to permanently eliminate estate taxes. If you want a world where those with brains, energy, and drive are discouraged from developing their ideas and talents, big businesses dominate, and Wall Street is more important than Main Street, we should let the estate tax return as is currently planned. The choice is yours.