Repealing death tax and gift tax a path to prosperity in Tennessee

Repealing death tax and gift tax a path to prosperity in Tennessee

March 24th, 2012 in Opinion Free Press

Government officials have no "jobs switch" they can flip to create private-sector employment.

But that unfortunately doesn't curtail the tendency among some in government to believe that more government action is all that's needed to generate jobs.

Just a few more subsidies, a little more intervention in the market, a bit more "priming of the pump" will do the trick, they assume.

But it doesn't work. In fact, one of the hardest lessons for many public officials to learn is that often government does the most to help create jobs by simply avoiding improper interventions rather than by devising some new program.

One of the best things government can do to enhance economic growth - or at least foster conditions that promote growth - is avoid excessive taxation. Wealth creation and growth flourish in a market unencumbered by undue taxes, because that leaves the private sector more money to invest in all sorts of entrepreneurial ventures.

The Beacon Center of Tennessee, a free-market think tank, demonstrated that recently when it teamed up with the Laffer Center for Supply-Side Economics to look at the potential for economic growth in the state if lawmakers would eliminate the unjust "death tax" on inheritances as well as the gift tax. (Dr. Art Laffer is a former adviser to President Ronald Reagan. Laffer now lives in Tennessee.)

The findings of the study were eye-opening, particularly as lawmakers look at rolling back those taxes.

The study found that if Tennessee had eliminated the two taxes 10 years ago:

• The state would have enjoyed 200,000 to 220,000 new jobs.

• The gross state product would have been anywhere from $6 billion to $18 billion greater.

• Tennessee's asset base would have risen by anywhere from $16 billion to $48 billion.

• State and local government revenue - from sources such as property, sales and business taxes - actually would have risen by up to $7.3 billion, versus the less than $1 billion that the death tax and gift tax bring in.

That's not chicken feed! It shows a real chance for economic growth.

"Our analysis proves that not only is repealing these two taxes the right thing to do morally, it is in the best economic and fiscal interest of all Tennesseans to eliminate them," Laffer said in a news release.

Justin Owen, of the Beacon Center of Tennessee, noted: "The state death and gift taxes drive job creators, investors and taxpayers out of Tennessee. Those who actually wind up paying the taxes - family business owners and rural farmers - can ill afford it."

Reversing counterproductive tax policies in our state would be a good step toward greater job creation and growth in general.