An analysis by economist William W. Beach and Heritage Foundation analysts using two leading econometric models found that repealing the estate tax would have a large and beneficial effect on the economy. According to Beach's study, if the tax were repealed this year, over the next nine years:

• The nation's economy would average as much as $11 billion per year in extra output .

• An average of 145,000 additional new jobs could be created .

• Personal income could rise by an average of $8 billion per year above current projections.

In addition, the deficit actually would decline, since revenues generated by extra growth would more than compensate for the meager revenues currently raised by the inefficient estate tax. For instance, the unified gift and estate tax raised only $14.7 billion in 1995; but it imposes heavy costs to the economy by generating complex tax avoidance schemes.

By repealing the estate and gift tax, concludes Beach, Congress would be making significant progress toward creating a tax policy that complements rather than undermines other efforts to expand economic opportunity by creating a growing economy.

Source: William W. Beach, "The Case for Repealing the Estate Tax," Backgrounder No. 1091, August 21, 1996, Heritage Foundation, 214 Massachusetts Avenue, NE, Washington, DC 20002, (202) 546-4400.