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This is red -- week as focusing on how the growing deficit is affecting people all across the United States.
Joining us now with a look at the impact of the if -- -- It got -- -- and he's visiting scholar at the American family business foundation he also happens to be.
Former director of the Congressional Budget Office and of course former economic advisor to McCain campaign -- -- good to field.
Morning Alexis so I support you did this analysis is pretty impressive what I'm before heading to what you think he can save or create in terms of jobs in numbers.
Explain to people how do you state tax works and what is expected to happen to -- state tax.
Well simply at the time when someone dies they look at the value of what they have left behind in their financial and physical assets and if it's large enough the federal government takes a slice it in in attacks before it heads off to whoever -- -- wanna leave your children or or someone else so.
Right now we've got an estate tax with a top rate of 45%.
The first seven million dollars exempt from tax if we let that law evolved.
We will be eliminated entirely next year.
And then come back full blown to life in 2011.
As an estate tax on the top part of 60% and only a two million dollars -- -- family so.
There's a lot on the table right now in terms of how weeks we see the estate tax playing -- OK you guys did it a terrific -- here let's walk we'll some of the intended consequences.
If in fact we were to keep it it current estate tax level you say.
Increase well by one point six trillion dollars perhaps even create as many as one point five million jobs how -- do that.
So there's been a quiet revolution in thinking about the estate tax us scholars have been studying it for a long time and we've really seen the the perception change from pretty benign instrument of social justice to a real tax one that's costly to administer and think how many millions lawyers get paid to avoid it.
One that really doesn't do much in terms of changing the distribution of wealth and might even hurt lower income people because it hurts the ability to.
Grow businesses and allow them to hire more people so we actually went out got all the studies have with the American failing business foundation.
We put some numbers on it and you see.
And -- state tax that is eliminated create about a -- and a happy new wealth.
A lot of that would be in small businesses which are the big source of job creation economy.
And that could translate into you know as much as a million and a half new jobs.
-- over the next couple years.
OK let's take -- converse for just a moment if we allow it into account and an eleven to go back to what it was in 2001.
What could that mean Q well -- -- wealth destruction or job losses.
-- expect to see happen -- -- go from a 45% rate something that's a 60% rate is number one you lose about 500000.
Jobs in the same small businesses.
The odds of them actually being able to -- new modern equivalent would go down.
The pace -- which they would grow to be diminished and overall we would hurt the vitality of an important sector of the economy so.
It's an important choice and it should be decided on it's economic policy amounts do we want to.
Raise money this way.
Where we've got a tax which is arguably.
The attacks doesn't raise much money and for that little amount of money we have big compliance costs big employment costs and then -- harmful impact on economic growth.
We're talking about waiting how to solve the -- -- to -- it down everybody says -- so we don't raise taxes we cut spending and you know about cutting spending more than anybody.
The thing I'm worried about is -- they're -- places to cut spending without causing -- -- consequences down the line to a lot of people's jobs and their livelihood.
-- we simply have no substitute for stopping spending so much -- at the federal level.
If you look at the numbers that are put out by the Congressional Budget Office and other neutral arbiters.
We could not possibly raise taxes to keep up.
With the rise in projected spending without actually question the economy so.
Cutting spending Washington is very hard cutting spending is scary because these are programs with which people -- familiar and comfortable.
But it is inevitable that we have to have some priorities and slow the growth of the entitlement programs and outside of that pick judiciously what we have the federal government -- there is no way attacks -- way out of this and there will be no magic bullet in terms of getting the deficit under control.
All Hank got -- great point thank you so much for joining us today great Kenya thank you.
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