The death tax is the only tax we have which has nothing to do with economic events. It just has to do with an unfortunate luck of the draw. It's you're crossing the street, and you get run over by a postal truck and die, which is enough action to upset your day, then the IRS comes by and they run over you again. So you end up not only having your day ruined. You end up having your day totally ruined because you got run over by the postal truck to begin with, and then your family has their day ruined because they have not only lost you, now they suddenly have to pay this huge tax if you're a entrepreneur. The problem is that it hits the small entrepreneurs in our society who basically create jobs, the small business person or the person who has made an investment and built assets throughout their life– people who go out and start a restaurant and maybe employ ten, 15, 20 people; people who go out and start a printing business or maybe make an investment in some real estate, an apartment, build housing for people. They're just getting going and they don't have a whole lot of assets. They're not very liquid usually. In fact, these folks aren't liquid at all because it's mostly tied up in real estate usually, and suddenly they have this traumatic event of the key person in the family dying who has maybe built this business, and then they get hit with a tax.

And not only is it a tax which has nothing to do with economic activity, it is actually tax that has the ironic and unintended consequence- I presume but it's exactly what happens- of actually crushing economic activity and reducing economic activity and in many cases costing jobs because the small family business or the farm which was being operated by this sole proprietor in most instances or this small family unit suddenly can't find itself capable of meeting the costs of paying the estate tax.

They didn't ever plan for that, and if they did plan for that, the cost of planning for that was pretty high. So they have to sell their assets, which usually means that the people who they employ are at risk or maybe they have to just close the whole thing down. And so the economic activity contracts instead of having a business that might have been growing, you end up with a forced sale, the practical effect of which is you contract economic activity.

So first you have this really incomprehensible concept that you're going to tax people not for economic gain, not because they've made economic gain, but simply because they've had a terrible thing happen, which is that they died, maybe accidentally, and then you're going to say that instead of encouraging economic activity, which is what the purpose of our tax laws should be, you're actually going to create a tax which contracts economic activity.

And so it's discriminatory and inappropriate and irrational, and on top of that, to make things worse, the United States has the third highest estate tax, death tax rate, of the industrialized world. In fact, our rate is so high that we're even above, and this is hard to believe, we're even above France. Now, when you get above France in an area of taxation, you have really started to suffocate economic activity, entrepreneurship and creativity because they're sort of the poster child for how you basically make an economy nonproductive and encourage people to work and basically be a socialist state.

We need to put in place a clear statement of what the tax policy is going to be if you have the unfortunate experience of being run over by a postal truck. And it should be a clear statement that if you're a small entrepreneur with a family-type business or a farmer that you're not going to be wiped out. Your family is not going to be wiped out by the IRS coming in on top of this terrible event and taking basically a disproportionate and inappropriate share of your assets and basically contracting and eliminating your business and putting your family's livelihood at risk.

The reason we need to do it now, even though most of this won't take effect until 2010, I can tell you as an estate tax planner before I took this job, before I got into public service, you need that sort of lead time to do it right. You know, you just can't overnight plan for tax policy. You have to have lead time. You have to have a clear statement of what the tax policy is going to be and consistency is critical here. So putting this in place now so that it will be effective in 2011, which most of the proposals are, is absolutely essential if we're going to have an effective reform of this death tax law, which we presently have.