Reinstating federal estate taxes at the 65 percent rate will result in some 1.6 million jobs lost, Douglas Holtz-Eakin, president of the think tank the American Action Forum, told CNBC Thursday.
“Congress and the administration ought to be focusing on growth consequences of every policy, and that would include estate taxes,” added Holtz-Eakin.
The practice of collecting taxes after someone's death isn’t “utterly benign,” it has consequences for small businesses and hiring practices, he said.
Congress let federal estate taxes lapse for 2010, meaning that heirs of anyone who died this year got an unintended tax holiday.
Holtz-Eakin was discusing findings of the study he wrote on the impact of estate taxes on employment for the American Family Business Foundation. He is a former White House economist and director of the Congressional Budget Office, who also advised John McCain during his presidential campaign.
The higher the estate tax, according to the study, the less likely small businesses will invest in hiring: At the highest estate tax, said Holtz-Eakin, capital outlays for small businesses would go down by as much as 9 percent.
“We need a really big tax reform,” he said, “that’s pro-growth in nature.”