The House voted to repeal the death tax on Thursday. There are lots of persuasive reasons to kill this odious tax. The money in a person’s estate has already been taxed over the lifetime that it was earned. The tax breaks up family-owned businesses. It reduces capital investment and lifetime savings. It encourages people with wealth to avoid leaving up to half their financial legacy to the IRS (including state estate taxes) and instead die broke.

All of these things make future generations of Americans worse off.

But here’s an argument against the tax that isn’t well understood. It hardly raises any money. This tax is all economic pain, with no gain.

According to the latest IRS statistics, in 2013 the estate tax raised $12.7 billion. In 2001 the tax collected nearly twice as much money ($23.5 billion) as in 2013. So it’s a small and shrinking source of government revenues. That $12.7 billion collected is out of $2.8 trillion in total federal revenue in 2013. In other words, a trivial 0.5 percent of federal tax receipts now come from estates. Get rid of the tax and the government still raises 99.5 percent of its money — at worst.

A study by Steve Entin of the Tax Foundation estimates that because the tax reduces capital investment and savings, the impact of the tax on federal revenues may even be negative over time.

One reason the tax raises such a pittance is that the exemption level is now $5.4 million on an estate; there just aren’t that many estates above that level. Fewer than 5,000 estates pay the tax each year or about 2 of every 1,000 estates.

The vast majority of heirs who fill out complicated estate tax forms pay no tax. This is a full employment act for estate tax attorneys and accountants.

Liberals counter that this is a tax on the 5,000 super-rich billionaires who can afford it. Think again. The two richest Americans, Warren Buffett and Bill Gates, have sheltered billions of dollars into the Buffet Foundation and Gates Foundation respectively. Those dollars will never be taxed by the estate tax; and most escaped the income tax too.

The majority of other billionaires have done similar crafty estate tax planning to elude the tax entirely. The so-called “charitable deduction” is the biggest tax dodge of all creating massive storehouses of wealth stuffed with billions of dollars of never-taxed money that will flow to other dubious “non-profits” like Harvard or the Sierra Club.

It would be much more efficient to cap the charitable deduction at say $50,000 a year and then eliminate the estate tax altogether.

The last time Congress voted on full death tax repeal bill was 2005 and about 43 Democrats voted in favor — including 9 members of the Congressional Black Caucus. Today only 7 Democrats voted for it.

But income inequality has become the anthem of the left; accordingly, it is educational to find out how many now support saving family farms and businesses.

Predictably, Barack Obama has threatened to veto any estate tax repeal. He says the money is better used for jobs and worker training programs.

Really? Two-thirds of jobs come from small and family-owned businesses. Wouldn’t the smart way to create jobs be to make sure that the next generation can grow these enterprises rather than sell them off at auction to pay this economically destructive and fiscally inconsequential tax?

Republished from The Daily Signal.