<http://www.atr.org/content/pdf/2005/sep/090205ot-ggn_deathtax_memo.pdf>
MEMORANDUM
From: Grover G. Norquist, Americans for Tax Reform To: Members of the United States Senate Date: 09/02/05 Re: Death Tax Repeal/Katrina
In light of this week's tragic hurricane in Louisiana, some politicians have suggested that tax cuts in general and death tax repeal specifically should not move forward. This is a similar argument which was made following the Iraq War and the 2003 tax cut. That analysis turned out to be very wrong.
In March 2003, the United States Senate voted on a number of amendments to reduce the budget window of President Bush's Jobs and Growth Tax Reconciliation Act. Opponents' efforts to cut the size of the tax cut package were narrowly defeated the week before. But with the campaign in Iraq entering its third week and fresh cost estimates of more than $70 billion released Monday morning, Sen. John Breaux (D-LA) proposed an amendment to the budget to redirect $396 billion of the tax cut into a "reserve fund" to strengthen Social Security. The measure narrowly passed and the President's tax cut was reduced by more than half.
In retrospect, this "half a tax cut" generated an additional $238 billion of economic growth over two years than was forecasted by the Congressional Budget Office four months after the tax cut was signed into law. To put this in perspective, these higher levels of economic growth translated into an additional $1,960 per American household. At the same time, $4 trillion of new shareholder wealth has been created and 4 million new jobs have been added to the American workforce. The result is higher than expected tax revenues which are $112 billion above the Congressional Budget Office August 2003 baseline.
Now imagine how much more growth, investment, jobs, and wealth would have been created if the Senate passed the entire package put forth by President Bush.
The 2003 tax cut is instructive to the recent tragic events. Opponents of permanent repeal of the Death Tax are attempting to exploit this tragedy to put off a vote. Proof that they are exploiting this tragedy is that they were never for repeal of the Death Tax in the first place. They were against this proposal six years ago, five years ago, four years ago, three years ago, two years ago, and two weeks ago.
By stalling the vote they believe that the issue will not fit in the calendar on a later date. The 2003 tax cut lifted economic growth far beyond what most people expected. We know repeal of the Death Tax will also have a similar effect. And higher levels of economic growth is exactly what the residents of the Gulf Region need at this time to start the rebuilding process for their neighborhoods and more importantly for their lives.