TY  - JOUR
AU  - Holtz-Eakin,Douglas
AU  - Phillips,John W.
AU  - Rosen,Harvey S.
TI  - Estate Taxes, Life Insurance, and Small Business
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7360
PY  - 1999
Y2  - September 1999
UR  - http://www.nber.org/papers/w7360
L1  - http://www.nber.org/papers/w7360.pdf
N1  - Author contact info:
Douglas Holtz-Eakin
American Action Forum
1401 New York Ave, NW
Suite 1200
Washington, DC 20005
E-Mail: dholtzeakin@americanactionforum.org

John W R. Phillips
National Institute on Aging/National Institutes of
Division of Behavioral and Social Research
7201 Wisconsin Avenue
Gateway Building, Suite 533
Bethesda, MD 20892-9205 
Tel: 301-496-3138
Fax: 301-402-0051
E-Mail: john.phillips@nih.gov

Harvey S. Rosen
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-4022
Fax: 609/258-6419
E-Mail: HSR@princeton.edu
AB  - One criticism of the estate tax is that it prevents the owners of family businesses from passing their enterprises to their children.  The problem is that it may be difficult to pay estate taxes without liquidating the business.  A natural question is why individuals with such concerns do not purchase enough life insurance to meet their estate tax liabilities.  This paper examines whether and how people use life insurance to deal with the estate tax.  We find that, other things being the same, business owners purchase more life insurance than other individuals.  However, on the margin, their insurance purchases are less responsive to estate tax considerations and they are less likely to have the wherewithal to meet estate tax liabilities out of liquid assets plus insurance.
ER  -