Despite varying levels of tax rates and exemptions, estate and gift tax revenue have resulted in less than 2 percent of all federal tax revenue over the past 60 years, according to the Joint Committee on Taxation. Since 1977, the estate and gift tax rate fell to 35 percent from 70 percent, while the maximum exemption rose to $5.12 million from $60,000.

Several studies cited by the Tax Foundation suggest the legal compliance costs associated with estate planning exceed the revenue it generates — less than 0.5 percent of federal tax revenue in 2011.

A recent study by the Joint Economic Committee Republicans (JECR) indicates the total federal estate tax revenue generated over the past 100 years was $1.3 trillion, the size of the 2011 federal fiscal deficit.

Notwithstanding poor tax revenue generation, this construct does not serve the economy well, since income is taxed twice and consumption is favored over investment. Less investment slows the growth in employment, income and tax revenue collections from income and capital gains.

It also precipitates the sale of capital assets to meet the tax liabilities. From 1916 through 2008, the capital stock (equity) has fallen $1.1 trillion, or 3.2 percent, according to the JECR.

Future tax policy should incorporate the following to balance the budget while promoting investment, employment and income growth over the long term:

1. Limit annual deductions for personal income to the federal poverty level (FPL).

2. Impose a flat tax on personal income above the FPL.

3. Increase the maximum taxable income for Social Security and Medicare.

4. Increase the tax rate on unearned income.

5. Reduce the corporate tax rate.