The nation needs to change the way it does business to compete in a global economy, and one change needs to be repeal of the federal estate tax, Sen. Lindsey Graham said Monday in Greenville.

Graham, R-S.C., said it is "political malpractice" for Congress not to eliminate a tax that accounts for about 2 percent of all federal revenue.

"Getting rid of the death tax would free up and enhance an entrepreneurial spirit of philanthropy that's been a hallmark of our country," Graham told local business and political leaders at a Greater Greenville Chamber of Commerce luncheon. "And when you take 55 percent of someone's lifetime achievement and you give it to the federal government, you diminish the ability of that community to chart its own course."

The Senate last week rejected a Republican-led effort to combine a cut in the estate tax with an increase in the minimum wage.

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Under current law, the estate tax will be repealed in 2010, but it will be restored in 2011 at a rate of 55 percent.

Republicans had hoped to link a $2.10 increase in the $5.15 federal minimum wage over three years to reductions in the estate tax and other tax credits and deductions. But Democrats balked at the combination.

The estate tax and minimum wage bill would increase the amount of an estate exempt from taxation to $5 million for an individual and $10 million for a couple by 2015. Estates worth up to $25 million would be taxed at a capital-gains rate, now 15 percent. The top tax rate on larger estates would be 30 percent.

The bill could be debated again this fall, and Graham said he was willing to support an increase in the minimum wage for estate-tax reform.

"The difference between 55 percent and 30 percent is not bad government," he said. "It's not going to destroy life as we know it -- that we in Washington can afford to take a little bit less so you'll have a little bit more."

The estate tax dashes the dreams of many small businesses, whose owners spend a lifetime building profitable operations, only to see the tax detract from those achievements, Graham said.

"How can you plan your estate, run a business, plan for the future of your own family and your community with something like that hanging over you?" Graham said. "That's political malpractice not to fix this."

Simplifying the U.S. tax code "is not to reward my rich friends," he said. "It's to have a tax code that rewards those who will take risks."

"If the tax code punishes people who build a new building, who open up a new franchise and you can't write it off fast enough to get your money back, you're going to do less of it," Graham said. "And there are plenty of places in this world where you can go with your money and get a good rate of return other than the United States."

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