In his State of the Union address, President Obama made it clear that 2010 would be all about jobs. So let's focus on jobs: Where they come from and how we can increase their number.

The president's apparent view is that jobs come from government. The stimulus bill passed early last year, he claimed, saved 2 million jobs from possible extinction. He mentioned school teachers, "first responders," other public employees. At a cost of $787 billion, that comes to $393,500 per saved job. Not all of the stimulus money has been spent yet; so the cost will be something less than that — but far more than the typical taxpayer earns.

The president remains confident government can create jobs and is calling for more such spending, this time calling the stimulus a jobs bill.

Let me offer an alternate view: first, that most new jobs come from business — and most of these from businesses owned by entrepreneurs, rather than those listed on the stock exchanges; second, that tax relief will do far more than government stimulus money to encourage businesses to post "help wanted" signs; and third, that one tax in particular discourages hiring — the estate tax — and eliminating this tax once and for all would create more jobs than any jobs bill.

How does the estate tax affect jobs?

When government collects the tax, it is basically laying claim to a part of everything an individual owns — home, car, boat, stamp collection, investments, bank accounts, business property, business equipment, business inventory — at the time of that person's death. In the case of people who own family farms and small businesses, the business assets typically are worth far more than the owner's personal assets.

To pay the tax (due nine months after an individual's death), families must often sell assets. Last year the tax was 45 percent of everything above $3.5 million. Next year the tax is scheduled to jump to 55 percent of everything above $1 million. This year, thanks to a fortunate quirk in the law, the tax is zero — though Congress and the White House are maneuvering to re-impose the tax retroactive to Jan. 1.

Say the decedent owns a $400,000 home, a $35,000 car, has $15,000 in the bank, $500,000 in retirement savings, and a business worth $7.5 million (when buildings, equipment and inventory are tallied). Last year, the heirs of that individual would have owed Washington nearly $2.25 million. Next year: nearly $4.1 million. The family could sell the house and car and liquidate the savings and retirement accounts and still not have nearly enough to pay the tax.

Something else would have to go — and that something would be the business, which would have to be sold, liquidated or broken up. It happens all the time.

Though supporters of the estate tax claim that relatively few taxpayers are affected, those "few" often are business owners. According to government data, compiled by Congress's Joint Economic Committee in 2006, from 1995 to 2005 estate taxes were paid by more than 37,000 "closely-held businesses," 24,000 family farms, 50,000 limited-partnerships and nearly 28,000 "other" non-corporate businesses, such as sole proprietorships. The combined worth of these businesses in constant 2005 dollars was $104 billion.

Economist Douglas Holtz-Eakin, former chairman of the Congressional Budget Office, tracked the correlation between estate tax rates and jobs in a 2009 study published by the American Family Business Foundation. Holtz-Eakin found that estate tax repeal would increase business investment by 3 percent, increase small business capital by $1.6 trillion, increase payrolls by 2.6 percent, and slash the current jobless rate by nearly a full percentage point — adding as many as 1.5 million new jobs. A 55 percent tax, on the other hand, would increase unemployment by 500,000, he found.

The estate tax destroys capital, discourages business expansion and reduces total employment. If President Obama wants a real jobs bill, he will instruct Congress to pass legislation permanently and explicitly doing away with the counterproductive death tax. It would be far cheaper and far more effective than anything Washington currently is contemplating.

Dick Patten is president of the American Family Business Institute in Washington, D.C.