Feb 1, 2000
   WASHINGTON, DC — Feb. 1, 2000 — A national survey found 92 percent of Americans believe it is unfair for the government to tax a person’s income while it is being earned and then tax it again after death. The survey of 1,000 respondents was conducted on January 13, 2000, for Americans Against Unfair Family Taxation (AAUFT) by John McLaughlin & Associates.

From the voters’ perspective, the unfairness of the estate tax is not a partisan issue. The survey sample represents the entire political spectrum. In the upcoming congressional election, 39 percent of those surveyed are likely to vote for the Democrat candidate and 33 percent for the Republican, while 28 percent are undecided.

The survey also shows that voters’ belief in the unfairness of the estate tax is not connected to their income level. Well over half of the respondents (59 percent) have an annual household income of $60,000 or less.

“The American dream should not have to end with one family’s generation,” said AAUFT Co-Chairman Tim Hammonds, who is also president and CEO of the Food Marketing Institute. “The federal government should encourage, not discourage, family-run businesses and farms to remain in the family.”

“We must repeal the federal estate, gift and generation skipping tax, so businesses can be passed on from one generation to the next without this penalty. In fact, 91 percent of businesses in the U.S. are family-owned. But a majority fail after the founder dies — and in nine out of 10 cases because the children cannot afford to pay the estate tax.”

The tax rate ranges from 37 percent to 60 percent on estates valued at more than $10 million. “It is especially burdensome to family-owned businesses and farms,” Hammonds explained, “because most of their estates are tied up in assets, such as land, buildings, equipment and inventory. “In order to pay the tax, they often have to sell assets — in many cases, the entire business.”

“Ironically,” he added, “the most insidious impact may be on those who pay little or no estate taxes. Each year, millions of family businesses pay accountants, tax attorneys and estate planners to manage their assets in ways to avoid the tax. For the estate taxes they cannot avoid, they pay hefty premiums on life insurance policies taken out just for that purpose.”

The annual median cost of such life insurance policies alone exceeds $45,000 per business, according to research by the Family Enterprise Center of Kennesaw State College and the Center for Family Business at Loyola University. They also found that the typical family business pays more than $33,000 to have lawyers, accountants and other financial advisors perform the estate planning needed in minimize the tax.

In 1998, families spent more than $20 billion to prepare for and comply with the estate tax, according to the Joint Economic Committee of Congress. The amount was nearly as much as the revenues the estate tax raised that year.

“These costs divert precious resources that could be much better used to expand the business, hire more workers or lower prices for consumers,” Hammonds said.

“Hit particularly hard are the newly economically empowered, especially women and minorities who are increasingly likely to be entrepreneurs.” Both the Black and Hispanic Chambers of Commerce have called for the repeal of the estate tax.

There is strong, bipartisan support in Congress for repealing the tax. A measure before Congress, “The Death Tax Elimination Act” (H.R. 8), is co-sponsored by 200 Republicans and 41 Democrats. Congress passed the legislation in 1999 as part of the major tax-cut measure that was vetoed by President Clinton.

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Americans Against Unfair Family Taxation is a coalition to give estate tax repeal and rate reduction efforts a much higher profile with average voters across America. Its founding members are the American Frozen Food Institute; Food Marketing Institute; Food Distributors International; Grocery Manufacturers of America; International Franchise Association; National Association of Broadcasters; National Association of Convenience Stores; National Beer Wholesalers Association; Printing Industries of America. They employ millions of Americans who are affected by the estate tax burden. Mr. C. Charles Nailen, Jr., a Dothan, AL, businessman, serves as AAUFT co-chairman.