This view was shared equally by Democrats (69.5 percent), Republicans (68.8 percent) and independent voters (67.9 percent). The polling firm John McLaughlin & Associates conducted the telephone survey of 1,000 likely voters between September 15 and 17. The margin for error is +/- 3.1 percent.
Leading Industry Groups Push for Estate Tax Relief
These findings support the efforts of major industry groups to gain estate tax relief this year. Leading the call for estate tax rate reduction are Food Distributors International, the Food Marketing Institute (FMI), National Association of Convenience Stores and National Beer Wholesalers Association.
“More than 500 members of Congress voted for outright repeal or rate reduction this year,” said FMI President and CEO Tim Hammonds, who co-chairs AAUFT. “President Clinton has said he favors rate reduction as well.
“We have ample common ground for meaningful relief this year. There is strong support across the entire political spectrum. The electorate wants it. And family businesses need it as the first step toward ultimate repeal of America’s most unfair tax.”
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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.
Myths and Facts on Estate Taxes
The Myth — Family-owned businesses aren’t really threatened by the estate tax.
Opponents of estate tax repeal suggest that IRS regulations already provide ample liability protection for family-owned enterprises. Those who favor keeping the estate tax are fond of claiming less than 2 percent of taxable estates are comprised of family-owned assets.
The Facts — On the contrary, family-run businesses are falling victim to the estate tax.
This myth falls apart when you examine the assets reported on estate tax returns. IRS rules categorize assets in these groupings: farm assets, closely held stock, other non-corporate business interests, real estate, real estate partnerships, and limited partnerships. For 1996, more than one-fourth (25 percent) of the total value of all taxable estates for which returns were filed in 1996 consisted of the value of business assets. With an accurate accounting of the assets of family owned businesses contained in estates, the proportion of estates in which such assets comprise a major portion of the estate’s value would be much higher than “less than 2 percent.”
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The Myth — Family-owned businesses can get a break on the estate tax without the need to repeal the entire tax. The Clinton Administration and Democratic members of Congress argue that simply accelerating the timetable for increasing the “unified credit” will enable most businesses to avoid paying the estate tax.
The Facts — Outright repeal is the only viable way family-owned enterprises can escape the confiscatory estate tax. Even a substantial increase in the unified credit won’t be of much help to asset-heavy businesses such as car dealers, beer wholesalers, medium sized newspapers — or even one modern supermarket. If the company is at all successful, the value of these assets can easily surpass $4 million (the maximum unified credit allowed in 2009 under the Democrats’ approach). Converting these assets into cash to pay the estate tax can ruin the company’s ability to compete, which, in turn, oftentimes leads to the sale or breakup of the entire business.
Besides, the exclusions written into the federal Tax Code are among the most complex regulations any business must deal with. Strict qualification standards must be met, and the definition of “family” doesn’t begin to reflect the variety of ways family owned businesses have been established. Congressional leaders concede that the qualified exclusion has provided very marginal tax relief. A clear beneficiary, however, are tax and estate attorneys, who’ve built a substantial cottage industry guiding clients through the unified trust regulations.
The Myth — Estate tax repeal gives a $250 billion windfall tax break to the Forbes 400 Richest Americans. Opponents of estate tax repeal love this argument, suggesting that the estate tax is justified because it’s the only way the government can collect its rightful share of taxes from the wealthiest Americans.
The Facts — The estate tax is one of many taxes levied on citizens — but the only one triggered by death. Americans at every rung on the economic ladder pay taxes — income, property, inventory, capital gains and sales taxes, to name a few. Estate taxes are levied on top of all the other taxes families and businesses are required to pay, and they’re the only taxes linked to an event — death — over which no one has yet found a cure. In today’s global economy, a thriving spirit of entrepreneurship has taken hold, enabling public and privately owned businesses and individuals to prosper and helping fill the government’s revenue coffers. Preserving the estate tax in this modern economy — when virtually every other nation has either abolished or dramatically reduced its estate tax — is more punitive than productive.
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The Myth — The United States can’t afford to lose the revenue that would result from estate tax repeal. Opponents of estate tax repeal project, with alarm, a $50 billion per year revenue loss — monies that are needed to fund a variety of urgent societal priorities such as reforming Medicare and preserving Social Security.
The Facts — Taxes will always be with us, but with repeal of the estate tax, death will no longer be a triggering event. Who, 10 years ago, accurately predicted the current robust U.S. economy or the fact that we entered the new millennium with a federal budget surplus?
That surplus is in large part the result of Americans doing better — and paying more taxes. And opponents of repeal conveniently neglect to point out that under H.R. 8 (the repeal bill that passed both Houses of Congress), accumulated wealth will still be taxed through capital gains on the appreciated value of assets. What will disappear from the Federal Tax Code with estate tax repeal is a burdensome tax liability linked solely to death.
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The Myth — Outright repeal of the estate tax is too dramatic a change in tax policy.
Opponents of estate tax repeal ultimately are left making the argument that we need some kind of estate tax to help defray the cost of government programs and to make certain wealth is not inherited tax-free.
The Facts — National opinion polls clearly show that a strong and sizable majority of American taxpayers believe the estate tax is unfair and ought to be repealed. Members of Congress pay close attention to what their constituents are telling them. The fact that both the House and Senate have now voted repeal of the estate tax reflects more than anything else that it is time to get rid our nation of this unfair, punitive and anti-competitive tax.
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