FOR IMMEDIATE RELEASE: November 16, 2010
- Susan Roth, 301-530-3539, [email protected]
Anne Singer, 202-271-4679,
Small Business Owners Say Yes to Estate
Tax, Tell Tax Opponents ‘You Don’t Speak for
They Join United for a Fair Economy in Asking Congress and White House for Permanent Restoration of a Robust Tax on Inheritance
Boston, MA -- A group of small business owners and entrepreneurs today spoke out in support of the estate tax, insisting that opponents of the tax have misrepresented the interests of small businesses for their own agenda. Coming from four different industries in four different states, these business owners explained their support for a federal tax on inherited wealth during a conference call organized by United for a Fair Economy (UFE) this morning. Each of the speakers has also signed UFE’s “Call to Preserve the Estate Tax.” Amid reports of possible compromise on the expiring Bush tax cuts, the fate of the federal estate tax remains unclear as Congress decides this week on a tax package that will go to a floor vote next month.
“I don’t know any small business owners who are worried about paying the estate tax,” said Dave Eiffert, a signatory to United for a Fair Economy’s Call To Preserve the Estate Tax who co-founded the Snoqualmie Falls Brewery outside of Seattle with a group of business partners in 1997. “Opposition to the estate tax is largely pushed by families who have enormous estates. They pay huge sums to spread misinformation and use small business people as their poster children. In my view, repealing or cutting the estate tax is just another billionaire bailout that will line the pockets of the heirs and heiresses of multi-millionaires and billionaires.” The brewery employs 20 people and has annual sales of $1.2 million. “Like almost all small business owners, I do not expect to owe the estate tax. Next time you hear someone say small business owners oppose this tax, don’t believe them.”
Of the 5,500 estates expected to pay any tax under the 2009 rules, only about 100, or 1.8%, of those estates will have a majority of their assets in a small business or farm, and of those 100, the vast majority have sufficient cash to pay the tax.
Jean Gordon co-owns Frostyaire of Arkansas, an agricultural freezing and cold storage company bought by her parents in 1950 in Little Rock. Gordon spoke out in favor of the estate tax, saying “At Frostyaire, our decisions about hiring employees, purchasing equipment, and expanding the business are not based on tax policy but on the number of customers and the amount of product they have to store with us. The best way to help small businesses like ours is to put more money in the hands of the middle class who will spend the money as customers of our businesses, rather than cutting the estate tax to ensure that very wealthy heirs can have a larger inheritance. If Frostyaire becomes more profitable, I would be happy to pay the tax as my family’s contribution for being part of the American economy.” Frostyaire has 45 employees and two freezer warehouses. Gordon, who has also signed UFE’s Call to Preserve the Estate Tax, expects she will owe no estate tax under 2009 rules.
John Russell, a real estate developer from Portland, OR, said, “I am one of the tiny fraction of small business owners who will owe the estate tax, and that’s fine with me. My success would not have been possible without investments by the federal government, along with the city and state, in redeveloping downtown Portland – particularly the investments in light rail and streetcar systems. Federal tax incentives like accelerated depreciation and selling tax credits to investors helped me attract investment and lower our cost of doing business. I see the estate tax as a way to pay some of those public investments and tax incentives back to society – to help make success possible for the next generation.” His company, Russell Development, owns and operates six office buildings and provides employment for about 50 people. Russell has signed UFE’s Call to Preserve the Estate Tax.
Russell added, “Small businesses do not pay the estate tax. Let’s be clear: the estate tax is not a small business or farm issue that has bubbled up from the grassroots. This is an orchestrated effort funded by some of the richest families in the country who want to get out of paying their fair share. These wealthy individuals have used small businesses and farms as the all-American icons to promote and front their cause, but the facts just aren’t there to back that up.”
“I’m one of the 0.25% of the population who will owe the estate tax,” said Jerry Fiddler, whose high-tech business, Wind River Systems, employed 2,000 people at its peak, before being bought by Intel for $850 million in 2009. Fiddler, a signatory to UFE’s Call to Preserve the Estate Tax, is now a venture capitalist specializing in green technology starts ups. “Most small businesses don’t come anywhere near the $3.5 million exemption. The traditional mom and pop businesses – the grocery store, the dry cleaner, the bakery, my dad’s fabric shop – just don’t have that kind of value. And most businesses, once they’re beyond a certain size, diversify their assets so paying some estate tax does not threaten the business. The idea that we should throw out the whole estate tax, or raise the exemption even higher than three and a half million, on the basis of a few edge cases, is offensive, and not the way we should make tax policy. As a small business owner and creator, I do not want the estate tax thrown out in my name.”
Given the 2009 exemption of $3.5 million per spouse, the estate tax is paid by the wealthiest 0.25% of the population. Lee Farris, UFE’s Estate Tax Policy Coordinator noted, “Small businesses are largely protected from the estate tax already. Multiple business-friendly special provisions in the law mean most small businesses and farms do not have to pay the tax. Those provisions allowed any given small business or farm estate to pass on up to $9 million untaxed in 2009. That’s why, out of 2.4 million deaths in 2009, only about a dozen were small business or farm estates with a lack of cash to pay the estate tax.” Farris added, “It makes no sense to set tax policy for our entire country based on the exception rather than the rule. It’s irresponsible to shift costs onto millions of Americans by giving massive tax breaks to thousands of wealthy heirs. That’s why UFE is mobilizing our members this week to call Congress.”
UFE as an organization supports the Harkin-Sanders-Whitehouse Responsible Estate Tax Act, which includes a $3.5 million exemption per spouse and a graduated rate going from 45% up to 65% on estates over $500 million ($1 billion for couples). UFE opposes the Lincoln-Kyl proposal with its $5 million per spouse exemption, which would cost $130 billion more over 10 years than even an extension of 2009 rates. UFE also opposes the Feinstein proposal for an unlimited farm exemption, which would create a loophole allowing wealthy individuals to shelter their wealth by buying farms; this would drive up the price of farmland and hurt small farmers in the end.
Some 6,000 Americans have signed UFE’s Call to Preserve the Estate Tax; 2,000 signers expect to owe the estate tax themselves or come from families that have already paid the tax. Among the signers are also more than 600 owners of small businesses and farms, including all four small business people on today’s call.
United for a Fair Economy is a national, independent, nonpartisan, 501(c)(3) non-profit organization located in Boston, MA, which advocates for progressive economic and tax policies. More at http://http://www.faireconomy.org.
(To arrange interviews with any of the speakers or farm and small business owners around the country, contact Susan Roth and Anne Singer, contact info above. An audio recording of this event will soon be available at UFE's November 2010 Estate Tax Teleconference page.)
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