Supermarket Industry to President Clinton: Repeal the Estate Tax

Washington, DC — Aug. 24, 2000 — “The supermarket industry urges President Clinton to sign the Death Tax Elimination Act (H.R. 8),” said Tim Hammonds, president and CEO of the Food Marketing Institute (FMI), as Congress officially delivered the measure to the White House today. “Repeal will relieve millions of family businesses and all the people they serve from America’s most unfair tax.”

“Mr. Clinton must recognize the need to fully repeal this insidious tax, which is an ongoing burden that follows business owners to their grave,” said Hammonds, who also co-chairs the coalition Americans Against Unfair Family Taxation. “Mr. Clinton needs to understand how harmful this tax is to millions of family-owned businesses, along with the workers they employ, the consumers they serve and the communities they support.

“What is too often overlooked are the exorbitant costs the family businesses incur for estate planning to minimize the impact of a tax that can run as high as 60 percent. Many supermarket companies spend millions of dollars on highly specialized tax attorneys, accountants and estate planners for this reason — and on loans and extremely costly insurance to cover estate taxes they cannot avoid.

“IRS data may show that a small percentage of family businesses pay estate taxes. But what these figures do not show is the many billions of dollars that businesses spend to avoid the tax. Estate planning costs are, in effect, an annual, ongoing tax that family businesses must pay if they are to survive.

“These costs are a waste of precious resources that could be much better spent to expand businesses, create more jobs, improve employee benefits, enhance customer service and support worthy community programs.

“IRS data also fail to show how many family businesses were sold in order to avoid the estate tax. In many of these cases, communities lose institutions that have been long-time supporters of local charities, schools, food banks and other vital programs.”
Family Business Estate Tax Exemption Is Worthless

Hammonds also commented on proposals to provide estate tax relieve by increasing the exemption. “Plans to increase the family business exemption are worthless. Our experience with the exemption enacted in 1997 shows that very few businesses qualify because the criteria are far too narrow and complex.”

Both the American Bar Association and American Institute of CPAs have condemned the exemption for its complexity and extremely limited application. The exemptions proposed this year feature the same criteria. Many experts have concluded that it is not possible to establish criteria that reflect the numerous ways that family business ownership is structured and transferred from one generation to the next.

“The only meaningful relief,” Hammonds concluded, “is total repeal. We have momentum. We have strong bipartisan support. And we have the blessing of the American public.”