News Room

Supermarket Industry Deeply Disappointed by President Clinton’s Veto of Estate Tax Repeal

August 31, 2000
   Washington, DC — August 31, 2000 — “The supermarket industry is deeply disappointed by President Clinton’s veto today of the Death Tax Elimination Act (H.R. 8),” said Tim Hammonds, president and CEO of the Food Marketing Institute (FMI) and co-chairman of the anti-estate tax coalition Americans Against Unfair Family Taxation.

“Repeal would relieve millions of family businesses and all the people they serve from America’s most unfair tax,” he said. “This insidious tax is an ongoing burden that follows business owners to their grave,” said Hammonds. “It affects 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 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.”

Hammonds also commented on proposals to provide estate tax relief by increasing the exemption. “Plans to increase the family business exemption are worthless. Our experience with the exemption enacted in 1997 shows that almost no 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.”
   
   
   

Food Marketing Institute proudly advocates on behalf of the food retail industry. FMI’s U.S. members operate nearly 40,000 retail food stores and 25,000 pharmacies, representing a combined annual sales volume of almost $770 billion. Through programs in public affairs, food safety, research, education and industry relations, FMI offers resources and provides valuable benefits to more than 1,225 food retail and wholesale member companies in the United States and around the world. FMI membership covers the spectrum of diverse venues where food is sold, including single owner grocery stores, large multi-store supermarket chains and mixed retail stores. For more information, visit www.fmi.org and for information regarding the FMI foundation, visit www.fmifoundation.org

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