Overwhelming Majority of Voters Support Repeal of the Estate Tax

WASHINGTON, DC — June 8, 2000 — More than nine in 10 Americans voters believe the federal estate tax is unfair and nearly eight in 10 support the current bipartisan congressional effort to repeal the levy, according to a national survey released today. The survey of 1,000 respondents was conducted for Americans Against Unfair Family Taxation (AAUFT) by John McLaughlin & Associates.

The number of voters favoring repeal, 78 percent, is up considerably from a January survey in which 65 percent held this view.

“In the strongest possible way, this survey shows that the American public wants this onerous tax eliminated,” said Tim Hammonds, co-chairman of AAUFT and president and CEO of the Food Marketing Institute. “Support for repeal is widespread, crossing party lines, and members of Congress seeking reelection should consider closely the implications of this survey.”

From the voters’ perspective, the estate tax is not a partisan issue. The survey sample represented the entire political spectrum. In the upcoming congressional election, 35.4 percent of those surveyed are likely to vote for the Democrat candidate and 38.6 percent for the Republican, while 26.0 percent are undecided.

The survey was released two days before the House is scheduled to vote on the Death Tax Elimination Act (H.R. 8), which would phase out the estate tax over 10 years. The bill is currently co-sponsored by 244 representatives, including 47 Democrats.

The survey also shows that voters’ belief in the unfairness of the estate tax is not connected to their income level. Half of the respondents (51.7 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 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, a major reason is that 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.

“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.

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