Nov 14, 2007
Arlington, VA – November 14, 2007 – The Food Marketing Institute (FMI) representing its family-owned supermarket members, today submitted testimony to the United States Senate Committee on Finance for its hearing, "Federal Estate Tax: Uncertainty in Planning Under the Current Law." FMI and its members have called for repeal of the estate tax for more than 20 years.
The hearing was sponsored by Senator Max Baucus (D-MT) and Senator Charles Grassley (R-IA). "We applaud Senator Baucus and Senator Grassley for their efforts to support the success of family businesses," said John Motley III, senior vice president, government and public affairs, FMI.
"Store owners confronted with an estate tax liability are often left with no choice but to sell stores to raise the necessary funds because assets are not liquid. Every store that does not get built – or worse, has to be sold - to pay an estate tax bill means lost jobs and less income security for the millions of employees in the grocery industry.
In an industry that averages an annual profit margin of only one percent, companies weakened by sell-offs often find it hard to continue to compete and grow. The estate tax makes family-owned businesses less competitive and drains resources that should be focused on expanding, creating jobs and giving back to the community," Motley said.
Members of FMI, including Niemann Foods Chairman Rich Niemann, Sr. from Quincy, Illinois; ShopRite CEO Joseph Colalillo of Flemington, NJ; D’Agostino Supermarkets, Inc. CEO Nick D’Agostino, Jr. of Larchmont, NY; and, Chatham Food Center CEO Leonard Harris of Chicago, IL, provided personal stories to the Committee to illustrate why food retailers seek reprieve from this pernicious tax, including:
• In a low-margin industry like food retailing, estate planning represents a proportionally outsized expense. Expenses incurred for estate planning waste precious resources that could be much better invested in new stores, jobs, expanded consumer services and community programs.
• The estate tax acts as a constant brake on growth and expansion – the lifeblood for survival in the supermarket industry. The overhanging threat of the tax often causes store owners to postpone building new stores or renovating existing ones.
• The estate tax is “blind” to the intrinsic value of family-owned enterprises. Family-owned companies tend to be heavily involved in community and civic affairs in part because their owners don’t have to answer to investors or shareholders primarily interested in bottom-line results.
• The estate tax is a critical factor in forcing owners to sell or liquidate their firms. In an industry already dramatically affected by consolidation, family-owned businesses say that the estate tax looms as a major factor that jeopardizes their survival.
Contact:
Claudia Peters
202.220.0654
cpeters@fmi.org
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