WASHINGTON – A Hagerstown businesswoman said Thursday that the federal estate tax “steals a lifetime of work” from small business owners and family farmers.
“One of my goals in life is to pass on my business to (my sister and niece), but what will be left if the death tax isn’t eliminated?” asked Victoria Nelson, owner of Jarnel Iron and Forge.
Nelson joined a handful of farmers and other small business owners from around the country who were at a Capitol news conference to support the Death Tax Elimination Act, which would phase out the estate tax.
Federal estate taxes can run as high as 55 percent and they bring $20 billion a year in to the government. Opponents of the so- called “death tax” point to it to explain the fact that more than 70 percent of family businesses do not make it to a second generation and 87 percent do not make it to a third.
The bill, introduced by Reps. Jennifer Dunn, R-Wash., and John Tanner, D-Tenn., calls for yearly 5 percent reductions in the tax until it is eliminated by the year 2010.
“This is not a rich man’s, poor man’s debate,” said Tanner. “We believe that saving, investing and passing on family farms is a fabric of our society.”
Rep. Christopher Cox, R-Calif., who has introduced a bill to immediately repeal the estate tax, also spoke Thursday.
“The purpose of the estate tax is to redistribute wealth, but it has the opposite effect. It actually decreases wealth,” Cox said.
But it could be dangerous to eliminate the estate tax without first seeing “how it fits into the overall budget strategy for the country,” said Susan Sullam, a spokeswoman for Rep. Benjamin Cardin, D-Baltimore.
A White House official agreed that before approving tax cuts, “you have to figure out how to pay for them.”
“We have our own priority for tax relief,” said White House Deputy Press Secretary Dick Siewert, adding that the administration feels that estate-tax exemption increases in 1997 were sufficient.
But Nelson, who also faces a Maryland estate tax, said she is already feeling the pinch of estate taxes on the business she founded 17 years ago with her husband, David.
She said she currently spends money on lawyers and life insurance preparing for the estate tax, money that “could be used to hire more workers or expand the business.”
The Nelsons employ one full-time worker at their business, which makes decorative wrought-iron fences and sculptures. She said they sell many pieces in the Washington area, including many gates, railings and lamps on Smithsonian museums around the Mall.
“It’s time for the death tax to die,” said Nelson, who was speaking on behalf of the National Federation of Independent Businesses.