Death taxes hurt small business

Published 12:00 am Wednesday, May 7, 2003

By Jack Farls – NFIB Focus

There it was, on the cover of the April 13 Washington Post Magazine: “Why is the father of the world’s richest man trying to make all those rich people so uncomfortable?”

The man in question is William H. Gates, Sr. and he’s become a leading advocate for preserving the Death Tax.

And those “rich” people are in favor of permanent repeal of the Death Tax.

The Post quotes Mr. Gates as saying “Americans have been convinced that the estate tax, which affects only the wealthy few…should be repealed.”

Let’s face it; the Death Tax affects people who by any reasonable definition would not be considered the wealthy few. In fact, more than half the Death Tax revenues come from estates of less than $5 million. And that’s not money stuffed under a mattress or in the bank – that’s the value of all the assets of the business – the property and equipment to keep a company operating.

For a small business, assets like a storefront, a warehouse and some delivery trucks can quickly add up to millions of dollars locked up in an enterprise that turns only a middle-class profit.

Only the wealthy few? “That’s like saying cancer only affects those who die from it,” said Frayda Levin, a small-business owner in Hackensack, New Jersey. In a letter to the local newspaper, she pointed out “much of the burden Death Taxes impose does not show up in tax receipts, but in needless lawyer and accountant bills, wasted time and personal anguish.”

Levin’s family has spent $50,000 in attorney fees for estate planning and continues to spend thousands of dollars more each year for accountants and insurance.

Mike Nobis of Quincy, Illinois doesn’t consider himself one of the wealthy few either. He told reporters on Capitol Hill, “My last name is Nobis. Not Rockefeller. Not Gates.”

Nobis, part of three generations working in the family business, lost both parents in a tragic auto accident. The Death Tax took $300,000 that the family had planned to use to expand the business and create more jobs in Quincy.

Karen Brown and her late husband were in business in the Midwest for 18 years. When her husband died in March 2000, she found herself a 38-year-old widow with two daughters, ages six and eight. Fortunately, prudent estate planning saved the businesses but Karen worries that those businesses might not survive the six-to-seven million-dollar tax burden in the event of her death.

“I am looking for the best way to pass on the family business to my girls,” says Brown. “Th Death Tax would wipe out literally everything my husband and I have worked for.”

Congress took steps to repeal the tax in 2001, and it is being gradually reduced until it expires in 2010. But it is reinstated in 2011. In the meantime, small-business owners (aka the wealthy few!) must continue to pour thousands of dollars a year into estate planning to avoid losing that to which they devoted a lifetime.

No, Mr. Gates, the Death Tax doesn’t target the rich. It reaps its grim benefits from the entrepreneurs of America and prevents them from devoting time and resources to building businesses and creating jobs.

Congress can fix the mess by simply repealing the Death Tax now-and forever.

JACK FARIS is president of the National Federation of Independent Business, the nation’s largest small-business advocacy group. More information is available on-line at