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| Wilson Votes to End the “Death Tax” |
June 09, 2000 |
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Washington, D.C.—Congresswoman Heather Wilson voted today in favor of legislation that would repeal the “death tax.” The “Death Tax Elimination Act” (H.R. 8) repeals the estate, gift and generation skipping transfer tax gradually over 10 years. Currently the Internal Revenue Service (IRS) can take up to 55% of the value of a family business or farm when the owner passes away.
“Families should have the security of knowing that when a loved one passes on, the family business will stay in the family,” said Wilson. “When people work their whole lives to build a family business or farm, they want to know that their hard work will continue to help a community prosper. This tax eats away at the fabric of New Mexico’s economy, and it’s time we bury it for good.”
John Chiado, a co-owner of Albuquerque-based Lumber Inc, welcomes this legislation and has personal experience with the consequences the so-called death tax can have on New Mexico companies. “My parents worked hard all their lives to build a business, and they faithfully paid taxes all their life,” he says. “You know, you play by the rules. And your reward at death is to lose 50% of your life-time earnings? I just don’t think that’s right.”
Lumber Inc. is a homebuilder’s supply store in Albuquerque and Santa Fe that delivers materials to construction sites. The company employs more than 150 New Mexicans. When Chiado’s father, one of the founders of Lumber, Inc., suddenly passed away in 1997, the family’s share in the company was subject to the estate tax. Had it not been for the elder Chiado’s extensive estate planning, the family may have lost their stake in the business their parents helped build from scratch.
“Today`s bill moves Congress one step closer to a full repeal of this unfair tax,” continued Wilson. “It is my hope that repeal will come as soon as possible so that all families—hard-working people like the Chiado’s—will be able to pass a legacy on to the next generation. The Chiado’s should be able to pass on their share of Lumber Inc. to their children without having to worry about selling the business to pay a hefty, unfair tax bill.”
Prior to 1916, the federal death tax was a temporary means to pay for the high cost of war, rather than a long-term source of federal revenue. A "stamp" tax levied at death was established in 1797 to pay for a naval buildup during heightened tensions with France. This tax was eliminated in 1802 and America was without a death tax for 60 years until Congress reenacted it in 1862 to help pay for the Civil War. After the conflict ended the tax ended, too, not to reappear until the Spanish-American War in 1898. This form of the death tax was eliminated in 1902, but was brought back in 1916 to pay for World War I and we have had some form of the death tax ever since.
According to the NFIB, more than 70% of small businesses do not survive the second generation and 87% do not make it to the third generation. Sixty percent of small-business owners report that they would create new jobs over the coming year if death taxes were eliminated.
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