More women facing 'death taxes'

The Olympian (Washington State)
Sunday, March 26, 2000

By JOHN HUGHES
The Associated Press

WASHINGTON - Karen Say is a jack of all trades at Saybr Contractors Inc. in Seattle. She's the company president and chief owner, and she does most of the bids, finances and computer work.

If she died, she would be expensive and difficult to replace, and Saybr also might have to delay an expansion to pay the taxes on her share of company assets.

"Having an estate tax start to eat away at the profits or the earnings of the company would make it even more difficult for them to recover," said Say, 31, who lives in Black Diamond. "If I'm to die, I affect many, many families."

Say is not alone in worrying about so-called death taxes. The number of women business owners is soaring, and many of those women say cutting estate taxes is a key to the long-term health of their ventures.

Women's interests

A survey released last month found that 272 women business owners expect to lose an average of nine existing jobs and 16 planned positions from an unexpected death of an owner or owners, according to The Center for the Study of Taxation, a Costa Mesa, Calif. Group formed by businesses worried about estate taxes.

Roughly 40 percent of women business owners in the survey said the estate taxes would hurt expansion plans or force the sale of all or part of the business.

Lawmakers, especially Republicans, see an opportunity in the women's concerns.

After years of appealing to women mainly through education and health care, they view estate tax cuts as a promising issue for attracting female voters in the high-stakes 2000 election.

"We've reached an era where women's interests have become as broad as men's, and they're equally interested in issues like tax reform," said Rep. Jennifer Dunn, R-Wash., who has made a 10-year phase-out of estate taxes one of her top priorities.

Women business owners are voicing their estate tax concerns at a time when they are growing as a political force.

Business boom

The number of women business owners has doubled to 9.1 million and grown 1-1/2 times faster than overall businesses since 1987, according to the National Foundation for Women Business Owners in Washington, D.C.

Portland, Seattle and Phoenix were the three fastest growing metropolitan areas for women business startups between 1992 and 1999.

Aside from the recent increase in women-owned businesses, the first big wave of women business owners - who began ventures 25 years ago when it became easier for women to get bank loans - is now nearing retirement age, said Linda Lasad of the National Association of Women Business Owners in Washington, D.C.

"They're just now beginning to start planning for secession," she said. "So it is not an issue that has affected many business women owners until now."

Rep. Greg Walden, R-Ore., said women farm owners in his rural district are left to deal with estate tax issues because they are outliving their husbands.

"They're left there looking at what happens to the family farm," he said.

Under federal law, estates above $675,000 are taxed at between 37 percent and 55 percent. Inheritance taxes brought in about $23.1 billion in 1998, or a little more than 1 percent of the $1.7 trillion in federal tax collections.

Lawmakers seeking exemptions or reductions in the taxes argue that estate taxes prevent small businesses and family farms from being passed down to heirs.

Rep. Darlene Hooley, D-Ore., said many people in her district hold large amounts of property they cannot develop because of land-use restrictions. So while those people seem wealthy on paper, they often lack the cash to pay hefty estate tax bills, she said.

"I just think it is important if people want to pass down their business to their children that they are able to do that," said Hooley, who has proposed exempting the first $5 million of as estate from taxes. "I see this as a family issue."

Having to cope

Small business owners also complain they spend costly time and resources making plans to cope with the taxes.

Judi Williams, vice chairwoman and cofounder of Telect Inc. in Liberty Lake said she and her husband have spent more than a decade consulting with lawyers, accountants and life insurers on how to avoid large estate taxes for their children.

"It's diverted our time. It's diverted our money," said Williams, 60. "Those are dollars that could have been spent hiring one more person or putting it into research and development."

The House earlier this month approved $78.6 billion in estate tax reductions over 10 years and attached the measure to a $1 increase in the minimum wage over two years.

But President Clinton has promised to veto any wage hike bill that includes tax cuts.

Other lawmakers, mostly Democrats, question the wisdom of large tax cuts before shoring up Social Security for future generations and paying down the federal debt.

Still others dismiss estate tax reductions as tax breaks for the wealthy.

But lawmakers who back estate tax reductions are confident they can strike a deal with Clinton before the year's end to get some kind of relief.

"There's growing support in Congress," said Walden, who supports several different approaches to bring the taxes down. "With the boom in the stock market, more people are affected by this."

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