Death Tax Newsletter

Issue #13 — March 29, 2001

To: Pacific Northwest Family Owned Daily Newspapers

cc:

107th CONGRESS TAKES UP DEATH TAX REPEAL — ACT NOW — OR NEVER

Now is the time to act. With elimination of the death tax included in the President's tax proposal; H.R. 8, the Death Tax Elimination Act, moving through the House; and the Senate considering S.275, the Kyl-Breaux bill, the repeal effort is poised for victory this year. All those who support the need for repeal are urged to contact their Members of Congress, for if the tax bill passes this year without containing repeal, our chances of substantial reform in the next several years will be severely diminished.

THE HOUSE

Rep. Jennifer Dunn, R-WA, and Rep. John Tanner, D-TN, introduced H.R. 8, The Death Tax Elimination Act early in March. The bill had 220 original co-sponsors, enough to assure its passage in the House. This bill is substantially similar to what passed the Congress last year. It eliminates the tax through rate reduction over 10 years, beginning in 2001. It also immediately increases the unified credit to $1.3 million, providing immediate relief for those at the low end of the tax' grasp. The Ways and Means Committee heard testimony on repeal of the death tax last week and expects to act within days. Frank Blethen, publisher of the Seattle Times, was invited by the Committee to deliver testimony. His comments are attached. Some people speculate the House may move a repeal bill before leaving for the Easter recess on April 6. Calls to your Representative in the House are timely, particularly to Democrats. Calls and letters to Ways and Means Chairman Bill Thomas, R-CA, are also critical, as his support will be critical to the more aggressive repeal of the death tax, versus an ineffective "relief" approach.

THE SENATE

The Senate is where most insiders believe the fate of repeal will be decided. With the parties evenly divided, great effort is needed to assure success. S. 275, the Kyl-Breaux bill (formerly Kyl-Kerrey) has been re-introduced. This bill has had substantial bipartisan support as a reasonable and effective compromise. S. 275 eliminates the death tax immediately but also eliminates the stepped up basis in capital gains so that there is no tax at death, but if the business (or asset) is sold by the heirs, a greater capital gains tax would be payable. It is still unclear whether the Senate will choose to act on S. 275 or whether it will bring the legislation that passes the House to the Senate floor. It is critical that Democratic Senators be asked to co-sponsor S. 275. Their support is essential to repeal of the death tax. Co-sponsors of S. 275 to date include: George Allen (R-VA), Evan Bayh (D-IN), John Breaux (D-LA), Max Cleland (D-GA), Susan Collins (R-ME), Phil Gramm (R-TX), Tim Hutchinson (R-AR), Blanche Lincoln (D-AR), Craig Thomas (R-WY), and Ron Wyden (D-OR). Key Democratic Senators that should be asked to sign on include: Mary Landrieu (LA), Patty Murray (WA), Zell Miller (GA), Ben Nelson (NE), Bill Nelson (FL), Carper (DE), Diane Feinstein (CA), Robert Torricelli (NJ), Maria Cantwell (WA), Jean Carnahan (MO). The Senate is expected to discuss tax legislation in May, so now is the time to communicate with your Senator about the importance of repeal to your business.

BEWARE OF "REFORM" AND "RELIEF"

Life insurers, estate tax attorneys and some charitable organizations have mounted a sophisticated campaign to oppose repeal of the death tax. Those involved in this effort are working to preserve a tax system that is devastating to their clients/donors, but which is beneficial to them. As they are aware of the substantial momentum toward repeal, they are not simply opposing any changes, but they are advocating for "relief" and "reform", keeping in place a structure that holds family businesses hostage to continued exorbitant life insurance policies and complicated estate planning. While repeal of the death tax is — and should continue to be — a bipartisan movement, some democratic leaders are using this self-interested campaign to defend their pursuit of ineffective compromises, such as small increases in the unified credit, carve-out language for family businesses and minor reductions in the top death tax rate. Don't be fooled by these proposals. They are not sincere efforts to resolve the terrible inefficiencies and harmful effects of the death tax. Any measure that is proposed should be judged as to its effectiveness at preventing a privately owned business of any size from having to be sold to pay the tax.

DEATH TAX REPEAL SUMMIT TO BE HELD IN MAY

The fourth annual Death Tax Repeal Summit will be held in Washington, DC, Tuesday, May 15, 2001. The Summit is hosted by the Seattle Times, with support from the Newspaper Association of America, the U.S. Chamber of Commerce and various other groups supporting repeal of the death tax. Business owners are strongly encouraged to participate in the day's events, which will include a breakfast in the Capitol Building with briefings from the congressional champions and from the Administration on this effort. Those present will then be given the opportunity to make calls on Members of Congress, with a strong focus on the Senate. The day's events will wrap up with a reception, providing an opportunity to gather with those who work for repeal daily in Washington, as well as with business owners from many different sectors of industry around the country. Please plan to join us on May 15 and help carry the death tax repeal effort over the finish line this year. For additional information on this important event, please contact Jill Mackie at 206/464-2028 or via e-mail at jmackie@seattletimes.com.

REPEAL ADS AVAILABLE ON DEATHTAX.COM

Ads targeted at the need for repeal are currently available on the deathtax.com website. The ads are a vertical, half page format and can be downloaded and run with the newspaper's logo inserted or can be attributed to the Family Business Estate Tax Coalition, a group of nearly 100 national business associations advocating repeal. Copies of the ads are attached. Please consider running these ads, which encourage the public to contact their Members of Congress. Questions may be directed to Jill Mackie at 206/464-2028.

This bi-monthly newsletter is produced by The Seattle Times for family-owned newspapers. Please share it with other family businesses in other industries. Any suggestions for distribution or content will be greatly appreciated. Contact Jill Mackie, Director of External Affairs, at 206/464-2028.

Please e-mail us with your comments, death tax horror stories and suggestions on-line at feedback@deathtax.com.

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