Iowa manufacturer Eugene Sukup writes for McClatchy-Tribune Information Services (via the California Farm Bureau Federation's Ag Alert):
The recent deaths of Farrah Fawcett, Michael Jackson, Billy Mays and Ed McMahon have many Americans thinking about mortality. If you're a business owner of a certain age, as I am, it's something you think about daily.
Unlike television personalities and performing artists, most business owners labor in relative obscurity. Our legacy, when we pass, is what we've built and perhaps invented—in my case, agricultural equipment most Americans have never heard of—and the hundreds and perhaps thousands of people who depend on us for jobs.
We're unlike television personalities and recording artists in another important respect as well: When we die, the government may lay claim to half or more of our business.
Not directly, but through tax policy.
He continues:
My sons are both active in the business. But they know that when my wife, Mary, and I pass, the estate tax will be so severe—estimated at $15 million to $20 million at today's tax rate—the business may have to be sold. [ ... ]If Sukup Manufacturing is fortunate enough to survive our deaths, the government will claim an additional 45 percent when our sons die (more, if Congress raises the tax rate, or allows it to increase automatically to 55 percent, as it will in 2011 under current law).
And when their children die it will take another bite until the business finally collapses or some future generation says, "We've had enough."
And all for nothing. According to a recent study by economist Stephen Entin for the American Family Business Foundation, of which I am a member, the economic damage the estate tax does to businesses such as ours—and to the economy as a whole—reduces total tax revenues by more than the estate tax brings in to the Treasury.
Read the entire commentary here.The music of Michael Jackson will live on, like Elvis' before him. But our business may not survive our deaths.
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