Estate Tax Bill Dies Quietly After Clinton's Veto
The legislation, which cleared the House of Representatives in June and the Senate a month later, would have gradually phased out federal estate and gift taxes, ending in a full repeal in 2010. Currently, the first $675,000 is exempt from taxation, but the remainder of the estate is subject to a marginal tax that can go as high as 55%.
Industry associations believed the legislation would have given a reprieve to the many family-owned contracting firms in the United States. Mark Davis, president of Davis Mechanical Con-tractors, Inc., in Waco, TX, was one contractor displeased with the veto.
“The estate tax is robbery,” he said. “You work all your life to make your family not have to struggle like you did, and the government takes half. You have already paid taxes on your earnings. Why must we do it again and put an additional hardship on our family?”
Michael Cedeck, an independent contractor in Dallas, TX, echoed Davis’ remarks.
“It’s a cruel and unfair tax on one’s loved ones, the ones we work so hard to see do better by what we do,” he said.
Publication date: 09/18/2000
ASSOCIATIONS BACK Repeal of Estate TaxIndustry organizations which gave the bill their support included the Air-Conditioning Contractors of America (ACCA), Plumbing-Heating-Cooling Contractors-National Association(PHCC-NA), Sheet Metal and Air-Conditioning Contractors’ National Association (SMACNA), and Mechanical Contractors Association of America (MCAA).
“We have long supported a repeal of the estate tax, as approximately $6 billion is spent annually by small family businesses on lawyers, accountants, and insurance — all in an attempt to soften the blow of the estate tax,” said Anthony Shaker, president of ACCA and ceo of Boston-based BALCO, Inc.
“This money could be put to better practical uses, such as hiring new employees or expanding the family business. Eliminating the tax [would have] dramatically reduce[d] the time, money, and energy wasted every year on estate planning.”
In a letter urging Clinton to reconsider his decision and end the estate and gift tax, Shaker said, “As the vast majority of our members are family-owned and operated businesses, our membership is disproportionately impacted by the inefficient and destructible estate tax regime.”
Shaker contends that every time a family-owned business is forced to shut its doors, 46 people lose their jobs. He says 90% of family-owned businesses that fail following the death of the founder do so because of the punitive estate tax burden on surviving family members.
HOUSE FAILS to Override VetoThere was hope that Congress, in its first order of business on returning from its summer recess, would override Clinton’s veto. However, by a 274-157 vote on Sept. 7, the House fell just 14 votes short of the necessary two-thirds margin to override the veto with 431 members voting.
Dennis Haster, House Speaker and Illinois (R) representative, was vocal over the decision.
“The death tax is unfair, and the President’s veto of our bill to repeal this tax is misguided,” he said. “[This] veto will hit our nation’s farmers and small business owners the hardest. The death tax will prompt their children to sell off the family business to cover the tax rather than to develop and grow the kind of businesses this country needs.”
Clinton defended his decision.
“If the congressional leadership is serious about estate tax relief for small businesses, family farms, and principal residences of middle-class families that have increased in value, they should work with me in a fiscally responsible manner as Democrats in Congress have proposed,” he said.
The President, Democrats, and some Republicans in Congress expressed opposition to the full repeal bill, countering that estate tax exemption should be raised to $4 million in order to exempt 90% of all estate taxpayers, instead of the proposed 100%.
Due to the difference of opinion in how exactly to distribute the percentage of those who pay estate taxes, Clinton followed through with his threat and vetoed the legislation, saying, “This bill is wrong. It is wrong on grounds of fairness. It is wrong on grounds of fiscal responsibility.”
He said that the bill would help the richest 2% of the country and that more than half of its benefits would be showered on just 3,000 estates, which would get an average tax cut of $7 million if it had become law.
In his argument for vetoing the repeal of the estate tax, the President said that the repeal is a “budget-busting bill that provides a huge tax cut for the most well-off Americans at the expense of working families.”
CONTRACTORS: Tell us what you think of the estate tax issue. Click on to “HVACR Forum” at www.achrnews.com. We want to hear from you.
Publication date: 09/18/2000