Date of Issue: May 11,1996
General Information Contact: Arturo Silva email@example.com or (202) 507-6398
A Kennesaw State College (Marietta, GA) survey of black businesses on Black Enterprise magazine's top 100 list reveals that over 58% estimate the long-term survival of the family business after the death of the current owner(s) will be significantly more difficult to impossible because of the federal estate tax. Edmund Peterson, Chairman of the African-American leadership group Project 21, says the survey reveals that the estate tax may deny the American dream to many hard-working families who save to provide their children with a better life.
The survey of Black Enterprise magazine's top 100 businesses include the following findings:
The black-owned businesses surveyed were overwhelmingly family-run. 97% were closely-held or privately run family businesses. All are first generation-owned. On average, the businesses employ 2.4 family members on a full-time or part-time basis. Only 35% have stockholders who are not family members. All have created new jobs, an average of 27, in the last five years. The average business surveyed started in 1984 and currently employs 96 people.
"This survey shows the federal estate tax does not allow black family businesses to create wealth and most importantly, keep this wealth 'all in the family.' Once again, big government is proving to be no friend to black-owned family-run businesses," says Edmund Peterson. "Simply put, the federal estate tax echoes the federal government's motto: 'What's mine is mine, what's yours is mine.'"
Estate taxes are applied to estates worth at least $600,000, but due to the insistence of some House and Senate Republicans, the 1996 budget agreement applies the estate tax (which starts at a 37% tax rate) to estates worth only $750,000 or more in 1998. Beginning in the year 2000, the value of the estate taxed will be indexed to inflation. Estate taxes provide less than 1% of total federal revenues.
Lonnie Thigpen, the son of 84 year-old Mississippi tree farmer Chester Thigpen (a grandson of slaves, and, with his wife, last year's National Outstanding Tree Farmers of the Year), recently testified before the House Ways and Means Committee about the injustice of the estate tax. "We're not rich people. My father and I do almost all the work on our land ourselves. Without estate tax reform, many [tree farmers'] properties will be broken up into smaller tracts or harvested prematurely. Some may no longer be economical to operate as tree farms and will perhaps be converted to other uses or back into marginal agriculture... My father and I planted some more trees not long ago. He knows he will not likely be here to see them mature. But he hopes that his grandchildren and great-grandchildren will be able to watch those trees grow on the Thigpen Tree Farm..."
Contact Arturo Silva at (202) 507-6398 or at firstname.lastname@example.org.
(A publication of Project 21, a project of The National Center for Public Policy Research, 20 F Street NW, Suite 700 Washington, DC 20002; (202) 507-6398; Fax (301) 498-1301; E-Mail email@example.com; Web http://www.nationalcenter.org.) ###
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