CEI Joins Coalition Opposing Estate Tax Changes

Changes would effect family-owned businesses

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Dear Secretary Lew:

The undersigned organizations oppose the Department of Treasury’s proposed changes to Section 2704 on estate and gift tax valuation discounts. These rules will significantly change family businesses’ succession plans and make it harder for family owned businesses to transition to the next generation. The changes proposed to Section 2704 would remove legitimate valuation discounts for estate, gift, and generation skipping taxes which businesses have used for the past two decades in order to prevent the IRS from overvaluing their businesses at death.

These proposed regulations would force even more family businesses and farms to grapple with the complicated and costly estate tax. Moreover, Treasury’s action does not comport with the will of Congress. On April 16, 2015, the House passed the Death Tax Repeal Act (H.R. 1105) on a bipartisan basis 240-179. In March 2015, the Senate passed a budget amendment to repeal the estate tax (S. Amdt. 607) and in 2013, 80 Senators voted to “to repeal or reduce the estate tax, but only if done in a fiscally responsible way” (S. Amdt. 693). Bypassing Congress to enact rules subjecting more family businesses to the estate tax rebukes the hard work elected officials have done to reform and repeal the tax altogether.

The undersigned organizations strongly oppose the Treasury Department forcing more family businesses to pay the estate tax through changes to Section 2704. Contrarily, we support full and permanent repeal of the estate tax for the following reasons:

Repealing the estate tax would spur job creation and grow the economy. Many studies have quantified the jobs that would be gained from estate tax repeal. A recent Tax Foundation study found that the US could create over 150,000 jobs by repealing the estate tax. A 2012 study by the House Joint Economic Committee found that the estate tax has destroyed over $1.1 trillion of capital in the US economy – loss of small business capital means fewer jobs and lower wages. Lawrence Summers, former Secretary of the Treasury under President Clinton; Alicia Munell, member of President Clinton's Council of Economic Advisors; Joseph Stiglitz, a Nobel laureate for economics; and Douglas Holtz-Eakin, former CBO Director have all published work on the estate tax's stifling effect on job growth and the economy as a whole.

The estate tax contributes a very small portion of federal revenues. The estate tax currently accounts for less than one percent of federal revenue. There is a good argument that not collecting the estate tax would create more economic growth and lead to an increase in federal revenue from other taxes. In addition, the estate tax forces family businesses to waste money on expensive insurance policies and estate planning. These burdensome compliance costs make it even harder for business owners to expand their businesses and create more jobs.

The estate tax falls particularly hard on minorities. The estate tax threatens to confiscate generational capital from African-American and minority communities. Estate tax liabilities bankrupted the Chicago Defender – the oldest black-owned daily newspaper in the United States. According to a 2004 Impacto Group poll, 50 percent of Hispanic business owners know someone who sold their business to pay the estate tax and a quarter expect to sell their business because of the estate tax.

A super-majority of likely voters support eliminating the estate tax. Poll after poll has indicated that a super-majority of likely voters support repealing the estate tax. Typically, two-thirds of likely voters support full and permanent repeal of the estate tax. People instinctively feel that the estate tax is not fair.

The estate tax is unfair. It makes no sense to require grieving families to pay a confiscatory tax on their loved one’s lifetime savings. Often this tax is paid by selling family assets like farms and businesses. Other times, employees of the family business must be laid off and payrolls slashed. No one should be punished for fulfilling the American dream.

The undersigned organizations strongly suggest that the Treasury Department support family businesses seeking to pass to the next generation by withdrawing their proposed changes to Section 2704.


AMT – The Association for Manufacturing Technology    

Food Marketing Institute    

Agricultural Retailers Association
International Foodservice Distributors Association    

Convenience Distribution Association    

Associated Equipment Distributors
International Franchise Association    

American Supply Association    

National Cotton Council of America
Heating, Air-conditioning, & Refrigeration Distributors International    

National Association of Electrical Distributors    

National Lumber and Building Material Dealers Association
National Council of Farmer Cooperatives    

American Trucking Association    

Associated General Contractors of America
American Architectural Manufacturers Association    

Hardwood Federation    

National Confectioners Association
Association of Mature American Citizens    

Air Conditioning Contractors of America    

Americans for Tax Reform
Forest Landowners    

Associated Builders and Contractors, Inc.    

National Association of Home Builders
Printing Industries of America    

Truck Renting and Leasing Association    

Americans Standing for Simplification of Estate Tax
Industrial Minerals Association – North America    

International Sleep Products Association    

National Taxpayers Union
ISSA – The Worldwide Cleaning Industry Association  

United Fresh Produce Association    

National Electrical Contractors Association

Mason Contractors Association of America    

Coalition of Franchisee Associations
Wine & Spirit Wholesalers of America    

National Grange    

Associated Wire Rope Fabricators
Heritage Action for America    

Association of Equipment Manufacturers    

American Foundry Society
International Housewares Association    

Petroleum Marketers Association of America    

American Conservative Union
National Industrial Sand Association    

Window & Door Manufacturers Association    

Aeronautical Repair Station Association
Equipment Marketing & Distribution Association    

International Council of Shopping Centers    

National Christmas Tree Association
American Business Defense Council    

Education Market Association

National Association of Chemical Distributors
National Renderers Association    

Equipment Dealers Association  

 Americans for Prosperity
Club for Growth    

National Propane Gas Association    

National Funeral Directors Association
American Loggers Council    

The Dude Ranchers’ Association    

R-Street Institute
International Association of Plastics Distribution    

United States Cattlemen's Association    

International Sign Association

Auto Care Association    

National Black Chamber of Commerce    

National Small Business Association
Professional Beauty Association    

Materials Handling Equipment Distributors Association    

Home Furnishings Association
Small Business & Entrepreneurship Council    

NACS – The Association for Convenience and Fuel Retailing    

American Beverage Licensees
Metal Construction Association    

NPES – The Association for Suppliers of Printing, Publishing and Converting Technologies    

Irrigation Association
Forest Landowners Tax Council    

Florida Armenians, LLC    

International Association of Refrigerated Warehouses
Global Cold Chain Alliance    

American Commitment    

Log Cabin Republicans
Franchise Business Services    

Tire Industry Association    

Jeffersonian Project
Rural Agriculture Council of America    

American Moving & Storage Association    

National Association for the Self-Employed
Independent Electrical Contractors  

 National Association of RV Parks & Campgrounds    

NTEA – The Association for the Work Truck Industry
NATSO, Representing America's Travel Centers and Truckstops    

60 Plus Association    

Southeastern Lumber Manufacturers Association
National Franchisee Association    

Competitive Enterprise Institute    

Taxpayer Protection Alliance

American Bus Association    

American Horse Council    

Center for Freedom and Prosperity
U.S. Business and Industry Council    

National Utility Contractors Association    

National Community Pharmacists Association
Modification and Replacement Parts Association    

WMDA Service Station & Automotive Repair Association    

Campaign for Liberty
American Civil Rights Union    

Let Freedom Ring    

Less Government
Service Station Dealers of America and Allied Trades    

National Tax Limitation Committee  

 NTCA–The Rural Broadband Association
Gases and Welding Distributors Association    

Family Business Coalition