Page One

Effects of estate taxes

Mike VukelichEl Sobrante
Tuesday June 18, 2002

To the Editor: 

Since 1960 we have lost 80 percent of our Bay Area’s larger family businesses because of estate taxes. All we have now are big stores like Costco, Target, Albertson's, Safeway, WalMart, etc. Local factories have been liquidated or sold to big corporations because of estate taxes after death or sold out before death in order to avoid estate taxes. The big corporations then manufacture the goods off shore. 

A very small minority of estates have been affected by the estate tax, 1.5 percent to 2 percent of the estates after death and about 2 percent of the estates before death each year, but this adds up to 80 percent of our larger local family businesses since 1960. 

This is communism. Stalin did this in order to keep central control. Now we have central control by big corporations and big government. This is not good and it is all because of the estate tax. We must have local family business control.  

Here is a scenario of what happens to a larger local family business. A father and mother start a small business 50 years ago. Their supermarket keeps growing because of hard work. The son and daughter start working when they are young, the grand children start working when they are young. The whole family works very hard. They keep enlarging the store. Eventually they buy ten acres, build a big store and build a small shopping center around the store with six small rented stores. The business that started with nothing is now worth $9 million. The father dies in 1999. His estate is now $4.5 million. The exemption is $.7 million. The family must pay 55 percent of $3.8 million or $2 million. They mortgage everything and pay the $2 million estate tax. Next year the mother dies. Another $2 million is due. What do they do? They sell out to Albertson's. If they lived 10 years longer, the business would be worth $20 million and the estate tax would make it worse. 

During the last 40 years, because of the estate tax, the big corporations have changed the ratio of personal income tax to corporation tax.  

In 1960 the corporation tax and personal income tax was about the about the same. Last year the corporation tax was $220 billion and the personal income tax was $1.1 trillion. Why?  

The big corporations are underpaying their tax by $880 billion each year. Why do you allow this? 

This is all because we have allowed the estate tax to destroy our larger local family businesses who pay their full taxes. Last year the estate tax and the gift tax combined was only $30 billion. This is nothing! 

Stop the estate tax - the estate tax is a freedom killer! 

I hope it's not too late! 

 

Mike Vukelich 

El Sobrante