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Letter to Senator Kyl on the Death Tax

May 26, 1999

The Honorable Jon L. Kyl
United States Senate
Washington, DC 20510

Dear Senator Kyl:

On behalf of the 14,000 member companies of the National Association of Manufacturers, including more than 10,000 small and medium manufacturers, I commend you for your leadership in legislative efforts to completely and immediately repeal the death tax. The NAM believes that the current estate and gift tax regime represents a huge burden on America’s small businesses, particularly family-owned and closely held companies.

In the United States today, only one-third of family-owned businesses survive into the next generation, in many cases because of this death tax. The burden is felt by a business on an ongoing basis, in the form of legal and accounting fees, insurance premiums and appraisal fees related to estate-tax planning. Death-tax liability considerations frequently affect business decisions about investments and expansions. Repeal of the death tax would dramatically reduce the time, money and energy spent on estate planning, and would allow business owners to concentrate on running their businesses and creating more jobs. In fact, our small and medium members consistently identify death tax repeal as one of the top three tax issues that would have the most positive impact on their companies’ ability to grow

The NAM strongly supports the "Estate Tax Elimination Act," which would repeal immediately all federal estate and gift taxes, including the generation-skipping tax. Under your legislation, death would no longer be a taxable event -- family members who inherit a business could step into the shoes of the deceased owner, without incurring any tax liability until they sold the business.

At the same time, we endorse your proposal to eliminate step-up basis for inherited assets as long as it is coupled with immediate and total repeal of the death tax. Lawmakers added the step-up basis provision to the tax code to partially offset a confiscatory estate-tax regime. It is critically important to keep the current basis rules in place until the death tax is totally eliminated.

Thank you for taking the initiative on an innovative and workable plan to eliminate a huge burden on American small businesses. The NAM looks forward to working with you and your staff to secure passage of this important piece of legislation.

Sincerely,

Michael E. Baroody
Senior Vice President
Policy, Communications and Public Affairs