Full Committee Hearing on Small Business and the Estate Tax: Identifying Reforms to Meet the Needs of Small Firms and Family Farmers
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FULL COMMITTEE HEARING ON SMALL BUSINESS AND THE ESTATE TAX: IDENTIFYING REFORMS TO MEET THE NEEDS OF SMALL FIRMS AND FAMILY FARMERS HEARING BEFORE THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS FIRST SESSION HEARING HELD NOVEMBER 4, 2009 Small Business Committee Document Number 111-054 Available via the GPO Website: http://www.access.gpo.gov/congress/house U.S. GOVERNMENT PRINTING OFFICE 53–451 PDF WASHINGTON : 2009 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate Aug 31 2005 18:16 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 G:\CLERKS~1\HEARINGS\TRANSC~1\53451.TXT DARIEN Congress.#13 HOUSE COMMITTEE ON SMALL BUSINESS NYDIA M. VELA´ ZQUEZ, New York, Chairwoman DENNIS MOORE, Kansas HEATH SHULER, North Carolina KATHY DAHLKEMPER, Pennsylvania KURT SCHRADER, Oregon ANN KIRKPATRICK, Arizona GLENN NYE, Virginia MICHAEL MICHAUD, Maine MELISSA BEAN, Illinois DAN LIPINSKI, Illinois JASON ALTMIRE, Pennsylvania YVETTE CLARKE, New York BRAD ELLSWORTH, Indiana JOE SESTAK, Pennsylvania BOBBY BRIGHT, Alabama PARKER GRIFFITH, Alabama DEBORAH HALVORSON, Illinois SAM GRAVES, Missouri, Ranking Member ROSCOE G. BARTLETT, Maryland W. TODD AKIN, Missouri STEVE KING, Iowa LYNN A. WESTMORELAND, Georgia LOUIE GOHMERT, Texas MARY FALLIN, Oklahoma VERN BUCHANAN, Florida BLAINE LUETKEMEYER, Missouri AARON SCHOCK, Illinois GLENN THOMPSON, Pennsylvania MIKE COFFMAN, Colorado MICHAEL DAY, Majority Staff Director ADAM MINEHARDT, Deputy Staff Director TIM SLATTERY, Chief Counsel KAREN HAAS, Minority Staff Director (II) VerDate Aug 31 2005 18:16 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 G:\CLERKS~1\HEARINGS\TRANSC~1\53451.TXT DARIEN STANDING SUBCOMMITTEES Subcommittee on Contracting and Technology GLENN NYE, Virginia, Chairman YVETTE CLARKE, New York AARON SCHOCK, Illinois, Ranking BRAD ELLSWORTH, Indiana ROSCOE BARTLETT, Maryland KURT SCHRADER, Oregon W. TODD AKIN, Missouri DEBORAH HALVORSON, Illinois MARY FALLIN, Oklahoma MELISSA BEAN, Illinois GLENN THOMPSON, Pennsylvania JOE SESTAK, Pennsylvania PARKER GRIFFITH, Alabama Subcommittee on Finance and Tax KURT SCHRADER, Oregon, Chairman DENNIS MOORE, Kansas VERN BUCHANAN, Florida, Ranking ANN KIRKPATRICK, Arizona STEVE KING, Iowa MELISSA BEAN, Illinois W. TODD AKIN, Missouri JOE SESTAK, Pennsylvania BLAINE LUETKEMEYER, Missouri DEBORAH HALVORSON, Illinois MIKE COFFMAN, Colorado GLENN NYE, Virginia MICHAEL MICHAUD, Maine Subcommittee on Investigations and Oversight JASON ALTMIRE, Pennsylvania, Chairman HEATH SHULER, North Carolina MARY FALLIN, Oklahoma, Ranking BRAD ELLSWORTH, Indiana LOUIE GOHMERT, Texas PARKER GRIFFITH, Alabama (III) VerDate Aug 31 2005 18:16 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00003 Fmt 0486 Sfmt 0486 G:\CLERKS~1\HEARINGS\TRANSC~1\53451.TXT DARIEN Subcommittee on Regulations and Healthcare KATHY DAHLKEMPER, Pennsylvania, Chairwoman DAN LIPINSKI, Illinois LYNN WESTMORELAND, Georgia, Ranking PARKER GRIFFITH, Alabama STEVE KING, Iowa MELISSA BEAN, Illinois VERN BUCHANAN, Florida JASON ALTMIRE, Pennsylvania GLENN THOMPSON, Pennsylvania JOE SESTAK, Pennsylvania MIKE COFFMAN, Colorado BOBBY BRIGHT, Alabama Subcommittee on Rural Development, Entrepreneurship and Trade HEATH SHULER, North Carolina, Chairman MICHAEL MICHAUD, Maine BLAINE LUETKEMEYER, Missouri, Ranking BOBBY BRIGHT, Alabama STEVE KING, Iowa KATHY DAHLKEMPER, Pennsylvania AARON SCHOCK, Illinois ANN KIRKPATRICK, Arizona GLENN THOMPSON, Pennsylvania YVETTE CLARKE, New York (IV) VerDate Aug 31 2005 18:16 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00004 Fmt 0486 Sfmt 0486 G:\CLERKS~1\HEARINGS\TRANSC~1\53451.TXT DARIEN C O N T E N T S OPENING STATEMENTS Page Vela´zquez, Hon. Nydia M. ....................................................................................... 1 Graves, Hon. Sam .................................................................................................... 2 WITNESSES Spoa, Sr., Mr. Christy, President, Ellwood City Save-A-Lot, Ellwood City, Pennsylvania, on behalf of Food Marketing Institute ....................................... 3 Mayes, Ms. Meredith, Digital Solutions Manager, Colorcraft of Virginia, Ster- ling, Virginia, on behalf of Printing Industries of America .............................. 5 Uhl, Uhl, Mr. Arthur, Fitzsimons & Jewett, PLLC, San Antonio, Texas, on behalf of National Cattlemen’s Beef Association .......................................... 7 Neese, Ms. Terry, Distinguished Fellow, National Center for Policy Analysis .. 9 APPENDIX Prepared Statements: Vela´zquez, Hon. Nydia M. ....................................................................................... 18 Graves, Hon. Sam .................................................................................................... 20 Spoa, Sr., Mr. Christy, President, Ellwood City Save-A-Lot, Ellwood City, Pennsylvania, on behalf of Food Marketing Institute ....................................... 22 Mayes, Ms. Meredith, Digital Solutions Manager, Colorcraft of Virginia, Ster- ling, Virginia, on behalf of Printing Industries of America .............................. 27 Uhl, Uhl, Mr. Arthur, Fitzsimons & Jewett, PLLC, San Antonio, Texas, on behalf of National Cattlemen’s Beef Association .......................................... 33 Neese, Ms. Terry, Distinguished Fellow, National Center for Policy Analysis .. 36 Statements for the Record: Clarke, Hon. Yvette D. ............................................................................................ 40 Associated Builders and Contractors, Inc. ............................................................. 43 Printing Industries of America ............................................................................... 44 Small Business Council of America ........................................................................ 46 International Franchise Association ...................................................................... 54 Society of American Florists ................................................................................... 55 Imperial Lithographics, Phoenix, AZ ..................................................................... 57 Marc Nelson Oil Products, Salem, OR ................................................................... 59 RFI Enterprises, San Jose, CA ............................................................................... 61 Grande Harvest Wines, New York, NY ................................................................. 63 Simkins-Hallin, Inc., Bozeman, MT ....................................................................... 65 Mavar Shrimp & Oyster Co. Inc., Biloxi, MS ........................................................ 69 (V) VerDate Aug 31 2005 18:16 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 G:\CLERKS~1\HEARINGS\TRANSC~1\53451.TXT DARIEN VerDate Aug 31 2005 18:16 Dec 14, 2009 Jkt 000000 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 G:\CLERKS~1\HEARINGS\TRANSC~1\53451.TXT DARIEN FULL COMMITTEE HEARING ON SMALL BUSINESS AND THE ESTATE TAX: IDENTIFYING REFORMS TO MEET THE NEEDS OF SMALL FIRMS AND FAMILY FARMERS Wednesday, November 4, 2009 U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, Washington, DC. The Committee met, pursuant to call, at 1:05 p.m., in Room 2360, Rayburn House Office Building, Hon. Nydia Vela´zquez [chairwoman of the Committee] presiding. Present: Representatives Vela´zquez, Dahlkemper, Schrader, Nye, Altmire, Bright, Griffith, Graves, Fallin, Luetkemeyer, and Thomp- son. Chairwoman VELA´ ZQUEZ. [Presiding.] I call this hearing of the House Small Business Committee to order. For many, starting a successful business and seeing it grow is the cornerstone of the American dream. As the daughter of an en- trepreneur, I saw firsthand what my family had to do to keep a small business afloat. With big ideas for the future and limited re- sources to call upon, I know that starting and running your own venture for many entrepreneurs is a family affair. It is not surprising then that many small-business owners imag- ine passing along the farm or business they have built to a child or grandchild to carry on the family trade. But for many parents who have spent their whole lives working to leave their business to their children, the estate tax can threaten the dream of having a son or daughter follow in their footsteps. For many family businesses, the estate tax was a hurdle too great to overcome as the heirs of a family farm or business sud- denly found themselves in the middle of a complex outdated law. It closed the doors on countless viable family businesses because they did not have the cash on hand when the estate tax came due. This was especially true for many family farmers, who were forced to liquidate—their greatest wealth is the land they till, not the cash in their bank accounts. For small-business owners that sought to overcome these hur- dles, the anxiety and costs were tremendous. After all, estate plan- ning for small businesses is complex and costly. Entrepreneurs at- tempting to plan for the future had to hire costly lawyers and ac- countants to navigate laws, calculate their estate tax, and set aside funds so they could pass along the family trade. Even then, entrepreneurs were not guaranteed their family busi- ness or farm would survive to pass on to the next generation. One entrepreneur told me he spent 5