Warren I. Blum
7916 Melrose Avenue, #5
Los Angeles, California 90046
STATEMENT FOR THE RECORD
COMMITTEE ON FINANCE
WASHINGTON, DC 20510

March 12, 2008

Chairman Baucus, Ranking Member Grassley, and members of the Committee; It is my honor to share my concerns about the death tax, and reasons for repeal:

In the late 1940’s, my mother and father traveled across the country from New York on their honeymoon to visit Los Angeles. They loved it and decided to stay. They rented a small storefront and opened a Television store in the front, and lived in the back. I am told that I was conceived in that small living quarter.

Eventually, the little store grew into a thriving business selling Televisions and Stereo equipment. My parents were able to acquire two properties within a few blocks of the store containing retail and residential space. Later they bought a house, and then a larger one. In the early 1950’s property in Los Angeles was much lower and affordable.

I was born, and a few years later, my sister was born. Those happy years for our family came to an abrupt end when at age 47, my father died of a heart attack.

The TV and Stereo business was sold, and under new management closed down soon thereafter due lack of success. What was left for our family were the properties that my parents had acquired, which consisted of my parents’ residence, a three unit residential property, and the two commercial properties. My mother lived in the residence, and the other properties provided her with a modest income.

After I graduated college and law school, I worked in various business, but eventually settled on helping my mother to manage the properties. Today we manage the properties together. My office is in one of the buildings we own, a block away from where my parents started and from where I was conceived. I have spent most of my life in this neighborhood. I have seen people come and go. I see a lot of familiar faces and longtime acquaintances. This neighborhood is in my blood.

Now, property values have increased significantly to the point where, even though there are only a few buildings, when my mother passes on, I may be forced to sell the properties to pay the estate tax. The current exemption amount will be insufficient to protect us. Not only will I will lose my dear mother, and my management job, but I may have to move away from the neighborhood I was born, raised, and worked in, and go somewhere where property values are lower. This is not a happy prospect.

I realize that the death tax is the law, but it is an unfair and immoral law. It confiscates the fruits of a lifetime of hard work by someone like my mother to pass something on the future generations of our family. It penalizes my mother for keeping her capital invested, rather than depleting her estate by spending on luxuries. It discourages sons and daughters from participating in a family business. For instance, since I don’t have an ownership interest in the business yet, the fruits of my labor will also be subject to the death tax. It also causes interfamily conflict, as the overwhelming financial burden on the business caused by the tax makes it difficult to provide a continuation of livelihood for all members of the next generation.

The death tax is now 45%, and in a few years, it is scheduled to go back up to 55%. Because of the cost of money to borrow such a large percentage of our capital investment value, and the need to pay back principal, it appears that it would be impossible to keep our family business intact.

I urge you to repeal the death tax immediately.

Thank you for this opportunity to provide a statement.

Warren I. Blum