My name is Catherine H. Giordano, President/CEO of Knowledge Information Solutions Inc. (KIS), based in Virginia Beach, Virginia, with over 60 highly trained Information Technology (IT) personnel providing customer centric proven IT managed service and security solutions, quality IT products, and support to federal, state, and local governments, and commercial organizations. KIS is a family business as my partner is also my brother.

The greatest part of America's wealth lies with family-owned businesses. Let's make this point clearly: this is about all business owners and we should not play class warfare with families' livelihoods.

HR 3170, Capital Gains and Estate Tax Legislation introduced by Congressman Mitchell (D) (AZ) and Shays (R) (CT), goes a long way in providing significant help for families and their business. It reduces the rate of tax to that of capital gains, so whether you sell, transfer or die with your assets, you pay the same rate of tax. It also increases the lifetime exemption to $5 million to exempt as many small businesses as possible.

First, the tax is not fair. It is simply wrong to tax people upon their death when they have paid taxes their entire lives.

Warren Buffett, the country's second-richest man, recently wrote an article saying his average income tax rate was only 17.7 percent, while his secretary paid a rate of 30 percent. In the 2004 election, it was revealed that John Kerry (the richest man ever to run for president) and his wife only paid an average income tax rate of 12 percent, far less than most middle-class Americans.

Second, the death tax is a job-killer. In some cases, it forces middle class families who have built up farms and other family-owned businesses to sell them to pay the taxes. Congress must eliminate the tax on family legacy to remain competitive in a global marketplace, and to attract future economic development opportunities.

Third, my brother and I have worked very hard to leave a legacy to our families. Our business is our financial legacy to our children, and their children. By voting to PERMANENTLY Eliminate the FEDERAL ESTATE TAX, CONGRESS will safeguard small business owners, women, and minority-owned small businesses that are often hit hard by this unfair tax. It is an issue of fairness.

Small firms:

• Represent 99.7 percent of all employer firms.
• Employ about half of all private sector employees.
• Pay more than 45 percent of total U.S. private payroll.
• Have generated 60 to 80 percent of net new jobs annually over the last decade.
• Create more than half of nonfarm private gross domestic product (GDP).
• Supplied 22.8 percent of the total value of federal prime contracts in FY 2006.
• Hire 40 percent of high tech workers (such as scientists, engineers, and computer workers)
• Are 52 percent home-based and 2 percent franchises.
• Made up 97 percent of all identified exporters and produced 28.6 percent of the known export value in FY 2004.

Small innovative firms produce 13 times more patents per employee than large patenting firms, and their patents are twice as likely as large firm patents to be among the one percent most cited.

The estate tax falls most heavily on small businesses that are asset rich but cash poor. By permanently eliminating the estate tax, it will allow family-owned businesses to be passed from one generation to the next without having to sell assets to pay a punitive tax and disincentive to encourage the legacy of entrepreneurial spirit to the next generation.

• Fourth: Why is it fair for Congress to penalize families who have worked hard to create jobs, taken personal financial risks, and paid substantial taxes during their lifetime with (I keep a list of just a few taxes my company currently pays (37) and I am sure I have missed some) another tax of 45% on the value of all of their assets, due 9 months after death?

• The 45% rate of tax must be reduced as well as the lifetime exemption amount must also be raised. By reducing the rate of tax a family can buy less life insurance, each year, (which is how 80% of small business owners plan to pay the tax), providing them with more capital each year to put back into their businesses to add more jobs and build their businesses. And increasing the exemption amount provides most small businesses to be exempt from the tax.

• It is also very important that the payment of state estate taxes be reinstated as a credit against the federal estate tax paid. This was eliminated in the tax act of 2001 and now residents of some states are paying a higher tax than they paid before the reduction in 2001!!!

• A special provision to exempt “owned and operated” family businesses DOES NOT WORK, so don’t suggest that we try and reinstate a law that was repealed, because it was so unworkable!! Family businesses are too hard to define and most will not qualify for any definition that Congress would create.

• Finally: I believe that the bias of the estate tax against the family-owned small business is the antithesis of the American Dream created by our Founding Fathers. Families need certainty in planning for the future of their businesses. Congress has spent the last decade discussing and attempting to alter the estate tax – actually making it more difficult and uncertain to plan. With the tax bill passed in 2001; one year of repeal in 2010 makes planning impossible. Both parties should sit down in good faith and work out a solution that will help all family businesses and the workers they employ. Congress should stop using the future of family businesses as an election issue or political tool and fix the estate tax!!!! As owner of KIS a Virginia family-owned small business, I support and urge the Permanent elimination of the Estate Tax. You are literally taxing small business owners to DEATH and reaching BEYOND THE GRAVE!