Victor Mavar
Former Vice-President
Mavar Shrimp & Oyster Co., Inc.
630 Beach Boulevard
Biloxi, Mississippi 39530
Statement for the Record
U.S. Senate Finance Committee
Federal Estate Tax: Uncertainty in Planning Under the Current Law
November 14, 2007

Chairman Baucus, Ranking Member Grassley, and members of the Committee. I am pleased to offer my views to the committee on the matter of the Federal Estate Tax, more aptly termed the “death tax,” and the impact it had on one family-owned business in Biloxi, Mississippi.

I am one of the former owners and Vice President of Mavar Shrimp & Oyster Co., Inc., a family owned seafood processing and pet food manufacturing business in Biloxi, Mississippi. The history of Mavar Shrimp & Oyster Co., Inc. is a classic story of American entrepreneurialism. In 1898, my father, John Mavar immigrated from what is now Croatia to Biloxi, Mississippi. He worked as a fisherman while my mother was employed as a seafood worker. Both were hard-working and frugal individuals. They saved as much as possible, and in approximately 1920 my father purchased his first fishing boat. Owning and operating his own commercial fishing vessel was very successful. Over time he was able to accumulate enough capital to start a small fresh seafood operation in 1926, buying from other boat owners and selling at both retail and wholesale. The business was a success and as each of his four sons finished their education they came to work in the family business.

In the late 1950’s, always looking for new business opportunities, we developed a way to make use of small, noncommercial fish, which were typically thrown overboard by shrimp fishermen. It turned out that these fish could be processed and used to manufacture cat food. We realized the opportunity to make use of what was previously a wasted product and dynamically expand the business. Through such wise business investments and the hard work of my family, all of whom were employed in the business, Mavar Shrimp and Oyster Co., Inc. became one of the largest and strongest businesses in the community. In the last few years of our ownership, we were grossing approximately $50 million in annual sales, and in peak season employed approximately 300 people. Our employees were paid the second highest starting wage in the city – only civilians on the local military base were offered a higher starting wage.

Given the company’s considerable success, we never had any intention of selling the business. That is, until we became aware of our death tax liability, and the reality that we would be unable to pay the tax without selling most or all of the assets. In fact, we were forewarned that it was very possible that my family would be forced to sell perhaps at an unfavorably low price if one or more of the owners were suddenly killed or died. Because we wanted to save our children from the difficulty of dealing with this problem, we elected to sell in 1988 to the H.J. Heinz Company when they made an offer to buy our business.

When Heinz took over, we hoped that they would keep the business running in Biloxi for the long-term future. Unfortunately, within five years, they chose to relocate the manufacturing operations to Pennsylvania and Kansas. Obviously, most of our employees, who had lived in Biloxi for all of their lives, were not able to simply relocate with the new owners. While a handful did move, the majority simply lost their jobs and had to start new careers. Today, I regularly meet folks on the streets of Biloxi, who tell me that they used to work in our business, and state that they wished it had never been sold.

Ironically, even with the sale of our business, I am still concerned about being able to pay for the death tax. I’ve spent a fortune on attorneys, accountants, life-insurance and tax avoidance measures, such as early gifting to my children and charitable endeavors. More importantly, I’ve avoided making any investments in other new businesses, which may not turn a profit for several years. I have chosen to do this despite my interest in supporting the rebuilding of Biloxi, which was ravaged by Hurricane Katrina in 2005. In fact, I have received requests for investments in several local businesses, including a housing development that would help lower and middle income families who lost their housing due to the hurricane. However, I have been forced to turn them all down, lest I burden my children with the same death tax that we sold the business to avoid. As I see it, the death tax has encouraged a “wealth-redistribution,” not from the rich to the poor, but from the local community to the national corporations.

Today, one of my sons has his own seafood processing business. He is one of approximately five such operations that remain in Biloxi. He has shown considerable success, and he will likely do very well. I am proud of him, but I would rather that he would be able to pursue success without concerns about the same death tax that led to the sale of our business. For the sake of my son and other entrepreneurs in places like Biloxi, Mississippi, I ask that the committee support legislation to repeal the death tax.