New Death Tax Study: Destroying Strong Communities

by Adam Nicholson - No Comments
Posted on July 28th, 2010 9:22 am

The estate tax debate often focuses on the important issues of jobs, economic growth, and tax revenues.These issues, while important, sometimes overshadow the impact of the tax on strong communities.

AFBI friend and ally Dr. Pat Fagan, senior fellow at the Family Research Council, has published a great new study about the impact of the estate tax on the local community.(Dr. Fagan previously coauthored a study with AFBI policy analyst Palmer Schoening.)

Fagan’s latest offering looks at the tax through the lens of four family business owners.Fagan considers the effect of the estate tax on their philanthropic activities, the civic leadership they provide, the opportunities they create for their employees, and the effect of their business on the environment.On each count, Fagan’s latest report indicates that the estate tax wreaks untold carnage on the local community.

Fagan recounts the dilemmas faced by the Sukup family in Sheffield, Iowa.

The Sukups run Sukup Manufacturing, “the largest employer in Franklin County.”Eugene Sukup, chairman of the board, describes in his testimony to the Senate Finance Committee how his company “is a major donor to the Sheffield Care Center for Senior Citizens.We helped build a local swimming pool and a playground.We also gave a million dollars to help fund a child day care center that cares for over 100 children in Hampton, Iowa.Sukup Manufacturing contributes 10 percent of its taxable income for charitable contributions.”

In his testimony, Mr. Sukup shares the sobering truth that if the tax isn’t repealed, it threatens not only his business, but a “principal source of economic support for the senior citizens center, the playground, the local swimming pool, the day care center, and the many charities supported by the Sukup Family Foundation.”

The death tax also harms the local environment, as Fagan shares through the story of Hancock Lumber, a seventh generation family-owned timber-products business.President Kevin Hancock describes the effect of the estate tax on the company and the surrounding community:

Some of the forestland will likely be the first to go, since we can more easily recoup those losses than our mills or retail stores…

Our forests are not simply potential lumber, but are natural areas on which wildlife thrives and humans are able to enjoy outdoor recreation. Unfortunately, the death tax has been a leading cause of forest loss in Maine, as multiple private forests have been sold in order to pay the death tax.

Kevin’s story is not unique.Arkansas Timber Farmer John Ed Anthony also faces a heavy death tax liability and could be forced to sell timberland.Anthony’s family is actively involved in keeping the Arkansas community strong. They sell land to their workers in order to keep them in area, fund college scholarships, and participate in a host of local charities.

Fagan’s study helps paint a picture of what is really at stake if the estate tax is not repealed.

America needs its family business owners not simply to create jobs, but also to create the communities where people can live and raise families. Congress must act to kill the death tax once and for all…before the death tax kills our local communities.

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