Farm Bureau policy also addresses provisions contained in other legislation to reform estate tax laws. While these proposals do not provide for elimination of federal estate tax, they do allow a greater measure of estate tax relief for farm families. We commend the sponsors and offer our support for these proposals as steps in phasing out the estate tax. We thank the Subcommittee for its consideration of estate and gift tax laws and ask that our statement be included in the hearing record. Again, Farm Bureau reemphasizes its commitment to repeal. Estate tax reform is the management of the problem; repeal is the solution. APPENDIX D STATEMENT OF RAY M. STROUPE, PRESIDENT NATIONAL TAX EQUALITY ASSOCIATION TO THE SUBCOMMITTEE ON TAX, ACCESS TO EQUITY CAPITAL AND BUSINESS OPPORTUNITIES COMMITTEE ON SMALL BUSINESS U. S. HOUSE OF REPRESENTATIVES SUMMARY ESTATE TAX RELIEF NEEDED FOR INCREASED SAVINGS AND ESTATE TAX DISCRIMINATES AGAINST SMALL FIRMS AND FARMS ESTATE TAX PROMOTES UNNECESSARY ECONOMIC CONCENTRATION June 18, 1981 Mr. Chairman, the National Tax Equality Association (NTEA) appreciates this opportunity to present its views on the impact of federal estate and gift taxes on small business. NTEA consists of more than 1,900 firms, mostly small enterprises, which oppose excessive and discriminatory taxation of business and capital. the Congress to repeal estate and gift taxation. TAX RELIEF FOR INCREASED CAPITAL FORMATION We urge In recent years, much attention has been focused on the pressing need to encourage increased savings, capital formation, and productivity growth required for the effective operation of our capitalist system. Recognition of the detrimental effects of high marginal income tax rates has rightly assumed a central role in discussions of tax policy. In our opinion federal estate and gift taxation represents another extremely counterproductive feature of our tax code. Disincentives to investment and to the conduct of economic ventures are very great, relative to the tax revenues derived from this source: less than 1% of total federal revenues. The incidence of the tax is regressive, falling heaviest on relatively modest estates, especially small family businesses and farms. These closely-held estates are often forced into liquidation on relatively unfavorable terms to meet tax payments. The existence of the tax provides an incentive for older businessmen to sell out to publicly-held corporations and use the proceeds to purchase liquid investment vehicles such as government securities. Estate taxation imposes a heavy burden on aggressive entrepreneurship, successful business judgment, and capital formation in closely-held enterprises. Yet these qualities are essential to the dynamic and efficient operation of our competitive enterprise system. The tax rates imposed by law are harsh enough, but inflation-induced bracket creep has pushed the tax take to virtually confiscatory levels. As a result, it severely disrupts business planning and forces the liquidation or truncation of many of the most successful and productive business units. Estate taxation destroys capital, discourages savings and capital accumulation, and produces little revenue. ESTATE TAXATION AND COMPETITION Government policy condemns economic concentration and strongly enforces many antitrust laws. Yet when concentration or market power actually appear, they are most often a result of some government regulation or action. Estate taxation, for instance, promotes unnecessary economic concentration by making many small businesses and farms sell out to large corporations. Tax considerations introduce a significant bias in decision-making in favor of larger business units. In addition, by hindering the growth of successful small businesses by the confiscation of capital, the tax can insulate big established corporations from competitive forces that would otherwise exist. Particularly in industries where economies of scale play an important role, the effects of the tax may constitute a barrier to entry or expansion, preventing a small firm from accumulating enough capital to aggressively challenge established businesses. Because estate taxation is inapplicable to publicly-held corporations it discriminates against small private businesses and farms. The competitive disadvantage imposed is considerable, and should be removed. The repeal of the tax can achieve this objective and facilitate more neutral taxation of business enterprises. Thank you. 82-735 0-81--14 APPENDIX E Statement of The Associated General Contractors of America Presented to the Subcommittee on Tax, Access to Equity Capital of the Committee on Small Business United States House of Representatives June 19, 1981 On the Topic of Estate and Gift Tax Reform AGC is: .. * More than 30,000 firms including 8,400 of America's leading general contracting firms responsible for the employment of 3,500,000-plus employees; * * More than 80% of America's contract construction of commercial buildings, highways, industrial and municipal-utility facilities; Approximately 50% of the contract construction by |