Billionaires Get Help from 'Small Business' Lobbying Group, Says American Small Business League

August 17, 2006; 07:18 AM
The National Federation of Independent Businesses (NFIB) urged its members this week to lobby their Congressional representatives for a controversial policy that was designed to give a tax break to the wealthy. In a statement issued Monday, the small business trade group pleaded with its members to meet with their "lawmaker and let him or her know that death-tax relief is crucial for the small-business community."

The "death tax" is a moniker originally assigned to the estate tax by a Republican lobbyist working for a group funded by the heirs of billionaires including the Walton family, according to a report in Small Business Review. Currently the tax is only applied to estates $2 million or more ($4 million for couples,) and only to the amount exceeding the exemption level of $2 million (or $4 million.)

The NFIB and other estate tax foes allege that the tax will take half of a small-business owner's wealth upon death. This is patently false. Assets of the vast majority of small business owners fall well beneath the current exemption level. According to a Congressional Budget Office report, less than 2% of all estates must file an estate tax return and a surviving spouse can inherit an unlimited amount without paying any taxes. Only 485 estates containing a family-owned business had to pay estate taxes in 2000 when the exemption topped out at $675,000. At the current exemption level of $2 million, the number of estates affected by the tax diminishes significantly.

The truth is, since most small business owners are in middle class and upper middle class tax brackets, they would probably end up paying higher income taxes to fill the revenue gap created by eliminating the estate tax. Furthermore, elimination of the estate tax would also eliminate a key provision that protects heirs from an excessive capital gains tax if they choose to sell the business.

Ultimately, it's the extremely wealthy that stand to gain the most benefit if the estate tax is repealed. There's no exemption level high enough if you're a billionaire. But the NFIB and other Republican organizations have been highly successful in using the confusion factor to convince people that the "death tax" is harmful to America's hard-working small business owners.

"Why is a trade group that identifies itself as the 'Voice of Small Business' lobbying Congress to pass a bill that would probably hurt rather than help its members?" asked Lloyd Chapman, president of the American Small Business League.

"The NFIB has been utterly silent for years as the Bush Administration slashed the SBA's budget and staff in half and allowed billions of dollars in federal small business contracts to be diverted to large corporations. People need to understand that the NFIB is not the voice of small business, it's the mouthpiece of the Bush Administration and its wealthy supporters. Actions speak louder than words," continued Chapman.

The American Small Business League (www.asbl.com) was formed to promote and advocate policies that provide the greatest opportunity for small businesses - the 98% of U.S. companies with less than 100 employees. The ASBL is founded on the principle that small businesses, the backbone of a vital American economy, should receive the fair treatment promised by the Small Business Act of 1953. Representing small businesses in all fields and industries throughout the United States, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members.