create jobs at a time of high unemployment now they are threatened with additional regulations mandates and tax increases to pay for health care and additional government spending the last thing that they need is the possibility of losing their businesses congress fails to act before two thousand and eleven family businesses and entrepreneurs may find their companies at risk which would out the state tax for those who passed away in two thousand and ten only is scheduled to sunset january first two thousand and eleven if congress does nothing top marginal state tax rate fifty five percent and an exemption of just one million dollars but again take it back in two thousand and eleven small businesses and farms are often operated by families and transferred from one family member to the next these entrepreneurs frequently return any savings right back into their businesses by purchasing valuable equipment or land needed to operate the company in the case of a small company or a farm or transferred after descendants death may be valuable the heirs net worth or liquidity may not be high the airbase in a fifty percent estate tax bill may be forced to sell vital equipment or land just to pay the tax rendering the business inoperable the net effect is reduction of capital formation productivity a business expansion death should not be a taxable event the notion that the federal government is owed anything upon the death of a family member is outrageous to me before the current law sunsets at the end of two thousand and ten congress has to act i support a full repeal the estate tax and have introduced legislation six six four to make the two thousand want to two thousand and three tax relief including the estate tax to make them permanent but the fact that there is uncertainty in the law makes it very difficult for small business owners and farmers to plan and we cannot allow these entrepreneurs to risk their future for their companies i want to thank you for holding this hearing and look forward to the testimony thank you nice the mr christie as the president of elwood city save a lot located in elwood city pennsylvania mr spoke his company is family owned and was started over ninety years ago he is testifying on behalf of the food marketing institute f m i represents more than fifteen hundred food real retailers and wholesalers worldwide welcome mr spell the save a lot you know what city pennsylvania we've been a family owned business for ninety one years and are proud of the relations we have built with our customers and our community i'm pleased to say that the fourth generations of will carry on this tradition three of my children work with me at the save a lot that will eventually run the company operating a supermarket demanding undertaking to requires long hours and dedication but they have tackled these challenges with creativity and enthusiasm i take great pride in knowing that i'm leaving the business in good hands however they exist and so the estate tax makes planning the succession harder than it should be for a number of years i've worked with my industry association the food marketing institute advocate for the repeal on fair tax i hope the two thousand and one reforms would be the first steps in this process but the situation it created by having the tax disappear next year before snapping back to as much as fifty five percent in two thousand and eleven has made estate planning nearly impossible i continue to hope that congress will repeal the tax or lemonade for companies to stay in the family but right now businesses like mine need certainty and predictability the estate tax hits family owned businesses when they are at their weakest following the death of the head of the company this period can turn into a nightmare for families that have not adequately prepared i can only imagine how painful it must be to have to sell off all or part of that once thriving family business in order to pay the estate  super market owners tend to be asset rich in terms of buildings equipment and stock but cash for every single store operator can find themselves bursting the current exemption levels and maldives to work on these can easily exceed ten million dollars it is exceedingly difficult for companies like mine and others in the industry to withdraw significant amounts of cash to pay the estate and since i operate a single store selling off part of the business to raise funds is not an option no one wants to leave that as a legacy for their children so in order to protect against the cost of the tax i carry a life insurance policy that would help my family cover the expense of compliance should anything happen to me similarly i've spent countless hours with lawyers and accountants to plan for the orderly transition of leadership from myself to my children the estate tax makes this process infinitely more complicated all even be more complex once my children take over since it will now be three owners they will also have to spend a nothing on amount of money to make sure that unforseen circumstances do not threaten the viability of the business and their ability to leave it to the next generation so i'm not just passing on the company but the cost of the state planning as well some might argue that this is the cost of doing business but every dollar that goes toward insurance premiums and estate planning is a dollar not invested in my business it is money taken from job creation increased wages and better benefits right now i have twenty five employees and they bear the brunt of this tax just as much as my family did in the ninety one years we have been in business i would guess we have employed over a thousand people at one time or another where are the jobs going to come from if family businesses are weekend or sold to cover the cost of the tax it can be easy to ignore this impact but for communities that are struggling to raise good jobs is the question that needs to be answered at the start of my testimony i mention that i have been advocating for years to repeal this tax it is my belief that it simply does more harm than good both the industry and i recognize that this is a difficult task and have work to support reasonable compromises when i offer but i continue to believe that repeal is the best solution and the best way to make short of small and family owned businesses continue to thrive and create jobs for individually owned and operated grocery stores like minded state taxes a constant source of anxiety that is real want consequences for my family my employees and the day to day operations of my business i do not have the cash or assets on hand to simply write the government a check so i spend years and thousands of dollars to plan for the worst but no matter how much i spend i always wonder have i done enough thank you for inviting me to testify and i will be happy to member gray members of this committee my name is arthur rule and i'm a rancher cal producer an attorney from san antonio texas i'm testifying on behalf of the national cattlemen's beef association which is the largest and oldest national representing america's cattle men and cattlemen as chairman of n c b s tax and credit policy committee i can testify that the repeal or fundamental reform of our federal state tax system is at the heart of n c b s mission and we believe it's critical to the long term viability of our industry i appreciate your committee raising awareness of the tremendous burden that the state tax places on america's farmers and ranchers ninety seven percent of american farms and ranches are owned and operated by families many  owned their properties for generations to small and medium sized operation this tax can be addressed thank you for holding this hearing and bringing cattlemen to the table tax policy is a key factor impacting american cattle producers particularly in today's difficult business climate in an industry where financial returns are historically small we depend upon the ability to pass on a farm or ranch the next generation without exhausting resources or arduous planning or being forced to break apart economically viable operations we view the estate tax is fundamentally unfair any efficient he canonically stifling and particularly devastating to our business which requires highly valued assets to produce minimal economic returns cattle producers understand and appreciate the role of taxes and maintaining improving our nation they also believe the most effective tax code is for this reason in c b a members fundamentally disagree with the taxing  access that have already been taxed sometimes two and three times in the eyes of american farmers and ranchers debt should not be a taxable either for the state or for the years the current owners state tax system is also at odds with our important national goals are preserving natural resources and open space family farms and ranches provide an abundant and necessary source of food and fiber feed the growing global population as well as americans right here not only are they producing food america's farmers and ranchers are taking care of the land air and water that make our way of life possible death tax breaks up form a range plan to displace family generational forms and ranges expediting their conversion to strip malls and condo complexes and doing a great disservice to the american public in our world way of life all family businesses would like to see this tax go away and historically the cattlemen have fought for full repeal of the estate tax but our members recognize full repeal may not be an option so we are simply asking congress to reform the state tax to give relief and certainty to dedicated farming and ranching families who continue to work and preserve the  be taxed at fifty percent rate when you factor in land and equipment not to mention rising property values it's clear that most farms and ranches would easily exceed a million dollars this is a value that most farmers and ranchers will never see educate and train small business owners has been recognized by fortune magazine as one of the power most influential small business women in washington and magazine has named her as one business and their families i am speaking on behalf of the national center for policy analysis a nonprofit nonpartisan public policy research organization dedicated to developing and promoting private alternatives to government regulation and tax dollars are not planning to try to avoid an estate tax in the future it is a major major problem and a major difficulty and we appreciate madam chair holding this hearing and certainly being here percentage of farms or ranches that will come within the standard certainly goes down to a million dollars many many more will come in according to the national agricultural statistics service in the us the average per head so what that would lead to believe economically would be that that average operation would average gets anything done it's going to be spending a lot more for relief for different businesses i can think of better is to take care of this and the twenty billion or whatever would pale in comparison to the benefit for american farmers policy to protect your family against the expense can you just elaborate a little bit more why it's important in industries with low capital and small margins to have something like that if you want to pass your business on  for us to be out to make good policy we have to hear from people who are on the front lines every day who are experiencing experiencing this trying to keep up with the regulation pain expenses that you talked about today in terms of keeping up with all this code and i just want to say thank you for taking the time to come on our economy in the future estimates that will cost one trillion dollars over ten years so if there is an exemption amount in magic number that will