Globe Gazette Editorial: Congress must act on estate tax

Globe Gazette Editorial: Congress must act on estate tax

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Gene Sukup of Sheffield helped shed light recently on a problem with the federal tax laws that needs to be addressed promptly.

Without change, businesses such as Sukup Manufacturing and countless others would have to be sold or broken up in order for the survivors to pay taxes.

The problem is with the estate tax, also known as the "death tax." Congress has rolled back the tax rate until it was non-existent this year. But it is scheduled to revert to a rate of 55 percent on Jan. 1, with an exemption of only $1 million.

That could put a severe financial burden on countless North Iowa family farms and other businesses, hitting them at an already distressful time after the death of a parent or relative. Many would be forced to break up their farm or business just to pay the tax bill.

Sukup, who was recently featured in Wall Street Journal and Globe Gazette stories on the issue, said the tax would cost millions of dollars.

"It will put the company out of business," Sukup said. "That means the government is going to end up with about 60 percent of the company. They can't afford to pay that when I pass away."

Sukup employs 500. If it were broken up, it would affect the lives of hundreds if not thousands of North Iowans.

"You take a little town like Sheffield that has 1,000 people in it and then you've got 500 people looking for work?" Sukup said in a story we reported July 15. "It's going to be a terrible blow if the company would fold."

Sukup said it's also unfair because it's his two sons, not him, who have expanded the company in recent years. "I've got two sons in the business that have grown the company 500 percent in the last 10 years," he said.

Should the tax stay at zero? That seems unrealistic. But a sliding rate and an exemption for the first few million dollars would protect most family farms and small businesses. Putting higher taxes on those who can afford them makes sense.

U.S. Rep. Tom Latham, R-Iowa, said the death tax "is a fundamentally unfair and immoral form of double taxation."

He said that as a family farmer and small businessman, he has "seen firsthand how the death tax has punished Iowa businesses and farms, making it more difficult to pass along a family-grown business from one generation to the next."

U.S. Sen. Tom Harkin, D-Iowa, said he is co-sponsoring legislation that would require the wealthiest Americans to "pay their fair share," but would exempt 99.7 percent of estates from paying any estate tax.

"This bill also includes language to protect family farms and small business estates. It is a common sense bill that not only creates a fairer America, but one that will also reduce the federal deficit," he said.

We see a great need for this in North Iowa and elsewhere, and hope Harkin's colleagues have the courage to pass this legislation before the year's out.

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