WASHINGTON (FNS) -- Retail and wholesale supermarket officials last week threw their support behind a House bill calling for repeal of the estate tax.
They are also backing a similar bill previously introduced in the Senate.
The supermarket industry, citing the harm to small operators, has long lobbied against the tax, which can be as high has 55%. Two years ago, Congress voted to raise -- from $600,000 to $1.3 million -- the value of small businesses and family farms excluded from the tax. However, industry officials said the change barely made a dent in tax liability owed when a company principal dies.
The House estate-tax repeal bill, introduced by Reps. Jennifer Dunn, R-Wash., and John Tanner, D-Tenn., calls for phasing out the tax over 11 years by 5% a year. Similar legislation in the Senate has been introduced by Ben Nighthorse Campbell, R-Colo.
Repeal efforts in the past failed in part because they lost out to other tax-cutting proposals. Competition this year is likely to be no different. In order to secure a tax cut, Congress also has to find a budget cut to offset a revenue loss. This year's tax debate is further complicated by the hot-button Social Security reform issue and whether a federal surplus should be used to bail out the fund or for tax cuts.
But supermarket officials are hoping that a Joint Economic Committee study released in December will persuade lawmakers to enact a repeal. The study found the tax equals about 1.4% of all federal revenue collected, but the cost of administering it is greater than what's collected. The tax also contributes to the dissolution of family-run businesses, the study also claims.
Tom Zaucha, president and chief executive officer of the Reston, Va.-based National Grocers Association, called the estate tax "anti-family." He added that "It does substantial harm to family business owners, their companies, their employees, their communities and to the economy as a whole."
The Food Marketing Institute here is also lobbying for repeal of the tax. Tim Hammonds, FMI president and CEO, said, "The estate tax kills jobs and stifles innovation among one of the most important sectors of our economy."
John Block, president of Food Distributors International, Falls Church, Va., called on President Clinton to use some of the budget surplus for an estate-tax repeal. "It's time for the President to use some of his personal popularity and that surplus to help Americans who have worked all their lives to build this booming economy," Block said.