WASHINGTON (FNS) -- Senate Republicans and Democrats last week proposed reforms of the estate tax, something the grocery industry has put at the top of its 1997 agenda.
The Republicans have advanced two packages, one introduced by Senate Majority Leader Trent Lott, R-Miss., and Sen. William Roth, R-Del., chairman of the Senate Finance Committee. The second has been put forward by Sen. Richard Lugar, R-Ind.
Lott's measure, which likely will be the starting point for any tax reform enacted this year since it has the backing of leadership, would increase the effective exemption of taxable assets from $600,000 to $1 million over five years. The measure also would provide special estate tax treatment for qualified "family-owned business interests," if they comprise more than 50% of a decedent's estate. The measure would exclude the first $1.5 million of value from an estate, and would exclude 50% of the remaining value of qualified family-owned business interests.
A family-owned business would be defined as one in which a family owns at least 50%, or two families own 70%, or three families own 90%. The decedent's family would have to own at least 30%.
Tom Wenning, senior vice president and general counsel of the National Grocers Association, Reston, Va., said the industry backed this measure because it provided relief for families that have often had to sell or dissolve inherited businesses to pay the tax bill.
Another, more radical reform plan, put forth by Lugar, would either abolish the estate tax or drastically lower it. Lugar has proposed raising the effective exemption from estate taxes to $5 million from $600,000. Under the abolition section of Lugar's plan, the entire income tax would be eliminated and replaced with a consumption tax collected by retailers. The industry has opposed this proposal because it objects to becoming the nation's tax collector.