Should Congress let the federal estate tax come back to life? Not if family businesses are important to the local economy.
As owners of Brady Industries, a family-owned business in Las Vegas, my family knows how damaging the estate tax can be. Brady Industries was founded in Las Vegas by my grandfather, Feurman Brady, in 1947. A former Safeway manager, he dreamed of doing more. With a little capital and a lot of determination, he left Safeway and founded his own janitorial supply company.
Back in the late 1940s, the Strip was nothing like it is today. Business was slow and there were many long nights when my grandfather considered calling it quits.
And who wouldn’t? Before, he had a dependable salary and benefits. He sweated a lot less and still enjoyed a decent living.
I wouldn’t have blamed him if he stayed at his old job, but my father and I, our families and our employees are certainly glad he took the road less traveled.
As Las Vegas grew, so did Brady Industries. In the past 20 years, we’ve expanded into five western states, launched a successful linen services company, and grown from less than 50 employees to more than 750, the majority of which reside in Nevada.
Our “secret” to success has been to hold tight to the work ethic and integrity that my grandfather handed down to us.
Unfortunately, that business ethic has also made us liable to pay an outrageous federal estate tax bill, and it could put our company out of business.
For this year, the death tax has been repealed. But in 2011, the tax comes back to life at 55 percent on all assets above $1 million.
That would allow the government to take 55 percent of the value of everything we own, including our warehouse, inventory, industrial laundry machines and company vehicles, but also our private home, retirement accounts and personal savings.
Rare is the company that can withstand such heavy confiscation. The amount due could easily exceed our available resources, which could force us to liquidate or sell the company.
This is why heiress Abigail Disney, of the famous Walt Disney family, is so out of touch when she says the estate tax is a fair form of progressive taxation that only affects the wildly rich. The reality is that businesses like ours are commonly forced to sell or liquidate in order to pay an estate tax bill that is due nine months after an owner dies.
In fact, most of the largest companies are not affected by this tax because they are publicly traded without a primary owner. This is truly a family business tax.
While it’s easy to point to the rare “Paris Hilton” example of abundant personal inheritance, this represents an extremely small percentage of people who fall under the estate tax umbrella. The people most affected by this tax are family business owners, their families and employees.
The death tax debate isn’t about saving a few extra dollars on the balance sheet — it’s about saving untold family businesses and the prosperity they create for their communities and employees.
Brady Industries is just one family business threatened by the death tax. Congress’s Joint Economic Committee has estimated that over a 10-year period, more than 37,000 closely held businesses (very often family-owned businesses) paid estate taxes.
In fact, research by two Duquesne University economists for the American Family Business Foundation found that for every 4.5 percent increase in the estate tax rate (the average annual increase since 1993), 6,000 small businesses are destroyed or sold to larger corporations each year just to pay estate tax liabilities.
Congress has until Dec. 31 to decide the fate of the estate tax. We hear many politicians claim that they are committed to strengthening the economy, creating jobs and protecting small business. It’s time to turn words into action. We’re not asking for a bailout, we’re simply asking for the end of a business-ending tax policy.
I hope Brady Industries will manage to survive the estate tax, should it come back. But like my grandfather, I’m not interested only in simply surviving. I want to leave a legacy for our employees, for my children and for future generations of Nevada entrepreneurs — the backbone of job creation in our city and state.
I want to leave them an America where they can work hard, invest and be rewarded.
I want to leave them an America with no estate tax.
Travis Brady and his family are the owners of Brady Industries in Las Vegas.