The Family Business Association of California is taking the lead in the campaign to defeat legislation that would reinstate California's death tax, a move that would seriously jeopardize the ability of businesses around the state to remain family-owned.
SB 726, introduced by Sen. Scott Wiener, D-San Francisco, is a placeholder for a ballot measure that would overturn the 1982 initiatives that did away with California's estate tax and impose a staggering 40 percent death tax, by far the highest in the nation. That would be a serious blow to family businesses – and the state.
Family businesses are the bedrock of their communities and the economy. A recent study showed that the state’s 1.4 million family businesses employ 7 million people. Family businesses tend to pay their employees better, train them better, and provide more generous benefits than nonfamily companies. They’re also less likely to significantly downsize during tough economic times.
Because families are in it for the long term, they focus not just on the next fiscal quarter but the next quarter-century. And because they’re based in their communities, they care about them, donating their time and financial support for community-based organizations and projects.
But keeping businesses family-owned is a struggle. Only about 30 percent survive into the second generation, about 12 percent make it into the third generation and just 3 percent operate in the fourth generation and beyond.
While family businesses in the other 49 states could be significantly strengthened if the federal government abolishes its 40 percent death tax, California would punish them and undoubtedly many would leave the state, taking jobs and tax revenue from California. Currently 18 states impose such a tax, while four states have repealed their death taxes since 2010.
Wiener has stated that his proposal would institute the state death tax only if the federal estate tax is repealed. But in a state where lawmakers this session have proposed numerous new programs, including free college and universal health care, there is no guarantee that a tax that generates $4.5 billion from Californians alone wouldn't be considered in any event.
To fight this misguided proposal, FBA is currently building a coalition including agriculture, general business groups, and anti-tax organizations to oppose the threat.
It is critically important that family businesses join FBA. There is strength in numbers and it is essential that we defeat this bill in the Legislature before it has a chance to be put on the ballot. Californians have shown repeatedly in recent years that they support taxing "the rich" and defeating a ballot measure would be an expensive undertaking with no guarantee of success.
New members can join download a membership application online www.myfba.org/join-fba. For more information about membership or the campaign, please contact Executive Director Robert Rivinius. email@example.com