April 12, 2005
Dear Representative:
On behalf of the 1000 franchisor and 8000 franchisee members of the International Franchise Association that collectively represent a “who’s-who” of American business, we strongly urge you to vote yes on H.R. 8, the Death Tax Repeal Permanency Act of 2005.
The International Franchise Association was organized in 1960 and is the oldest and largest association representing the franchising community for the purpose of protecting, enhancing and promoting franchising. Our members conduct business in over 75 different industry areas – from hotels to quick service restaurants to lawn care and personnel services. The pervasive economic impact and vitality of the franchise method of business in the United States is extensive.
In March 2004, the International Franchise Association Educational Foundation released a study conducted by PricewaterhouseCoopers, entitled “The Economic Impact of Franchised Business.” Among other things, the study found that franchised businesses directly employ 9,797,000 people in the U.S., about the same number as the U.S. durable goods manufacturing sector, or the size of the information and construction sectors combined. Franchised businesses, in turn, generate jobs for more than 18 million Americans, which is about one out of every seven jobs in the private sector in the U.S. And finally, more than 760,000 franchised businesses operate in the U.S., generating a total economic output of more than $1.53 trillion.
Our members, the vast majority of which are small businesses, have a lot to lose if the death tax is not permanently repealed in 2010. The phase-out and ultimate repeal of the death tax will help reduce the time, money, and energy spent by business owners on estate planning and preserve the many companies that are sold today for tax reasons when an owner dies. Therefore, we are very concerned about the temporary nature of the death tax repeal provisions. Because of the “sunset provision” in the law, the death tax will be repealed fully in 2010, and unless the law is changed, the onerous estate tax – with rates ranging from 37 to 55 percent – will be reinstated in 2011. The uncertainty, and unfairness, surrounding repeal will require business owners to continue with estate-planning strategies that are costly, cumbersome and time consuming.
Moreover, the temporary provisions further complicate an already overly-complex tax code. If the death tax were permanently repealed, resources currently allocated to estate planning would be reinvested into businesses, thus creating and shoring up job opportunities and providing a much-needed boost to local economies.
Permanent repeal of the death tax is critically important to the future of America’s small businesses and the people they employ. The International Franchise Association urges you to vote yes on H.R. 8 to ensure that this much-needed tax relief is permanently locked into place.
Sincerely,
John Gay
Vice President of Government Relations