By Karen Madonia
A recent article titled “Trump family would get $7B windfall from estate-tax plan: analyst” highlighted a report by an analyst attacking Mr. Trump for including repeal of the death tax in his tax plan. While the analyst appealed to the hearts of readers, he never looked at his analysis through the lens of reality. The analyst’s exact attack against the Trump family also attacks my family and thousands of others who own small and medium sized businesses. He believes the next generation of a family business and its employees should be punished simply because a business owner dies, and I wholeheartedly disagree.
My siblings and I represent the second generation of Illco, Inc., an Illinois-based distributor of heating, air-conditioning and refrigeration equipment, parts and and supplies. In our business, heavy inventories are mandatory – when refrigeration or temperature control systems break, we have the parts needed to fix them immediately. After paying our taxes and making our profit sharing contribution for our employees, the remaining income is put right back into the company so we can continue to carry an extensive inventory, extend payment terms to our customers and maintain our trucks and buildings. It is this re-investment in our business that puts us in the crosshairs of the death tax.
Using a vendor’s guarantee and a large bank loan, my dad purchased Illco in 1973. His goal was to provide a good life for his family and the families of those who worked for him, so he put everything he had into growing the business. His passion for the industry, his commitment to his employees, and his drive to succeed allowed him to keep pushing during tough economic times, and forty years later, he has a successful and thriving business with eight locations and almost 100 employees. When I joined the company in 1996, the passion and work ethic that he instilled in me took root, and I proudly work alongside him and other members of my family today. But everything we have built as a family is threatened by the death tax.
If something happened to my dad and we were left with a large estate tax bill, we would have to sell parts of the company in order to pay it. That would likely mean shutting down branches, laying off workers or liquidating inventory just to be able to pay a tax bill. It could also mean selling to a large corporate rival, moving our industry closer to consolidation amongst a few major players.
My father, and thousands of other business owners, collectively spend countless hours and billions of dollars to protect against the death tax. This capital could be used to grow the economy if the death tax was repealed. A recent study by the Tax Foundation found that repeal of the estate tax would grow the economy by $143 billion over 10 years. This economic growth would create 159,000 jobs, and increase wages for existing employees, all while keeping family businesses operating into the next generation.
As a family business under threat of the death tax, seeing repeal of the estate tax included in Mr. Trump’s tax plan and the tax reform proposal recently released by the House Ways & Means Committee gives us hope for the future of our business. I urge Congress to repeal the death tax to help thousands of family businesses and their employees, not appease the ideological attacks on one candidate’s family. It’s time we stop punishing successful entrepreneurs and start encouraging Americans to dream big, work hard and build legacies for future generations.
Karen Madonia is the Chief Financial Officer and next generation of Illco, Inc., a Chicago-area distributor of heating, ventilation, air-conditioning and refrigeration equipment, parts and supplies.